How GST actually works! Types of GST

 

How GST Actually Works! Types of GST!

The Indian economy underwent massive economic reforms almost 25 years ago when the floodgates were opened for markets to live up to their potential and only market forces were allowed to steer the economic growth of the country. However, the taxation policies in effect were the same that were present pre-liberalisation. This was an anomaly as there were various loopholes leading to uneven economic growth, "tax on tax" issues thereby having an adverse impact on the country's economic progress.

Both the central as well as the state governments had their own say in what kind of taxes will be levied on what kind of products and this made India an extremely difficult market to operate in. This resulted in the common man of the country having to pay different prices for the same products in different part of the country. This not only had a bearing on the average citizens, but also on business establishments looking for a level playing field and being assured of consistent returns on their investments without looking at unfair taxes bringing down their profits.

GST has been brought in with this very objective of unifying the entire taxation policy and making the entire nations as ONE when it comes to taxes, levies and cess. It is an indirect tax reform that will unify the country's market and anyone and everyone will be free to sell, buy, import and export within the country by pulling down the tax barriers that existed between various states. And yet, it will not result in losses, but an increase in GDP by 1-1.5% in the long run!

In simple terms, GST will be beneficial for the common man in two ways. firstly, the taxes will be collected only at the point of consumption, that is, when the buyer purchases the good or consumes the service. Secondly, since the tax barriers will be down between the states, the end-user will not be paying any tax-on-tax on the products/services. This, in other words, means that the tax is only levied at the last stage of product cycle before it lands up with the buyer!

In India, GST is implemented in a Dual System. It is imposed on manufacturing, sale and consumption of goods and services rendered at national level. The tax will be collected and levied by two entities; Centre and State. Tax imposed and collected at Centre level is CGST (Central Goods and Services Tax). Tax imposed and collected at State level is SGST (State Goods and Services Tax)

GST is a value added tax which is imposed on goods and services at different stages of sale and purchase. In the earlier system every seller recovered tax from the buyer, which means, the end users were burdened of the tax on each and every good and service.

But now, the system will change. Now the end point of goods and services will pay the GST. Rest will claim it back.

Manufacturer

Wholesaler

Retailer

Consumer

GST

Claims back GST

Claims back GST

Claims back GST

Consumer pays GST

Before going further, here are some of the broad pointers of how actually GST will work:

1. This will follow a multi-stage collection mechanism where tax will be collected at every stage of production and the credit of tax paid (input tax credit) at the previous stage will be available as a set-off at the next step of transaction.

2. This would result in elimination of tax on tax regime and the end user will only pay tax applicable at the last stage of production/service generation thereby a reduction in prices and tax component in the long term.

3. GST rates have been classified under 4 basic rates: 5%, 12%, 18% and 28% thereby eliminating all other taxes and levies that were hitherto in effect. This makes understanding indirect tax regime easier and simpler to understand and implement effortlessly.

4. All those business enterprises having an annual turnover of Rs. 20 lakhs and above shall be liable to pay GST and follow the norms except for certain states where the threshold limit has been set for businesses with a turnover of Rs. 10 lakhs and more.

It is always better to understand the entire mechanism with the help of a practical example.

Here is an easy example to understand, how GST will actually function:

We are talking about making and selling of sweets here.

Supposedly, in Distribution Channel of sweet making, there are 3 people: Manufacturer, Wholesalers and Retailers.

Stage-1

Assume, that manufacturer of sweets buys raw material like milk, sugar, dry fruits and other necessary things that is required to prepare 250 grams of sweet, and it costs around Rs 200, including 10% tax of INR 20. Now, sweet is ready and manufacturer added his own value to the material, say INR 60. Then the total cost of sweet box becomes INR260 and tax for this will be INR 26 (10% tax rate). But, under GST taxation, at this stage manufacturer will only pay INR 6 (as Rs 20 he has initially paid, so INR 26-INR 20 = INR 6).

