GST impact - Tax on inter-state transactions
Kerala has a handful of leading banks, gold loan companies and gold retailers who have branches across the country.Do they have to pay tax for the transaction between the corporate office and their branches in other states? Under the GST regime, tax liability will trigger on supply and not necessarily only on sale. Even If the supply is between two branches of the same legal entity, there can be a GST liability if one of branch is located in another state. While such inter-state transfer supplies of goods or services are taxed, in effect the company is enabled by the law to transfer the credit lying in one state to another, as it can immediately avail the credit of such taxes paid in the receiving branch. This will avoid a situation where the unused credits are accumulated in one state and GST liability arises in different states. Branch to branch transactions in banks or similar transactions in other sectors need to be valued and should be taxed.The valuation of such supply of services can trigger disputes and lead to alternative views. However, to avoid such disputes, the law provides that if the recipient branch is eligible to take credit, the value declared in the invoice by the transferor branch will be accepted without further scrutiny. Traditionally, movement of goods through the Kerala border had been slow. Would introduction of RFID be able to address this issue? The general understanding is that the implementation of GST would lead to elimination of long queues and delays at check-posts at the state borders. The transporters will be required to carry tax invoice-delivery challanbill of supply and copy of e-waybill or e-waybill number mapped on the RFID. The officers would be able to verify the movement of goods very easily by using RFID reader. This will help to avoid the delays at border check-posts.The introduction of RFID system shall simplify the documentation required for transportation of goods. Presently it is understood that the existing system shall continue until the requisite infrastructure is in place. How to upload files on GSTN? Would small companies businessmen need help of third parties for that? Small businessmen or companies have an option to upload their detailsdata to the common GST portal manually by using standard templates issued by GSTN directly, without using any middle men such as Application Software Providers (ASP) and GST Suvidha Providers (GSP).ASPs and GSPs offer services to enable faster and errorfree return filing. Under GST Law, a normal dealer is re quired to furnish three returns in a month. In cases where filing returns with data becomes cumbersome, businessmen have the option to approach facilitation centers, ASPs, GSPs to upload returns to GSTN. There are embedded hardware-software solutions on a laptop for fil ing returns available in the market for small dealers. For a local supermarket owner, keeping and filing the details of the numerous products might be difficult. Would he have to hire a full-time ac countant for that? Even under the existing VAT regime, the deal ers are required to keep records of all the sales, purchases and stock of all the products that they are dealing with. Most of the dealers are currently using different IT systems and soft ware which are designed for accounting trans actions specific to the supermarkets. Such IT systems shall be modified to capture the re quirements under GST and the same may be used by an ASP (GST software) to Illustration: Gireesh comply with GST re quirements. Most of the ASP systems are designed in a way that it can be operated by the regular administrative staff of the organization with bit of training in the beginning. Further, for super markets while filing GST returns, numerous sales to ordinary customers need not be disclosed invoice wise. For goods worth above Rs 50,000, the e-way bill is mandatory. Is it really necessary as there is always a bill furnished for each product? Under GST, e-way bill has been mandated for the movement of goods worth above Rs 50,000 and can be generated on GSTN common portal. The general idea behind the proposal for e-way bill is for the authorities to keep track of the stock with dealers and trace the dealer in case of non-payment of tax. A bill furnished for each product alone, might not be sufficient for the tracking the movement of goods under GST.