As a taxpayer or business owner, you must be familiar with what is GST or the types of GST. You must understand the significance of being GST compliant. But that will not be enough; you must also know what the necessary GST compliances are. Filing your GSTR-1 and GSTR-9 on time is one of the most important steps to stay GST compliant. GSTR-1 should be filed before the 10th of the following month, and GSTR-9 should be filed before the 15th of the following month. Paying your tax dues will ensure you have a good compliance rating score, and it could create a chain reaction along the supply chain, which could make it difficult for buyers to claim the input tax credit. Also important is to submit a consolidated annual return called GSTR-9.
General GST Compliance Checklist
Tax Rates: Once supplies are properly classified, you should make sure to apply the appropriate tax rate on each and every supply, and you should update tax rates as needed in your system.
Transaction Classification: To classify transactions, you will need two codes. HSN and SAC codes. HSN Code (Harmonized System of Nomenclature) was developed by the World Customs Organisation (WCO), and its main objective is to classify all goods in a systematic manner. SAC Code (Service Accounting Code) is issued by the Central Board of Excise and Customs and is used to classify different service types and the rate at which they are taxed. Using SAC Code and HSN Code mapping, you should classify all transactions under GST as either “Services” or “Goods.” Some of these classifications have changed from the previous Value Added Tax(VAT) laws. For example, Earlier restaurants were classified under “Goods,” but under GST, they are classified as “Services.”
Location and time of supply: You must be clear about the applicable provisions of time and location of supply, as provisions different from the place, goods, and industry. It could be confusing at times to capture the time and location of supply for that there are different tracking software that can be used.
Chart of Accounts: You are required to recheck the chart of accounts post GST. Businesses, Especially that come under the service sector with PAN India operations and those engaged in E-commerce, E-tailing, etc. must evaluate requirements and make necessary changes in the chart of accounts to make sure that it is GST compliant.
GST Registration: It is mandatory for all outlets, factories, and warehouses to register under GST, and all supply points are identified. You can obtain GST registration for different businesses that come under different jurisdictions to help ease GST compliance and ensure a smooth input tax credit (ITC).
Cost and Inventory Management: There will be some effect on the cost structure of new inventory with the change in the tax structure. You should ensure that these changes reflect in the system properly to help ensure the correct cost structure and make accurate pricing decisions.
Marketing and Sales Policy: GST has made significant changes in the taxation overtime regarding discounted items, gifts, and related party transactions. You should change your marketing and sales policy accordingly.
Many businesses may have some non-compliances either because they are not fully ready or lack proper management. If there is proper management, then staying GST compliant will be uncomplicated. As it is important to keep a checklist of GST compliances, it is also important to keep yourself updated with the recent changes that are happening with GST returns to save time and take things ahead properly.
There have been several changes that happened recently in the 38th GST Council meeting held on 18th December 2019. There have been dates extended for GSTR 1 late filing. There has been some late fee waiver, changes to restrictions in Input Tax Credit(ITC) claim, etc.
Few highlights of the 38th GST Council meeting
Restrictions made on the E-way bill: E-way bill will be blocked for taxpayers who have not filed their returns in Form GSTR-1 for two consecutive periods. Earlier, this restriction was only for the non-filing of Form GSTR-3B.
Exemptions for developers of the industrial plot: GST exemptions will be given on upfront payment for long term lease of financial or industrial infrastructure plots by an entity possessing ownership of 20% ( presently 50%) or more of state/central governments. It is applicable from 1st January 2020.
Changes in the GST rates: There is a proposed uniform GST rate of 18% from 1st January 2020 on non-woven and woven sacks and bags polythene or strips of polypropylene covered under HS 3923/6305.
A soP to be released for non-filers: SOP or Standard Operating Procedure will be released for Revenue Authorities in respect of actions taken in case of non-filing of GSTR-3B returns.
Waiver for a late fee: Late fee waiver is proposed on the filing of GSTR-1 for the period of July 2017 to November 2019, only if such GSTR-1 returns are filed by 10th January 2020
Restriction on ITC (Input Tax Credit) Claim: It is proposed that Input tax credit for debit notes or invoices which are not reflected in GSTR 2A will be restricted to 10%(earlier 20%) of the eligible Input Tax Credit. Steps to block fraudulent Input Tax Credit benefits availed by taxpayers to be implemented.
GST Audit / Annual Returns Due date for filing GSTR 9C Reconciliation Statement) and GSTR 9 (Annual Return) for the financial year of 2017-2018 has been proposed to be extended for 31st December 2019 to 31st January 2020. This was done for the offline utilities for providing relaxation in some reporting requirements which were not yet available.
Extension for the North Eastern States: Due dates for filing GST return for November 2019 was extended.
To understand GST compliances, you need to be updated with the changes that are frequently happening with the Act. As it is a very complex Act, there are changes that occur in every Council meeting. To get an overview of the compliances, it would be enough to know what is GST or to get familiar with types of GST. But to stay GST compliant, you will need to keep an updated checklist with the new rules and changes. However, some of the software that is available online is the most efficient solution to remain GST compliant effortlessly.