Here's what got cheaper and other major announcements 07/10/2017

The GST council today announced major cuts in taxes of various items and announced various measures to support exporters and small businesses, three months after the new taxation system was launched. 

"It's almost three months since GST roll out..returns have been filed for first two months as well. So it was a time to deliberate on its effect on various trades and the transition," Finance Minister Arun Jaitley said in a press briefing after the meeting of GST Council. 

Sops for exporters Keeping in view of the liquidity problem being faced by the exporters, the Council has decided to immediately start refund process for the month of July by 10th October while exporters can get refund of August by 18th October. For the remainder of the fiscal, they will operate under an exempted category paying a nominal 0.1 per cent GST. 

"As a long term solution, an e-wallet will be created for every exporter where a notional Jaitley said. The e-wallet option will be launched by 1st April, Jaitley added. 

For Small Businesses Jaitley also revealed that about 72 lakh taxpayers have been migrated to the GST system while 25-26 lakh are new taxpayers under the new taxation system. He said that a majority of them have less than Rs 1 crore of turnover and though their tax input is low, the burden of compliance is too high on them 

Hence the GST Council has decided to increase the limit of composition scheme to Rs 1 crore from current Rs 75 lakh for small businesses. So the small businesses can now file returns on a quarterly basis. This, Jaitley said, has been done to increase compliance. So far, over 15 lakh out of the 90 lakh registered businesses have opted for the composition scheme. 

The tax rate for traders of goods in the composition scheme is 1 per cent, while it is 2 per cent for manufacturers and 5 per cent for suppliers of food or drinks for human consumption (without alcohol). 

Service providers cannot opt for the composition scheme. The scheme allows small businesses, including eateries, to pay 1-5 percent tax without having to deal with the three- stage filing process. 

The scheme cannot be opted by supplier of services other than restaurant related services; manufacturer of ice cream, pan masala, or tobacco; casual taxable person or a non- resident taxable person; and businesses which supply goods through an e-commerce operator. 

No input tax credit can be claimed by those opting for composition scheme. Also, the taxpayer can only make intra-state supply (sell in the same state) and cannot undertake inter-state supply of goods. 

Businesses with annual turnover of up to Rs 1.5 crore, which constitute 90 per cent of the taxpayer base but pay only 5-6 per cent of total tax, have been allowed to file quarterly income returns and pay tax instead of the current provision of monthly filings. 

Jaitley said big taxpayers, who contribute 94-95 per cent of the total taxes, will continue to file monthly returns and pay taxes on a monthly basis. 

Also, a group of ministers has been asked to go into the issue of extending the composition scheme on inter-state sales as well as rationalising taxes on restaurants. 

The switchover to quarterly tax filing for small and medium businesses would happen from October 1 and they will have to file monthly returns for the first three months of GST, which was implemented from July 1, he said. 

Revised Rates Meanwhile, Jaitley said the Council also decided to cut GST rate on 27 common use items. GST on unbranded namkeen, unbranded ayurvedic medicine, sliced dried mango and khakra has been cut to 5 per cent from 12 per cent, while the same on man-made yarn used in textile sector has been reduced to 12 per cent from 18 per cent. 

Tax on stationery items, stones used for flooring (other than marble and granite), diesel engine parts and pump parts has been cut to 18 per cent from 28 per cent. GST on e-waste has been slashed to 5 per cent from 28 per cent 

Food packets given to school kids under Integrated Child Development Scheme (ICDS) will attract 5 per cent tax instead of 12 per cent. 

Job works like zari, imitation, food items and printing items would attract 5 per cent tax instead of 12 per cent. Government contracts involving high amount of labour will be levied 5 per cent GST instead of 12 per cent in order to contain cost of those programmes, he said. 

Service providers with revenue below Rs 20 lakh have been exempted from iGST as well. 

GST , which was launched in July, is a landmark reform which turned India's 29 states into a single market for the first time. 