Stage-2

Next we move on to second stage, where Wholesaler buys the sweet from manufacturer for Rs 260 andto make profit, he adds INR 40. Now the total cost for that box of sweet is INR 300. Tax rate would be same as mentioned above (10%), tax amount will be INR 30. Here, in the first stage INR 26 tax amount is already paid so he need not pay again. Under GST, wholesaler's tax will be calculated as: INR 30-INR 26-INR 4

Stage-3

Now the goods reach the final stage, that is, the retailer, wherein retailer got the sweet box from wholesaler at the cost of INR 300. As he also wants to earn profit, so he adds margin of INR 20. Total Price for sweet bax comes out to be INR 320 and 10% tax rate is charged, so tax would be INR 32. In stage second, INR 30 is already paid as tax, so tax incidence left would be INR 32-INR 30INR 2

Now, if the retailer sees the benefit that he is paying a substantially lower tax as he used to pay earlier. he would automatically slash the prices of his sweets, and the end user will benefit with goods on lesser cost.

In Nutshell, to sum up the total for GST for the distribution chain: Manufacturer-Wholesaler-Retailer is INR 20+ INR 6+ INR 4+ INR 2 INR 32. Instead of 10% being deducted at every stage, resulting in high price of the goods

Now, GST is being promoted as one nation one tax and rightly so. However, to ensure the central and state governments still have a working mechanism to earn and share revenues, GST has been segregated equally to make it a fair play.

Let us now move on to describing types of GST in details.

There are 4 types of GST implemented as of now

CGST-Central Goods and Service Tax

SGST-State Goods and Service Tax

IGST-Integrated Goods and Service Tax

Additionally UTGST Union Territory Goods and Service Tax meant for Union Territories of India

CGST stands for Central GST

CGST

This is applicable on supplies within the State Tar collected will be shared to Center

SGST

SSTS GST

This in the Ste Texollected will be shared to are

IGST

>STegra 631

This is applicable en linterstale and import transaction tax collectest is shand petween Centre and State

CGST-CENTRAL GOODS AND SERVICE TAX

CGST falls under Central Goods and Service Tax Act 2016.

For easy understanding, when CGST is being introduced, the present central taxes of Central Excise Duty, Central Sales Tax CST, Service Tax, Additional excise duties, excise duty levied under the medical and toiletries preparation Act, CVD (Additional Customs duty-Countervailing Duty), SAD (Special Additional Duty of customs) surcharges and cesses are subsumed. This is to bring uniformity to the tax structure and avoid duplication of taxes, which was the case earlier with the previous tax regime.

CGST is charged on the movement of goods and services of standard commodities and services which can be amended time to time by a separate body depending on the evolving situation and economic policies and needs at the given period of time. The revenue collected under CGST is for the central government to shore up its revenues. However, input tax credit on CGST is given to states and such input tax could be utilized only against the payment of Central GST This would assure that both the state as well as central governments are on the same page and both equally divide the revenues and no one is in loss of any kind.

It has also been made mandatory to mention this tax component on each and every invoice for the consumers to be aware of and understand the component of actual tax being levied.

For example if a product is manufactured and sold within the same state, the consumer will pay 2 taxes on it. The CGST that will go to the central government and SGST that will go to the state. However, if the product was manufactured in one state and sold in another, then the manufacturing state will not levy any tax on it. If it does, it will be transferred to the consuming state via central government

SGST-STATE GOODS AND SERVICE TAX

SGST falls under State Goods and Service Tax Act 2016.

For easy understanding, when SGST is being introduced, the present state taxes of State Sales Tax, VAT, Luxury Tax, Entertainment tax (unless it is levied by the local bodies), Taxes on lottery, betting and gambling, Entry tax not in lieu of Octroi, State Cesses and Surcharges in so far as they relate to supply of goods and services etc. are subsumed.

As is evidently visible, all those multiple taxes, levies and cess of different kinds have been replaced by a single SGST that'll be extremely easy to apply, file, keep track of and implement in an efficient manner, thereby leading to ease of doing business and ensuring every financial transaction happens in a transparent manner. Every stakeholder, right from the producer to the end-consumer would know where there money is going to

The revenue collected under SGST is for State Government

Every bill mention this tax component separately for consumers awareness and understanding.

IGST-INTEGRATED GOODS AND SERVICE TAX

IGST falls under Integrated Goods and Service Tax Act 2016.

IGST is charged when there is a movement of goods and services from one state to another. For example, if goods are moved from Tamil Nadu to Kerala, IGST is levied on such goods. The revenue out of IGST is shared by state government and central government as per the rates fixed by the authorities. This is to ensure that individual states don't have to deal with different states to settle taxes and revenues, instead they only deal with the union government for their rightful share of the taxes.

