GST roll-out on 1 July: How prepared is India?
Even with the Goods and Services Tax (GST) coming into effect only two weeks from now, several businesses aren't ready for it. GST requires all businesses, including e-commerce, to register under the tax regime for which businesses need to take concrete steps. A recent CA Club India survey showed only 38% of 1,100-odd respondents was prepared for the roll-out. Is India ready for GST?
GST isn't just a tax reform or business reform
Chartered Accountant Minal Agarwal, Adviser on GST compliance, said GST isn't just a tax reform but a lifestyle reform that impacts the way India does business. The level of unpreparedness is higher, particularly among small business entrepreneurs who think they can bypass GST if their turnover is below Rs. 20 lakh threshold. She advises all businesses, even small ones, to get registered.
Joining GST is easier than you think, say experts
Experts say joining the GST isn't the herculean task some entrepreneurs and small business people presume it to be. Entrepreneurs can register online by logging on to GST.gov.in. Some tax companies and portals are offering GST-related services and assistance at low prices for companies to get on board. They include ClearTax.in, Taxmann, GST Suvidha's One Solution, and GSTsamadhan.in among others.
GST requires very high level of compliance
Under the GST regime, there will be no hand-written accounting books, ledgers and notepads; everything will go online and businesses need to update accounts regularly. Businesses will have to file 37 returns in a year - three monthly returns and one annual return - per state. If businesses have offices in multiple states, the number of returns will increase accordingly.
The GST provides some relief for smaller outfits
Enterprises with below Rs. 50 lakh turnover can opt for composition scheme that levies a presumptive tax on the turnover. Only manufacturers and specific service providers (restaurants) can avail the scheme. However, it comes with drawbacks; businesses operating in only one state can avail this. The scheme breaks the seamless chain of input tax credit; composition dealers cannot levy/collect tax from buyers.
CA and ClearTax.in's GST expert Preeti Khurana's statement
Preeti Khurana warned: "Those who buy from a composition dealer will not be able to take credit of input tax. Should the composition dealer purchase from registered persons, he will not get input credit on the tax paid by him on inputs."
Driving almost every small business to eventual closure: Bharat Goenka
Tally Solutions Managing Director Bharat Goenka said about 50% of businesses aren't aware of the reforms GST will usher; many think it is another tax regime. In future, the government would also begin rating businesses on basis of their GST compliance, which would affect the business credibility. This could also wipe out smaller businesses that delay payments and face cash-flow problems.
Minal Agarwal warns about GST compliance
Minal stated, "If you are not in GST, the businesses you supply to will have to bear the burden of your compliance. They may eventually switch to vendors who are registered under GST." As the GST-deadline approaches, many are hoping it will be deferred.
