The business of GST

The goods and services tax (GST) is not merely a tax change but a business change that will impact all functions of an organisation such as finance, product pricing, supply chain, information technology, contracts and commercials. Its companywide implementation is not limited to the finance and IT departments, but involves the entire business ecosystem. Any training and sensitising programme has to involve employees, vendors and key customers. Sudipto Dey looks at what it entails:

• The regime’s impact analysis exercise has to involve several departments, including finance, IT, supply chain, product pricing and human resource, among others

• Claiming input tax credit is the most important benefit. Currently, service providers can’t claim credit for VAT paid on goods, while traders can’t claim credit for excise/countervailing duty and service tax. Businesses have to identify benefits on account of the transition at an organisation-level

• Identify possible cost savings key suppliers/vendors could be entitled to under the GST; engage with vendors for pass-through of these benefits in accordance with anti-profiteering provisions

• Input tax credit is denied on goods and/or services used for personal consumption; tax credit not available on goods lost, stolen, destroyed, written-off or given away as gift or free samples

• Employer can’t claim tax credit on offering cab service, canteen facilities, life insurance or health insurance to employees

• One can’t claim input tax credit while taking a client out for a business lunch

• To claim the input tax credit, the buyer has to ensure the supplier is paid within 180 days from date of invoice; otherwise, proportionate input tax credit will be reversed