IGST is also applicable on imports and an important aspect is that exports would be zero-rated. As per GST Law:

Under the GST regime, an Integrated GST (IGST) would be levied and collected by the Centre on inter State supply of goods and services. Under Article 269A of the Constitution, the GST on supplies in the course of interstate trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council

For example, a manufacturer in Gujarat sells a product to a final buyer in Maharashtra. Assuming the final product to cost Rs. 1 lakh and the tax rate of 18% on the particular item, the IGST ate of 18% will be charged and the tax component be Rs. 18,000/- Now this IGST will go to the centre, that will further share this revenue with the concerned state.

UTGST-UNION TERRITORY GOODS AND SERVICE TAX MEANT FOR UNION TERRITORIES OF INDIA

We have already discussed about CGST, IGST and SGST. As you know, in India, duel GST is implemented. CGST and SGST against intra state supply (within the state) of goods and services and IGST for interstate supply:

GST under supply of goods and services takes place in Union Territories like Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi (National Capital Territory of Delhi), Lakshadweep, Puducherry etc. is accounted under UTGST

A separate Act is being implemented for Union Territory states to impose and administer GST in India in the name of UTGST Act. Under UTGST Act, the details of GST rates payable against the movement of goods and services in Union territories are explained.

The UTGST bill is presented in respective states government to implement as UTGST Act

All these various types of GST are to ensure that there is a uniformity in tax collection and sharing of the revenues without causing any financial losses to individual state governments. The mechanism has been defined to keep the entire process extremely simple to understand and implement apart from keeping a check on it to avoid any malpractices or duplication of taxes

A lot of taxes being levied in the earlier tax regime were invisible and the end-consumer didn't easily understand as to how the final price of a product/service was calculated. GST is a step in the direction where everyone will know how the cost of a particular product was arrived at and how much indirect tax is being paid to bring that product/service to their doorstep.

Initially it may all look like too much to absorb & understand, but in the long run GST is what a nation as big and diverse as India needs to realize its economic potential. It's simple not only for Indian citizens, but also for foreign companies trying to set-up shop in the country to conduct their business. It will eventually benefit us all.

What is GST Amendment Bill?

A bill is a draft of a proposed law presented to the Parliament for discussion. Once it is passed by the Parliament, it becomes an act. So GST Bill has now become GST Act.

Any amendments to the said act are proposed in an amendment bill. Similarly, the proposed amendments to GST acts were recorded in GST Amendment Bill

Why was there a need for GST Amendment Bill? Were there any changes to the GST Act?

The Model GST law was first drafted in June 2016 and later nevised in November 2016. Lok Sabha passed 4 bills with certain amendments

Here is a list of the major amendments proposed in GST bül

Applicability of GST Law in the State of Jammu and Kashmir

J&K Finance Minister Haseeb Drabu confirmed that Jäck will apply GST. However, since J&K has a separate constitution and has special provisions regarding legislature, CGST & IGST will be passed separately. SGST will be passed separately, similar to the other states.

Employer's Gifts to Employee Will No Longer be Taxed under GST

Earlier the supply of goods or services between related persons (made during the course of business) was treated as 'supply' even when there is no consideration. Employer and Employee were covered in thedefinition of related person. So, it stood that any supply of goods or services by employer to his employees (even if free of cost) would have been covered under the scope of GST,

Proposed change to the act provides that GST will not apply on gifts up to Rs. 50,000 by an employer to a particular employee. However, gifts above Rs. 50,000 will attract GST

GST not Applicable on Sale of Land/Building

Earlier, the term 'goods' included all movable property including actionable claims. Only money and securities were excluded. "Services" had a vague definition of "anything other than goods"

Thus, there was an apprehension that the government may levy GST on supply of immovable property (land/building) apart from levy of Stamp Duty

Now, the government has clearly mentioned in Schedule III that sale of land and/or building will neither be treated as a supply of goods nor a supply of services, l.e., Goods and Service Tax (GST) will not be applicable on this

So currently (on date this book is being compiled) it stands that:

GST will apply on renting, leasing of land and/or building

GST will NOT apply on sale of land/building (Stamp duty will continue to apply)

GST will apply on works contract, i.e., constructing a building

GST will apply on sale of an under-construction building

However, there are discussions of bringing in sale of land and/or building under GST within 1 year from GST implementation date.

Fixing the Upper limits of GST rates- CGST-20% & IGST-40%

Earlier, the upper cap fixed was 14% and 25% respectively in both the laws. Now, the upper cap has been fixed at 20% and 40% respectively under CGST and IGST Law to keep a flexibility for rates increase in future. However, the GST slabs remain the same-5%, 12%, 18% and 28%.