But small and medium-sized enterprises, crucial to Prime Minister Narendra Modi's plans to create millions more of jobs, have been hurt by the massive tax overhaul that added layers of extra bureaucracy for firms and hit exports. 

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Quarterly returns, eWayBill applicability, composition scheme, rate cuts and lots more: All you need to know from GST Council Meeting

Goods and Services Tax Council (GST Council) headed by FM Arun Jaitley met today for 22nd time at Vigyan Bhavan in Delhi. The main agenda of today’s meeting is to rethink on the process of businesses and changes that need to be brought about based upon the learnings of the government and the feedback it has received in the three months since GST launch.

In order to streamline problems faced by taxpayers across nation, Council has take following decisions:

1. Increase in Composition Threshold To Rs 1 Cr From Rs 75 Lakh

2. Allows Quarterly Returns To Traders Having Turnover Upto Rs 1.5 cr

3. Reverse charge mechanism deferred till 31 Mar 2018

4. Kerala FM Thomas Isaaq says will develop & introduce the e-wallet gateway after a 6 month period

5. Govt revokes GST notification on gems and jewelry, separate notification to be issued separately after due consideration

6. E- Way bill to be rolled out from April, 2018

7. Kerala FM says in principle GST Council decides to bring down rate for AC restaurants to 12 percent; Govt to decide mechanism

8. J&K FM says “relief” has been provided wrt car leasing issue

9. GST on works contracts reduced to 5%

10. Relief for jewellers as no need to furnish PAN card on jewellery purchase of more than Rs 50,000

11. Tax rates reduced for more than 60 items

Next GST Council scheduled for November 10 in Assam.

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How to improve customer relations ?

No matter how much you present good service to your customers, it’s just not enough. There will always be the customers who are not happy with you.  The reasons may be:

1. – Lack of communication with clients
2. – Over promising and non-delivery
3. – Make culturally specific and inappropriate comments
4. – Impossible time frames

Sometimes the interactions with the client leave us with the anxiety, fear and self-doubt. Identify the nature of the clients you need to handle and make yourself comfortable managing the relationships with them. You must know the definite ways of dealing with clients to be able to grow your business. You need to serve a client with the dedicated and correct approach for quality delivery.

Here are a few ways to deal with the frustrated customer:

Manage relationships:

Provide a platform to your client to manage your relationship with them. Focus on some key points between you and your clients that help to manage relationships. Work on the relationships with your clients that make you feel more empowered, less anxious, and more efficient in dealing with new solutions.

Identify the personality based anger:

Personal attributes based anger is the toughest type of anger to solve. The clients may not like you, just because of your personality. To overcome this kind of a challenge:

1. – Let them understand you as a real person
2. – Ask your friends who might have similar qualities to validate your experiences in dealing with client’s anger

Observe task based anger:

Task-based anger is the easiest type of anger to deal with. They come because of no timely delivery and the performance non-appreciable.

1. – Accept your mistakes done
2. – Believe on what is the most important thing and commit your own goals and deadlines to complete your work done

Displaced anger clients:

The displaced anger clients are the ones who are frustrated from their manager or partner. And they, in turn, pass the anger on to you.

1. – Before starting a meeting with client, give them a chance to externalize the displayed anger
2. – Share your complaint in private
3. – Follow his lead as you are into the part of being active listener

 

Control the anger of clients with the perfect display of behavior patterns:

The aggressive critical client:

1. – Clarify each and every detail with your client in each discussion
2. – Focus on important goals : how can you bring maximum results and your ability to set limits
3. – Make the perfect decision to respond for both active and passive posture
4. – Use active or passive approaches for different responses

The Passive Withholding client:

1. – Work on client review efficiently
2. – Develop backdoor sources of information
3. – Work on particular deadlines

The triangulating client:

1. – Check frequently their roles of satisfaction and dissatisfaction
2. – Avoid close-ended questions
3. – Use open-ended questions

The wounded insecure client:

1. – Congratulate your client on small achievements
2. – Make them realize you’re on their side
3. – Make them feel they created a solution as the key contributor

It is very difficult to deal with clients, but if you handle the situation well, you might create opportunities for yourself.

