Amidst the biggest tax reform in the recent times i.e. the Goods and Services Tax (GST), it is no wonder that the Indian Tax regime has set a new precedent for being the single most dramatic change in the way the economy runs.
Now, the onus comes onto the small and medium enterprises and business owners when it comes to knowing what exactly they need to do under the new tax regime without driving themselves into a cauldron of never-ending information. For obvious reasons, (starting from the wide spectrum of goods and services that are now a part of GST to the fact that even after about a month of GST been rolled out it is still evolving) there is always an information overload but to no avail. While, everything that is to change or has already changed with the new GST could be a daunting task to be assimilated under one head, Slickaccount makes a humble effort to bring forth everything that you NEED to know as a business owner right at your finger tips.
What is GST?
GST is nothing but a destination-based tax that is levied on Goods as well as Services, meaning that the end user or the final consumer of the same is the one who bears the taxes. Here, the idea is to eliminate the cascading effect of the taxes on the goods that was prevalent previously and replace it with a taxation system which levies taxes only the value added to the goods or the services at every stage.
As a business owner, it is important to understand as for how are your invoices and transactions going to get affected under GST. Some key points to take note of:
GST enforces what can be considered as last-mile sales and transaction recording and reporting with regard to the movement of the goods. Hence, maintaining invoices take the center stage for uploading tax returns. Since both Goods and Services are liable to be taxed, let’s break it down for both categories of deliverables in this blog thread.
How to make your current invoicing compliant to the GST?
Acceptable forms of invoices: GST invoice (or tax invoice), Debit and Credit notes, vouchers, bill of Supply. The Tax invoice can be issued only when taxable goods is supplied to a registered taxable entity/person. In all other cases, the bill of supply comes into picture. For example, if there is a scenario in your business wherein you receive exempted under GST from a supplier, then the supplier is liable to issue a bill of supply instead of a Tax invoice as he is not allowed to charge any tax on the said exempted goods.
When to raise invoice or taxable event: A very vital point to understand is whenever there is a ‘supply’ of goods i.e. transfer, movement, barter, rental or exchange of goods, it is termed as a taxable event and hence, it may attract GST based on the kind of goods.
Number of copies of tax invoices: Tax invoices for goods would require at max three copies to be issued by the supplier with the original being issued to the buyer, Duplicate to carrier of the goods from the place of origin to the destination and the triplicate is retained with the supplier.
At the advent of this tax regime, government has released the acceptable formats for the invoices that have provision for HSN/ SAC codes against each deliverable/ commodity.
Who needs to register under GST?
This is the question that haunts most of the small business post the GST roll out. The answer to this is: If your business is registered for service tax and/or has an annual turnover of over 20 Lakhs, then you need to register under GST. Businesses that have a turnover of less than 20 Lakhs but deal with goods whose state of origin is not same as the destination state need to register as well. For now, Small businesses that do not belong to either of these categories can voluntarily vouch for registration under GST.
Follow our next blog in this thread to fill yourself more on GST Registration, Services Taxation under GST, among others
How to get your business up and running under GST: A quick guide to registration under GST to filing return