Petroleum Products Will Come under GST

The petroleum products (crude oil, high speed diesel, petrol, natural gas and aviation turbine fuel/ATF) have now been brought under GST

This will be highly beneficial to Indian businesses as businesses now can take input credit on petrol products purchased. Many industries like the plastic and chemical industries have petroleum products as inputs for manufacture. Besides, machinery, vehicles use petrol/ATF to run. Availability of input credit will help to reduce prices of goods

Unregistered Seller and registered Buyer - GST is Applicable on Reverse Charge Basis

An unregistered supplier cannot charge GST on sales. The Model law did not mention the tax treatment if an unregistered dealer sold to a registered buyer.

The Act now provides that when a registered buyer buys from an unregistered dealer, then reverse chargeis applicable, Le. the buyer (recipient of goods/services) is liable to pay GST. This is similar to the current purchase tax on purchase of goods from an unregistered dealer applicable in many states.

Reduction in Composition Rates

Particulars

Earlier Composition Scheme

Now in GST Act

1%

Trader

Manufacturer

2.5%

2.5%

N/A

Restaurant

N/A

Service provider N/A

0.5%

1%

Reduction in composition rates is a welcome move for the MSME sector. Composition scheme has many restrictions such as non-availability of ITC, not eligible for inter-state transactions. Reduction in composition rates will attract more taxpayers to register.

However, service providers are not eligible for composition scheme thus burdening the various professionals and freelancers

No Permission Required for Composition Scheme

Now a taxpayer, whose turnover was less than 50 lakhs in the last financial year, can OPT to pay under composition scheme. He does not have wait for the permission of the proper officer. He can directly register himself under composition scheme.

Change in the Provision Time of Supply of Services

Model GST law contained that the time of supply of services (i.e., the point of taxation when liability to pay tax arises) would be the earlier of:

Date of issue of invoice, OR

The last date on which the invoice should have been issue, OR

Date of receipt of payment by the supplier.

Now in the Act, as passed in the parliament, the provisions for determining time of supply for services have been changed. Thus, the time of supply of services shall be earlier of the following dates:

If the invoice is issued within time prescribed:

Invoice issue date, OR

Date of receipt of payment

whichever is earlier

If the invoice is not issued within time:

The date of providing of services, OR

The date of receipt of payment

-whichever is earlier

If clauses (a) & (b) are not applicable then:

The date on which the recipient shows the receipt of services in his books of accounts.

Change in Conditions for Disallowing Input Credit Tax

According to the earlier provisions of GST Law, if the recipient buyer failed to pay the service provider within 3 months, then the input credit tax (ITC) availed by the buyer would be disallowed. He would be required to pay the amount of ITC availed along with interest. This was only for services. There were no provisions of re-allowing the ITC if the buyer paid after 3 months.

Now, in the amended act, this provision includes goods also. Further, the tirne period for payment is extended to 180 days instead of 3 months before ITC is disallowed. Now, if payment is made even after 180 days then the ITC will be re-allowed

Credit of Rent-a-cab, Life Insurance and Health Insurance Allowed if used Against Sale of Same Category

Earlier rent-a-cab, life insurance, and health insurance businesses were not eligible to take input tax credit. Only those services, as notified by the government, which are mandated to be provided to an employee by the employer will enjoy input tax credit.

The earlier provision of denial of credit would have had many consequences. For example, a life insurance company, in case of reinsurance of life insurance, will not be eligible to take credit of GST paid on reinsurance amount.

To reduce the taxpayer's burden, input tax credit will be allowed for the above services subject to the following condition:

Credit must be adjusted only against outward supply (sale) of the same category of service. It can also be a part of mixed or composite supply

GST will apply on petrol on a date and at a rate notified by the Government on the recommendations of the Council.

Non-Applicability of GST on Actionable Claims

The Model GST law included "Actionable claims in the definition of "Goods", ie., GST would apply on actionable claims. The Lok Sabha amendments to the GST act in Schedule III clarify that actionable claims, other than lottery, betting and gambling will neither be treated as a supply of goods and not as a supply of services. Thus, GST will be applicable on lottery, betting, gambling but not on other actionable claims.