This brings an effective management to your relationship with clients.

Fix the situation perfectly to get more power. These above techniques will help your clients for an easy resolution quickly.

The dissatisfied clients won’t be easy but if handled properly can eventually focus on getting the solution.

Minimize these issues efficiently and professionally according to the needs.

The key to successfully manage angry customer relations :

1. – Observe the silent space between you and your client
2. – Respond in a usual manner
3. – Develop active stress management techniques
4. – Conduct self-assessment to deal with your client
5. – Identify the lessons learned
6. – Proactive approach
7. – Transparency in communication/billing

Convert a happy customer into a loyal fan to smile and share warmly. Keep cool with the angry customers – not as easy as it sounds.

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Advantages & Benefits of Private Limited Company Why to Register Private Limited Company

Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Private limited company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014. To register a private limited company, a minimum of two shareholders and two directors are required. A natural person can be both a director and shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.

Unique features of a private limited company like limited liability protection to shareholders, ability to raise equity funds, separate legal entity status and perpetual existence make it the most recommended type of business entity for millions of small and medium sized businesses that are family owned or professionally managed.

ADVANTAGES & BENEFITS

Limited Liability Protection to Directors personal assets

Many times startups need to borrow money and take things on credit. In case of normal Partnerships, Partners personal savings and property would be at risk incase business is not able to repay its loans. In a private limited company, only investment in business is lost, personal assets of the directors are safe.

Easy to raise funds and loans

Pvt. Ltd. company enjoys wide options to raise funds through bank loans, Angel Investors, Venture Capitalists, in comparison to LLPs and OPCs.

Easy to attract Employees

For startups putting together a team and keeping them for long time is a challenge, due to confidence attached to private limited structure, it is easy to hire people as well motivate them with corporate designations and stock options.

Better image and credibility in Market

Private limited company is popular and well known business structure. Corporate Customers, Vendors and Govt. Agencies prefer to deal with Private Limited Company instead of proprietorship or normal partnerships.

Favorite Business structure for Investors

Investors love to invest in Private Limited companies as it is well structured and less strings attached. Most important it is very easy to exit from a private limited company.

Easy to Sell

Private Ltd. is easy to sell, very less documentation and cost is involved in selling a Pvt. Ltd. company.

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10 steps to starting a business

Starting a small business is easy using our step-by-step guides. The 10 steps below will teach you how to start a business, taking you through each of the key stages of the start-up process – from evaluating your business idea and choosing a company name through to designing your business cards, developing a website and, finally, getting ready to launch.

KEY TOPICS


1Start-up business plan essentials: Testing your business idea
Field research is a key part of analysing your market and will help you build a successful business plan and brand. 

2.Choosing the right business structure
Choosing the right business structure Sole trader, partnership, limited company or LLP? We look at how to choose the right legal structure for your start-up…

3.How to choose the perfect name for your business
How to choose the perfect name for your business Choosing the right start-up name is extremely important. Here's a practical guide on how to pick out the best name to ultimately build a better business.

4.How to create a logo that properly represents your business
How to create a logo that properly represents your business Five fundamental points your logo should convey to your customers…

5.Applying for a Start Up Loan: What to expect
Applying for a Start Up Loan: What to expect Looking to raise finance for your new business? Join the 30,000 plus Start Up Loan recipients today

6.How to choose an accountant
How to choose an accountant Tips from Startups on how to pick the number cruncher that's right for your small business

7.What to consider when choosing office space for your business
What to consider when choosing office space for your business What exactly do you need to consider when looking for the perfect premises?…

8.How to save money on business software when starting out
How to save money on business software when starting out Free and low-cost software options available to help you start a business…

9.Red tape checklist: What your small business needs to know
Red tape checklist: What your small business needs to know Dealing with business red tape? Startups has complied the five key legal issues and how best to deal with them……

10. 3 key selling techniques that could help your start-up
3 key selling techniques that could help your start-up What types of selling do you need to use? Startups covers a few of the most important selling techniques for your business…

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Tips to file tax under GST

Expert estimates say that only about 50% of the sector is technologically capable of complying with GST rules.

