Be GST Compliant

In a chat with Anagh Pal, Vinod Subramanian, Chief Executive Officer at Logo InfoSoft Business Technology explains what new businesses need to know as far as GST is concerned. 

1. What are the steps a new business must follow to be GST compliant? Do all businesses need to be GST compliant? 

From April 1, 2019, GST registration and compliance is mandatory for all companies which are exclusively supplying goods with turnover above Rs 40 Lakhs. In case of services, it is Rs. 20 Lakhs. For ten select states, this threshold is Rs 20 Lakhs (Seven sisters of North East, Puducherry, Telangana, & Uttarakhand). Beyond this threshold, it is mandatory to take registration under GST, record and report all transactions following the provisions like Supply, Time of Supply, Place of Supply, Valuation, Input Tax Credit and Return Filings.

Comment : Earlier, this threshold was 20 Lakhs, and was increased to 40 lakh since April 1, 2019. All reporting is mandatorily digital, there is no paper at all.

2. What are some of the things they need to put in place for this purpose?

All reporting requirements of GST are digital, and there is a need to submit complete transaction details on a regular basis. This is expected to move to near real time with e-Invoices becoming mandatory from September onwards. Hence, it is essential for companies to gather sufficient knowledge of the provisions, make someone responsible to manage compliance, and capture all details at the point of transaction digitally. This is a vast departure from the past where summary data was sufficient for filings. Since an external advisor or consultant cannot “manufacture” transactional data post facto, a good accounting or ERP package based on the size of the business should be put in place.

3. How has the Government eased the GST burden on small businesses recently?

Government has increased the threshold for GST registration (exclusively for goods) from 20 lakh to 40 lakh. Earlier itself, the law provided for small businesses earning upto Rs 1.5 Crore to file GSTR1 and GSTR4 quarterly. In the current provisions and new return formats introduced, this limit has been increased to Rs. 5 crore. 

Apart from this, GSTN is providing free software to small players with turnover below 1.5 crore, where the book keeping is GST compliant, and the returns are automatically generated. There are eight such software giving customers a choice of accessing it across desktop and mobile, some of them like Vyapari are available 24x7 leveraging Amazon Cloud.

4. What is the importance of GST software and how does one choose one?

Accounting or ERP software is the heartline of any business registered under GST. The taxpayer has to ensure that the provisions of Time of Supply, Place of Supply, Valuation, Input Tax Credit and Return Filing are fully GST compliant, and are able to incorporate changes in GST rules from time to time. If the software is not supporting these basic things then the taxpayer has to pay a heavy penalties. Selection is a challenge since there are very few experts who understand all the rules, regulations and accounting, audit and reporting requirements. 

To make it easy for customers, GSTN has already evaluated and approved a few software packages, so customers can pick from these. Given the need for near real time reporting, cloud based software with 24*7 access, and those which can be operated from smartphone and Mobile Apps are finding faster adoption. Some of these software also integrate their data with GSTN servers, so the filings and data movements are fully automated and secure.

5. What are some of the important deadlines new businesses need to remember as far as GST is concerned?

Currently, ‘regular’  taxpayers have to file the GSTR-1 by 10th of next month and pay Taxes by 20th of next month. For ‘composition’ taxpayers, the quarterly filing of GSTR-4 is by 18th of the next month of the quarter. Further, annual Return and GST Audit has to be filed by June 30, 2019. Government has released Sahaj and Sugam forms which will be effective October 2019, for businesses with turnover up to Rs. 5 crore. Sahaj is for those engaged purely in B2C supply, and Sugam for those engaged in both B2B and B2C supplies. These are quarterly filings, and will reduce reporting burden, it will not reduce accounting needs since taxes still have to be paid monthly.