'Actionable Claims' means claims which can be enforced only by a legal action or a suit, example a book debt, bill of exchange, promissory note. A book debt (debtor) is not goods because it can be transferred as per Transfer of Property Act but cannot be sold. Bill of exchange, promissory note can be transferred under Negotiable Instruments Act by delivery or endorsement but cannot be sold.

CONCLUSION

These changes show that the government is trying its best to make GST litigation free,

Business Practices Redefined under GST!

For the last 70 years, businesses have been run in a particular manner in the country. Even though the formal sector comprising of companies following the laws of the land to the "T" conducted their operations as per the book, the informal sector stayed out of it. Neither there was an incentive nor a punishment to follow the written rule. To be fair to the businesses, the tax laws were also confusing and cumbersome for most people to follow them and run companies according to them. Hence, it became a way of life to do business the way it was done, with the state exchequer losing out on taxes, revenues while making it costlier for the companies to do business, pay multiple taxes and the end-consumer having to bear the burnt by paying higher for the end product/service. This also affected the growth of the economy and created a lot of bottlenecks when it came to implementation of policies, even if they were sometimes for the benefit of the businesses only.

With the introduction of GST, the uniformity in the country's indirect tax system is like a shot in the arm, Just at the right time when the country is bracing to take on the world in terms of growth. Widening the tax base, bringing uniformity in indirect taxes, making it easier to move goods across states within the country, lowering the cost of operations are some of the major benefits of GST.

However, to achieve all such goals and embrace and align with the new tax regime, it is important for the businesses to undergo some major changes about how they are run and this includes both the operations and the human part of it. Before we understand this in detail, let's first understand how a business was run before GST was implemented.

WAY OF DOING BUSINESS: BEFORE GST

When it comes to manufacturing, the companies had to not only look at the best suppliers in terms of raw materials, but also the places from where they source that raw material. The reason being, every state had its own set of taxes and levies. Add to it the logistics cost and the companies made their decisions about setting up their manufacturing plans basis that.

This consideration was done as every company wanted to have the lowest procurement cost, the ease of moving the goods while paying lowest possible taxes depending on which sate they were doing their business in and moving goods to and eventually to claim maximum input tax credit.

Instead of deciding the final retail price of the product based on actual cost of operations combined with the profit mark-up, the final price was decided based on the average price of a similar product already in the market. This was unfair to the end consumer, because it deprived him of getting a better product at a lesser price, all due to faulty taxation process.

Also, any decision to expand or diversify operations was purely taken on the basis of states taxes and cost of sourcing raw materials. At times, the organisations were faced with a dilemma of choosing between manufacturing or outsourcing their core businesses. Such decisions led to a business not achieving its optimum potential, uneven playing field and impacting the economy in the long run.

Even though GST is one of the major financial reforms and is universally accepted a positive change for the economy, its implementation faced humungous challenges. For one, it is not easy to change way of doing things that are in practice for 70 long years. Secondly, to educate a billion-plus population with diverse backgrounds, educational qualifications, varied skill-sets and individual priorities and goals and doing all this at one go, simultaneously is no mean job!

This is why there were some inherent challenges facing GST right in the face. Let's look at these major roadblocks that needed to be worked upon before crossing the line:

1. Transformational Changes:  Every business activity right from procuring the raw materials,

manufacturing it, moving it to the market place, leasing to ultimate sale to the buyer needed to be transformed. The entire chain of events needed to be relooked into as the tax reform affects each and every step of business. Hence, every organisation had to go back to the drawing board, understand not only their business processes in detail, but also of their vendors, suppliers and even buyers to make fresh plans. Taking into consideration how the new tax structure will affect their business activity, every company had to analyse every step of manufacturing activity/service generation to align it with the taxations reforms. Easier said than done because even though big corporations have the resources to handle such a gigantic task, for major businesses that are small scale and form the backbone of the economy, this involved considerable amount of time and resources, both in terms of manpower and money. To convince, everyone to undergo this painful process, was definitely a challenge.

2. Reworking Tax Compliance Strategy: The tax filing process has been changed and every

organisation coming under the gambit of GST will have to follow the norms. The challenge is that most small sector companies haven't followed the norms ever and still find using the technology as a cumbersome process. Since GST filing and processing is all going to be an online process, the task is to learn about it and get experts to help file the returns as per the mandated timelines. Many of the businesses have never maintained official books or invoices, but now everything has to be in order to claim tax relief and even one glitch in the entire chain can cause losses to everyone. So it's not about an individual company to comply with tax systems, but for everyone to be on the same page and doing their bit efficiently and on time.