Tip 1: Calculate your ITC like your life depends on it

And truth be told, it actually does! It is very important for SMEs to understand the legislations around Input Tax Credit (ITC). The availability of ITC could determine the cost of compliance and the competitiveness of a business in the GST era. The law allows for ITC to be claimed on expenses incurred for ‘furthering of business’ such as marketing expenses, transport costs etc. SMEs can claim ITC across a bucket of expenses by being familiar with the law and thus reduce operation costs and increasing their margins. Besides ITC can impact your working capital, this makes it all the more relevant to make sure there is good compliance.

Tip 2: Keep those invoices and transaction details safe

ITC can be claimed only when the invoices from the seller and the buyer match completely, and also on the supplier’s timely return filing and tax payments. The entire supply chain, therefore, has to be disciplined about invoices and record maintenance, and timely tax filing and payments should become second nature to all SMEs and everyone they deal with.

Once GST goes live businesses will have to furnish all details of a transaction i.e. all the invoices made out to customers will now be matched to invoices received from suppliers, and only when the reconciliation is done will the ITC claim be valid. This should help the authorities track false ITC claims, but it also means that SMEs will have to familiarise themselves with the technological aspects of ITC claims and ensure that the suppliers they deal with are trustworthy and compliant. Any mismatches will be flagged and will have to be accepted and reconciled with both parties.

Tip 3: Anticipate cash troubles early and stay solvent

Since free-flow of ITC depends on several factors, SMEs might face some cash crunches in the interim while the supply chain adjusts to the new regime and falls into position. Cash-strapped businesses may have to increase their borrowing, but it can be completely avoided if SMEs prepare for rainy days in advance and take measures to keep their business solvent during the transition phase.

Tip 4: Do away with manual book-keeping

GST aims to digitise the Indian economy, and the GSTN portal will be the sole online source for uploading invoices and all other GST-related issues. We have seen how important invoice matching is for ITC claims, and errors can be easily made when you transport manual data to the online portal. Instead, it is better to use virtual records and accounts so that data can be transferred easily without any costly mistakes. Some of the SMEs may have to invest in giving basic training to their staff who have been doing manual book keeping and accounting in the past.

Tip 5: Choose your compliance software wisely

You can file tax returns on the GSTN portal directly, but if you are not well-versed with the forms you need to fill and the technical aspects of it, then it would be a better idea to buy a compliance software that lets you file your returns in an easier manner. Compliance software can help you avoid mistakes when filing returns and uploading crucial data. It is important to remember that every business will have to file a minimum of 37 returns in a year (three per month and an annual return), and human errors can prove to be costly in this context.

Hopefully, these tips will help SMEs in India effect a smooth conversion to the new tax regime. The government has been organising GST training sessions and business owners can also attend webinars to understand the finer points of GST. The initial struggle will be harsh on this sector, but once the transition phase is over SMEs can hope for a cost advantage of 2-4 percent due to increased tax efficiency throughout the supply chain. If the sector can only brave the temporary troubles that the change in tax regime will bring and adopt the behavioural changes necessary for compliance, they will be able to reap the benefits of GST pretty soon.

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Frequently Asked Questions (FAQs) on Goods and Services Tax (GST)

Question 1.What is GST? How does it work?

Answer: GST is one indirect tax for the whole nation, which will make India one unified common market.

 GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Question 2. What are the benefits of GST?

 Answer: The benefits of GST can be summarized as under:

·         For business and industry

o   Easy compliance: A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.

o   Uniformity of tax rates and structures: GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.

o   Removal of cascading: A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.

o   Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.

o   Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost

·         For Central and State Governments

o        Simple and easy to administer: Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.

o        Better controls on leakage: GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.

o        Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.

