Preparedness for the new changes in GST

[Ganeshan Kalyani]

GST is a two years and six months' old law now. It is still evolving and developing. Various amendments in GST law indicates the improvement and growing stage. Thanks to GST Council which is accepting and acting upon the representation of trade, industry, tax payers, consultants etc. Thanks to Government to have implemented GST and thereby eliminating multiple laws prevailed State-wise, region-wise, business-wise etc. State-wise Value Added Tax challenged tax payers, consultants had to practice the law prevailing differently in various States. Central Excise which was applicable to manufacturing activity. Octroi, entry tax was prevailing differently in every municipal locations. It was a big challenge for tax payer to comply various laws, deal with various authorities and complete assessments. Taxation was decentralized. Decentralized is a term used in corporate world to say that the work is taken care by regions instead at corporate level. When a task is left to regions the law happens to modify as per there suitability resulting in multiple tax law. The same thing happened with erstwhile tax laws. Now, with the GST in place, every indirect tax law is consolidated and become one. Similarly, like every finger is brought together and a powerful fist is made a tax law GST is a single fist which makes a tax compliance easy, simple and doable. GST has made life of tax payer and consultant very easy. One CGST, IGST is required to be studied in depth and SGST of very State being a replica of CGST need not to be read in detail. This has simplified and made life easy. However, in view of constant change in law, challenges posed by GSTN showered worry on the tax payer and the consultant. The instance is GST annual return of the first year of GST is still extended to 31.01.2020.

The new return in GST ANX-1 and GST ANX-2 is coming into effect from 01.04.2020. The new return trail is already provided by GSTN in their website. It gives a glimpse of new return. A tax payer need to step forward and chalk out the plan to get ready to comply for the new return. The preparedness a tax payer can work upon is envisaged as below:

Vendor/Customer master management: A tax payer has a master data of vendor as well as of customer. The information like vendor/customer name, their address, contact number preferably mobile number, email id, their GSTIN etc. must be in possession of the tax payer. In case, the data is incomplete the tax payer can as a first step can collate such information and be ready to face the new return. The same would be of very use to communicate mismatch in GST ANX-1 and GST ANX-2.

Confirmation of GSTIN of Vendor/Customer: A tax payer must have collated GSTIN of their suppliers and their customers at the time of implementation of GST. However, during these two and half years time a tax payer must have found typo error while filing GSTR-1 wherein they would have rectified but the updation in masters is left to be updated. A supplier may as a second step correct the GSTIN of supplier/customer in the accounting software.

Confirmation of our GSTIN in the records of Vendor/Customer: A tax payer must have shared his GSTIN to their suppliers and their customers at the time of implementation of GST. However, the supplier/customer must have committed typo error while updating their master. Hence, as a third step, a tax payer may send out an email communication to all their supplier/customer along with GSTIN and seek confirmation from them. It is essential that their record is also updated with tax payer's correct GSTIN.

Agreement clause amendment: A tax payer is allowed to claim input tax credit only when the invoice detail is uploaded by tax payer in GST ANX-1 and also pays the tax to Govt. In view, of upcoming e-invoicing requirement every tax payer will have to send the details to Invoice Registration Portal (IRP). IRP will generated Invoice Reference Number (IRN) on the basis of invoice details. IRP will send the details to GST ANX-1 and to e-way bill portal as well. As a result, by default the supplier will be uploading the outward supply details in the online portal on real time basis. However, few tax payer may not generate IRN on timely basis causing the buyer to postponed claiming of input tax credit. A suitable terms may be included in the agreement which will bind the supplier to comply in time.

Dedicated team to take care of follow-ups: It is envisaged that enormous matching task, follow-up task will come into play. The buyer will always match the purchase invoice in hand with the details populated in GSTR-2A dump. If there is mismatch he will have to immediate send an email communication to inform such difference to counter party. In case the invoice is missing the supplier will have to intimate and request the supplier to upload the invoice in GST return. These kind of follow ups will be a routine task when the new return comes into effect. Hence, an organization may look into this aspect and may create a team who will take care of the matching compliance/requirement.

Invoice Reference Number: Invoice Reference Number (IRN) will be mandatorily required to be generated with effect from 01.04.2020. However, the Govt. has allowed to generate IRN on voluntary basis from 01.01.2020. IRN is required against all the invoice, credit note, debit note etc. Also, the IRN need to be stored in sales register in accounting software as the same will be requirement during assessment.

E-way bill: This is already in place. However, every State has set up their own threshold limit for generating e-way bill. That too for some period. The same need to be updated and accordingly the e-way bill need to be generated. A tax payer having existence in multi State need to stay updated with the changes in respect to e-way bill requirement in that respective State and comply accordingly. An e-way bill generated should also be linked to taxable sales details.