3. Manpower Training: Every company had to ensure that their employees and concerned staff waswell aware of the changes in the entire tax reform as returns will be filed in a different way now. Not only employees, but even the vendors and customers had to be updated about the entire tax process to avoid mistakes and confusions. This was about the entire tax spectrum right from the concept, the regulations, the actual process involving filing, uploading returns etc. This assumes significance because a fault at any level can lead to substantial financial losses across the entire chain of production. What made is doubly challenging was that even though big companies have the required resources to train their employees, for smaller companies, it was a mammoth task given limitations of financial education and skill-sets to understand and comply with a complex tax structure. We say it complex tax structure as it is for those, who are coming into the tax-based ecosystem for the first time even though it is the simplest tax reforms ever!

4. Determining The Prices: GST is supposed to bring down the prices in the long term. However,

the government left the onus on companies to determine new tax rates on their products/services, calculate the impact on their profitability and pass on additional profit to the consumers. It is in good faith that the authorities assumed that the businesses will pass on the benefit on their own, but still, a strict vigil had to be ensured for on-ground implementation of the principles of fair play. It is all about lower taxes, wider tax base and consumer being the ultimate beneficiary from the lower prices. Hence, it was a substantial challenge to ensure everyone played by the book without profiteering by unethical prices or complex taxation.

Once we have understood the challenges faced, let's now look at how GST impacted the specific business aspects:

1. Legal: This is the first and foremost aspect of any business that had to be reworked upon. With new regulations and policies in place, the entire legal framework of the company had to be reconsidered and brought up to date with updated reforms. Decisions were taken in regards to tax rates, supply routes, existing rules governing the pricing, existing incentives and financial transactions and bring them on par as per the required new guidelines.

2. Understanding GST: Substantial manpower was dedicated to comb through the new tax law, understanding its impact on every aspect of the business right from the scratch and assessing the steps required to implement it without causing any disruptions in the day to day business. GST will not only have an impact on taxes and revenues, but also procurement of material, capital flows, production processes, warehousing decisions, final costing and pricing of the product and the likes. Hence trained and dedicated employees were put on task and it will be an ongoing process because the expected time to be taken for a smooth transition is going to be six to nine months, even though it's a one-time process.

3. Supply Management: With no levies or taxes to be paid on most products while moving inter-state, GST will ensure smooth flow of products across the country and logistics will be an easier process to handle. Nonetheless, in the light of changed way of doing business, the entire supply chain had to be hauled over to update changes. This included every step involved right from sourcing to distribution. As GST leads to taxes being paid by the final customer and every stage getting the benefit of input tax, adequate measures were taken to ensure nothing went amiss and every step was taken into account to manage seamless supply and distribution.

4. Accounts: This aspect of a business has also undergone massive change to bring on record the updated practices and implementing the tax reform in letter and spirit. Tax credits, invoicing, filing returns, all kind of payments, record-keeping, maintaining books and following the law has been reworked completely and adherence to tax laws is the new motto!

5. Technology: Not only the latest software are required to follow and file GST returns, there is a need for trained personnel as well to carry out the task. Every company has undergone changes to upgrade their systems to ensure smooth, timely and transparent reporting of their sales and file returns as per the required norms.

6. Policies: A complete assessment of the policies on expenditure, new investments, quality assurance. expansion, long-term gains, financial viability etc. had to be undertaken to face the new changes. Since the change happened all across the segments, it gave a level-playing to every organisation. However, it did impact companies ability to deal with suppliers and formulate plans to take on the competition.

7. Warehousing: Previously, companies tried to keep a warehouse in as many states as possible to avoid CST and associated cumbersome paperwork, not to mention following different rules and regulations. With GST, the entire nation has become one market and the need to keeping separate warehouses is no longer applicable. Also, movement of goods will be seamless as there will not be separate taxes in different states thus eliminating the need to own and maintain a warehouse

8. Personnel: Finally this is the most important aspect that got affected by GST, not in a negative way though. Just that, everyone in the company along with suppliers, vendors and customers had to be educated and trained to work under new tax guidelines. This was to ensure transition happened smoothly and going forward, everyone is on the same page, filing and uploading returns on a timely basis while following all the guidelines.

GST has changed the way India conducts its business and business practices have undergone sea change. The impact may not be immediately visible, but in a couple of years down the line, the positive impact of the entire process will be for everyone to enjoy.

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