·         For the consumer

o        Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.

o        Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.

Question 3.  Which taxes at the Centre and State level are being subsumed into GST?

Answer: At the Central level, the following taxes are being subsumed:

1.      Central Excise Duty,

2.      Additional Excise Duty,

3.      Service Tax,

4.      Additional Customs Duty commonly known as Countervailing Duty, and

5.      Special Additional Duty of Customs.

At the State level, the following taxes are being subsumed:

1.      Subsuming of State Value Added Tax/Sales Tax,

2.      Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),

3.      Octroi and Entry tax,

4.      Purchase Tax,

5.      Luxury tax, and

6.      Taxes on lottery, betting and gambling.

Question 4.  What are the major chronological events that have led to the introduction of GST?

Answer: GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes. A brief chronology outlining the major milestones on the proposal for introduction of GST in India is as follows:

1.In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.

2. A proposal to introduce a National level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07.

3. Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC).

4. Based on inputs from Govt of India and States, the EC released its First Discussion Paper on Goods and Services Tax in India in November, 2009.

5.In order to take the GST related work further, a Joint Working Group consisting of officers from Central as well as State Government was constituted in September, 2009.

6.In order to amend the Constitution to enable introduction of GST, the Constitution (115th Amendment) Bill was introduced in the Lok Sabha in March 2011. As per the prescribed procedure, the Bill was referred to the Standing Committee on Finance of the Parliament for examination and report.

7.  Meanwhile, in pursuance of the decision taken in a meeting between the Union Finance Minister and the Empowered Committee of State Finance Ministers on 8th November, 2012, a ‘Committee on GST Design’, consisting of the officials of the Government of India, State Governments and the Empowered Committee was constituted.

8.This Committee did a detailed discussion on GST design including the Constitution (115th) Amendment Bill and submitted its report in January, 2013. Based on this Report, the EC recommended certain changes in the Constitution Amendment Bill in their meeting at Bhubaneswar in January 2013.

9.The Empowered Committee in the Bhubaneswar meeting also decided to constitute three committees of officers to discuss and report on various aspects of GST as follows:-

(a) Committee on Place of Supply Rules and Revenue Neutral Rates;

(b)  Committee on dual control, threshold and exemptions;

(c)  Committee on IGST and GST on imports.

1.The Parliamentary Standing Committee submitted its Report in August, 2013 to the Lok Sabha. The recommendations of the Empowered Committee and the recommendations of the Parliamentary Standing Committee were examined in the Ministry in consultation with the Legislative Department. Most of the recommendations made by the Empowered Committee and the Parliamentary Standing Committee were accepted and the draft Amendment Bill was suitably revised.

2.The final draft Constitutional Amendment Bill incorporating the above stated changes were sent to the Empowered Committee for consideration in September 2013.

3.The EC once again made certain recommendations on the Bill after its meeting in Shillong in November 2013. Certain recommendations of the Empowered Committee were incorporated in the draft Constitution (115th Amendment) Bill. The revised draft was sent for consideration of the Empowered Committee in March, 2014.

4. The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok Sabha.

5.In June 2014, the draft Constitution Amendment Bill was sent to the Empowered Committee after approval of the new Government.

6. Based on a broad consensus reached with the Empowered Committee on the contours of the Bill, the Cabinet on 17.12.2014 approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country.  The Bill was introduced in the Lok Sabha on 19.12.2014, and was passed by the Lok Sabha on 06.05.2015. It was then referred to the Select Committee of Rajya Sabha, which submitted its report on 22.07.2015

 Question 5.How would GST be administered in India?

 Answer:Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

 Question 6.How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?

 Answer :The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of Central Excise.

A diagrammatic representation of the working of the Dual GST model within a State is shown in Figure 1 below.

Figure 1: GST within State

Question 7.Will cross utilization of credits between goods and services be allowed under GST regime?

