Today is the first day of the GST and as expected have many changes, revisions and modifications leading up to this day. Last week saw a flurry of different notifications released to finalize rates, rules and procedures. The rate schedules made some modifications to the proposed rates which were released over the course of May and June 2017. Even last night, the GST Council meeting where the tax rates for fertilizers was cut to 5% from 12%, and the rate for certain tractor parts has been decreased as well from 28% to 18%. The GST Council will meet on August 5th, September 2nd and October 7th to continue to refine the regime.

First, GST won’t apply in all of India on 1 July 2017 because there hasn’t been a political decision in Jammu and Kashmir to implement GST. The earliest a decision will occur will be on 3 July 2017. Along with everything else – this is something that needs to be on everyone’s radar – how and when will GST come to J&K. Depending on the mode of implementation which could be an act of the Legislative Assembly or an ordinance, the effect could be immediate.

Second, GSTR 3B will be the return for the next two months; but even after you file GSTR3B, you are required to file GSTR1 and GSTR2 for the months of July and August. So, the tax process which everyone had geared up for has turned on its head for two months. The GSTN is working hard to release new APIs to GSPs so everyone can be ready in a couple months for the real-time submission of data. Businesses will need to submit their GSTR3B returns on August 20th and September 20th. The GSTR1 returns will need to be filed by September 5th and September 20th; while GSTR2 will be September 10th and September 25th.

Third, invoice rules have been finalized. Notification No. 10/2017 – Central Tax updates the content of a tax invoice. Rule 46(g) states that now the Harmonized System of Nomenclature will be used for goods and services. The services are now covered in Chapter 99 and the new rates and treatments for services are tied back to Chapter 99. Service invoices must be issued within 30 days from the date of supply; suppliers of insurance and financial services will have 45 days.

It is important to note there is no set format which must be used for invoices. Rather invoices must meet minimum content requirements found in Rule 46, but there is no model to follow. Many countries have strict rules on how an invoice would appear. This free form appearance should help business focus on getting the critical details – (a) through (q), printed on an invoice rather than worrying about where a logo is appearing. This reinforces the idea that format of the invoice is less important and getting the data correct at the time of invoice is critical.

Finally,there are lots of rates and many different treatments which are being applied. The notifications have established that for turnover in excess of five crore’s, only four digits code have to be reported. One challenge is that the description of the product will be critical in validating the tax treatment from a vendor. For example, the 4-digit code 8413 appears in three different rate slabs:

  • 5% – hand pumps
  • 12% – power driven pumps for handling water
  • 28% – power driven pumps for dispensing other kinds of fuels
  • Over the next months, everyone will be working to keep up to date with the GST Council Meetings, CBEC notifications and business decisions to optimize the GST.

    Summary of dates:

  • 1 July 2017 – GST Starts
  • 3 July 2017 – Jammu and Kashmir GST Meeting
  • 5 August 2017 – 19th GST Council Meeting
  • 20 August – GSTR3B Return for July
  • 2 September 2017 – 20th GST Council Meeting
  • 20 September – GSTR3B Return for August

by Anil Kuruvilla.

He is an international Taxation Expert and Chief Content Officer at Adaequare (Parent company of Udyog Software).


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