As jitters subside, focus shifts from first GST invoice to first GST return

Published: July 20, 2017 4:00 AM

Amidst the commotion on account of implementation of new tax regime during the past few weeks, Goods and Services Tax (GST) slowly, but surely, appears to be sinking in.

GST, GST  return,  GST law, VATSince the GST law is at a nascent stage, varied interpretations by trading partners were expected.

Amidst the commotion on account of implementation of new tax regime during the past few weeks, Goods and Services Tax (GST) slowly, but surely, appears to be sinking in. This is not to say that the confusion among the traders and consumers on different types of GST, ie, Central GST (CGST), State GST (SGST), Integrated GST (IGST), invoicing, rates, valuation to be adopted, etc. have settled down, but the initial jitters appear to have subsided and paved the way for new issues for discussion.

To begin with, there is confusion on documents to be used for movement of goods, whether the goods should move along with hard copies of tax invoice, bill of supply, the circumstances under which delivery challan needs to accompany, etc. Further, continuation of the waybills/road permits of the erstwhile regime, as an interim measure till Rules on e-way bills are finalised by the GST Council, has not helped the cause but increased the concerns of traders.

Since the GST law is at a nascent stage, varied interpretations by trading partners were expected. Thus, customer queries on invoicing, taxes to be charged, classification of products under different codes are some of the challenges with which industry is grappling with. Some of the common questions are  ’My customer is saying that I need to mention eight-digit classification code, while I heard it was four digits’, ‘Customer is asking for mandatory GST discount’, ‘Customer is asking me to mention their GSTIN on the invoice, should I’. While, the government is doing a decent job by releasing FAQs on various topics in leading newspapers, in order to clear the air on basic and mundane issues, the approach to reach out to more and more people needs to be far extensive.

Another critical talk in the Board room today is on pricing of the products post GST. The fear of the anti-profiteering provision which mandates reduction in price of the product/service on account of benefit of GST, is the driving force behind the discussion. The debate on pricing is lengthy and ambiguous as, though the anti-profiteering rules have been released, same do not divulge critical aspects such as how profit needs to be computed, whether profit would be looked at product wise or at entity level.  To facilitate price changes, government has come up with a notification dated July 4,  2017, which allows adding a new MRP by stamping, putting sticker, etc. However, the notification seems to be pose more questions than provide answers.

Cut over transactions and their implications is also keeping the industry on their toes. Treatment of goods in transit, ie, goods sent by supplier before June 30, but received by customer in July, open purchase orders, treatment of advance received in June for services provided in July, sales return of goods sold under Value Added Tax (VAT) regime, etc, are some of the hot topics. Thankfully, there are detailed Rules to take care of all such scenarios. Still, interpretation, understanding and implementation of the Rules is what is keeping the GST excitement alive.
Another area of key interest these days is availment of transitional credits. Full credit of tax on pre-GST purchase, which is evident from the invoice, is available as a set off against the GST liability.  Further, the government has come up with a provision which allows a deemed credit of excise duty paid on purchase, even if the same is not visible on his purchase invoice. Every dealer wants to avail these benefits and thus are working to compute the credit and avail the same.

Exporters of services, who intend to export without paying any tax have been made liable to file a Letter of Undertaking or a bond, for the first time. Such new procedures and compliances are also the talk of the town and keeping the industry busy.

The focus is also slowly now shifting from ‘first GST invoice’ to ‘first GST return’. Though the government has, thankfully, delayed filing of the detailed return to the month of September, the multinationals do not want to take any chance and want to get this first time right. Thus, analysis of the fields of the different GST returns GSTR-3B and GSTR-1 is underway.

To conclude, GST is turning out to be a fresh fruit, where peeling of the first layer (of queries, confusions) is leading to another new layer to be peeled. It appears that there are many more layers to be peeled before the true taste of the fruit can be savoured.

-By Harpreet Singh, Partner, indirect tax, KPMG in India. Views are personal

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