 Answer :Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would not be allowed except in the case of inter-State supply of goods and services under the IGST model which is explained in answer to the next question.

Question 8.How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method?

Answer:In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State.

A diagrammatic representation of the working of the IGST model for inter-State transactions is shown in Figure 2 below.

 

Question  9.How will IT be used for the implementation of GST?

 Answer:For the implementation of GST in the country, the Central and State Governments have jointly registered Goods and Services Tax Network (GSTN) as a not-for-profit, non-Government Company to provide shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders. The key objectives of GSTN are to provide a standard and uniform interface to the taxpayers, and shared infrastructure and services to Central and State/UT government 

GSTN is working on developing a state-of-the-art comprehensive IT infrastructure including the common GST portal providing frontend services of registration, returns and payments to all taxpayers, as well as the backend IT modules for certain States that include processing of returns, registrations, audits, assessments, appeals, etc. All States, accounting authorities, RBI and banks, are also preparing their IT infrastructure for the administration of GST.

There would no manual filing of returns. All taxes can also be paid online. All mis-matched returns would be auto-generated, and there would be no need for manual interventions. Most returns would be self-assessed.

 Question 10.How will imports be taxed under GST?

Answer :The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

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Impact of GST on the economy: things to watch out

The Goods and Services Tax (GST) came into effect on 1st July 2017. This happened after much anticipation and opposition. Now, one month has passed. Many are debating whether GST is delivering what it promised for the economy. It may be too early to measure its positive impacts. Those will kick in over the long run. But there are a few things to watch out for in the short run
.

Compulsory invoicing
The small and medium enterprise (SME) sector in India is still unorganised to a large extent. Transactions often happen with partial or no invoicing. GST forces companies to ask their suppliers for invoices. They also need to raise invoices on their sales. GST also tries to do away with fake invoicing. It does so by introducing bilateral validation of credit or invoice matching. These steps can increase the compliance costs of small companies. It can also make their prices less competitive compared to the larger players. Large companies have better-established supply networks. So, they can offset the taxes they pay on supplies.

Supply chain reorganisation
Many SMEs are suppliers or service providers to a few large companies. This is especially true in the manufacturing sector. They come up around production hubs. Or you see them around the manufacturing facilities and warehouses of their customers. They have limited ability to diversify. What was the case before the GST implementation? Companies for the most part decided the location of their facilities. They based this on tax considerations. In focus were state taxes, along with location-based tax exemptions and benefits.

GST has made location-based tax neutral. It has changed the decision criteria for operational factors. These factors include logistical costs, storage costs, and proximity to key markets. So, large businesses are changing their locations based on these criteria. As a result, small businesses could lose their customers. Some have only a few customers. For this reason, they are unable to diversify. These small businesses could suffer the most. But new businesses could also come up where factories and warehouses relocate.

Anti-profiteering measures
The GST law includes anti-profiteering measures. Businesses now need to pass on all benefits of the new taxation system to consumers. This may happen through price reductions. The benefits include tax savings, as well as savings in operational and input costs. The GST Council will keep an eye on whether companies are passing on these benefits to consumers. Implementing these steps could be difficult. That is because indirect savings are hard to calculate. It could bring back an era of price controls. This will not be healthy for businesses, especially small ones.

Possible impact on household budgets
Essential goods and services are either exempted from GST or taxed at lower rates. These include food grains, consumer goods, healthcare, education, and transportation. So, inflation could remain low. This is good news for consumers. Companies are to pass on tax and operational cost savings to consumers. This will help consumers. The savings could lead to more household spending. This is positive for businesses. But there is more to it.

Non-essential services are taxed at higher rates under GST. This could hurt household budgets. Remember that services account for almost 50% of household consumption. This effect will not completely reflect in the headline inflation number. Services carry only 20% weight in inflation calculations using the consumer price index. Also, companies will in due course pass on tax compliance costs to consumers. This could further neutralise their savings.

