The requirement of a minimum of 16 states ratifying the 122nd Constitutional amendment bill has been completed in advance with Odisha coming in at number 16. The other states are Bihar, Nagaland, Delhi, Gujarat, Chattisgarh, Madhya Pradesh, Himachal Pradesh, Jharkhand, Haryana and Maharashtra etc. The act was achieved in 23 days against the stipulated time of 30 days.
Now the bill will be put up to the President of India for his approval. The IGST and CGST laws have to be enacted by the Centre while the states have to come out with the SGST law. Meanwhile, the GST council comprising of the Union Finance Minister and state representatives have to come to a common platform with regard to the GST rate, tax slabs and the exemption list of goods and services. This activity will ensure that the legislation gets tabled in the Lok Sabha and Rajya Sabha in the Winter Session of Parliament in November this year.
The GST compliance is likely to bring a monthly load on the businessmen, traders, dealers and service providers etc. At present everyone is used to filing a quarterly tax with the returns going in on a quarterly, six monthly or annual intervals. The GST draft law has indicated the filing of returns on a monthly basis. In addition, the number of returns every month would be three. These would include the Inward supplies, outward supplies, and the monthly summary return. The businessmen would have to top it all with an annual return that would have to be filed by the end of December in the subsequent financial year.
Sections 25 and 26 of the model GST law pertain to the filing of the outward supply and inward supply return respectively. The outward supply return has to be filed by the 10th of the succeeding month. It will contain the invoice details and GST registered numbers of the clients to whom the goods or services were delivered. The IT infrastructure software on the GST Network will make this data visible on the respective client access points. They will use this data to furnish the incoming supplies return by the 15th of the succeeding month.
The third report that is to be filed by the 20th of the succeeding month is a summary of the auto-populated data of the incoming and outgoing supplies report. It is here that the details of the tax amount paid through the challan and input credit availed would be reflected. The three returns every month and an annual return total up to a whopping 37 reports every year.
While the monthly filing ensures that your accounts are up to date, it also brings the additional burden of ensuring that your supply chain is also on track. A clerical mistake or wrong filing may result in your input credit being denied. It will require you to get it corrected at the vendor who made the mistake and also to pay the tax from your own pocket until the time you get the input credit correctly reflected. There is a penalty of INR 100 per day for a missed deadline and your GST compliance rating score goes for a toss with every delay.
The above story is for the businessmen operating in one state. The compliance returns multiply with the number of states that you add to your sales network. As you become an all India player with input and output supplies in all the 31 states your returns will go up to a figure of 1147 every year. Are you ready to face the challenge with a highly active accounts back-end?