Growth could stagnate in the short run
GST is a landmark move. It could bring the economy closer to the 10% growth mark. But this may not happen immediately. In the short term, economic growth could stagnate. Three major segments of the economy are being affected. These include consumers, big businesses, and SMEs. Analysts predict the economy to grow close to 7.4% in the financial year (FY) 2018. This is a bit higher than 7.1% in FY 2017. But it is much lower than 7.9% in FY 2016.

The road may be unstable in the short term. But GST could be beneficial over the long run. It could stimulate growth. What happens when more businesses enter the tax net? Tax policy becomes predictable and doing business becomes easier. Business sentiment could improve too. So, more foreign investors and companies could enter the country.

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Impact of GST on manufacturers and their distribution networks

The implementation of Goods and Services Tax is India’s most important tax reform. It may well be the most important one since India’s independence. The implementation of GST needed a complete overhaul in business processes. It has changed the manner in which businesses operated. Who are the biggest beneficiaries of GST? The manufacturing sector is sure to benefit. But the reconciliation process is still underway.

The manufacturing sector is feeling the greatest impact of GST. Before this, manufacturers planned their warehousing and distribution strategies differently. There was an aim to avoid tax at the state levels. So, logistical efficiency was not always a priority. Now, GST is coming into play with a uniform and simplified approach. Manufacturers can finally reorganise their business strategies in the right way. They can concentrate on leveraging efficiencies of location and scale. They can focus on other factors that are relevant to their industry. Here are some of the advantages of GST for the manufacturing sector.

Reduction in the number of warehouses

Keep in mind the warehouse structure in India under the previous tax regime. Companies would build warehouses in different states. They wanted to avoid interstate taxation. They did this because the taxes varied from one location to another. So, companies focused on ways to stretch storage costs in the best possible way. A uniform tax regime is now in place with GST. Manufacturers no longer need to pay separate taxes in separate states across India. They can opt for a bigger warehouse at a centralised location. With this, they can cater to the demands of a clutch of states. GST has brought down storage costs significantly for manufacturers.

Better control on inventory and organised warehouses

There were complicated warehousing strategies in the previous regime. This led to stock outs in situations where there was a sudden rise in demand. GST helps in this regard. It enhances inventory efficiency. Manufacturers can enjoy economies of scale. They can make better forecasts about future demand too. Manufacturers will reap the advantages of this in the upcoming festive season.

Now, consolidated and bigger warehouses will become important. The new warehouses may be four to 10 times larger than the previous ones. So, manufacturers may consider automation and technical upgrades on a larger scale. This will improve service standards. It will also lower the costs of supply chain management. For instance, robotics specialists have seen a surge in demand from manufacturers already. Robotics can help manufacturers to become more reliable, agile, and efficient. GST is playing a key role in bringing about these changes.

Reduction in cost of freight

State boundaries have become redundant with the implementation of a uniform tax structure. Transport time and costs have also rationalised. Larger warehouses offer another advantage. Transport lot sizes have increased. This makes way for the deployment of larger and more efficient trucks. Further, the travel time for these trucks may see a large reduction.

The Ministry of Road Transport and Highways offers some numbers for this. It says the travel time of long-distance trucks has reduced by a fifth. A long-distance truck can now save up to 20% of its previous run time. This is because of the removal of interstate check posts. And it is all thanks to GST implementation. To put this in context, consider a truck travelling from Chennai to Kolkata. Earlier, this took about 60–65 hours to reach its destination. It takes about 55 hours now.

The rationalisation of costs has improved the efficiency of the distribution network. It has also provided manufacturers with an opportunity. They can now explore distribution models that are most suitable for their business. All this culminates in a competitive advantage for businesses.

Some manufacturers were quick to assess the impact and implication of GST. They put in place better warehousing strategies before July 2017. They are in a vantage position now. Meanwhile, others are still dealing with the GST headwinds. But reconciliation with GST by manufacturers is happening at a rapid pace. The benefits to the supply chain may appear from the fiscal year 2018/19.

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