Jigar Shah

Jigar Shah

Must to surprise of many businessmen who battled against GST’s implementation on 1st of July, Government of India indeed pulled off a landmark tax reform on the said date. Even as finance professionals across the country race to get things up and running smoothly, GST has become a buzzword. It is a topic of daily conversation on Social Media, FMs and dinner tables. Posting selfies with your first GST bill is a thing and as the days pass, newer challenges are emerging. Here are a few real-life challenges that businesses have faced recently.

Confusion over Exports

Exports in GST is a zero-rated supply i.e. supply can be done even without payment of tax. However, the procedural aspects were not clear to many. People struggled with questions like whether ARE-1 was required or not? Whether bonds entered into in excise regime will be sufficient?

Clarity on such aspects was given only on 7th July by government through a circular. Requirement of ARE-1 is now dispensed with. New LUTs/bonds will have to be submitted before 31st July.

Accounting systems not up & running on time

Several businesses delayed their billings under GST as their accounting systems weren’t configured or migrated on time.

Most SMEs had to stop billing for almost 4-5 days after GST. Users were required to close open POs/SOs of old regime and create new POs/SOs in GST regime. Further, end users are yet to understand accounting implications of GST. Robustness of accounting systems like tally and ASPs will be tested while filing GST returns. To ease the returns load, Government has now asked for payment of tax by self assessment through Form GSTR-3B. Invoice level matching & reconciliation would be an activity in September.

Getting the Tax Invoice right

Businesses struggled to get their invoices right. Many were unaware of requirements of the invoice and many also struggled to differentiate between Bill of Supply and Tax invoice. Restaurants were erroneously charging additional tax. Infact, CBEC had to issue “Clarification on rates of GST on restaurants”.

Dealing with HSN Codes and SAC codes

HSN code is a completely new concept for traders and service providers. Some respite on the use of the same came on 28th June. However, most of the businesses are required to disclose HSN codes in their invoices.

A huge exercise of tagging internal item codes with HSN codes had to be undertaken. This is an area which can lead to lot of litigation as classification of goods is largely subjective.

Further, there is a change in SAC codes which were used in service tax regime and the ones which are to be used in GST. Many were caught off guard over here. In fact, the Government’s official site (www.gst.gov.in) which is used for registration has not yet updated the table of SAC codes.

Transportation procedure

E-Way bill has been deferred and it shall fall in place somewhere around October 2017. There was a lot of ambiguity on documentation and procedure to be used for transportation of goods. Many state governments notified that old procedures shall continue till the time E-Way bill is notified. For eg., Form 402 and 403 is being continued in Gujarat and E-sugam is continued in Karnataka.

(Author is partner/leader-Indirect Tax at S.K.Rathi & Co., and a Consultant for SahiGST. He can be reached out at jigar.shah@skrathi.com)

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One response to “5 Issues SMEs Faced After GST Implementation”

  1. pankaj bansal says:

    we are manufacturer exporter of goods and exporting goods in several countries in GST regim under LUT or on payment of IGST.
    Since our major purchases are from domestic market (inter-state) or Import ,wherein we have to pay IGST during purchases in GST regim whereas in earlier tax regime we were allowed to import against Advance authorisation or procure without payment of duty from domestic market , consequently our major part of working capital have been blocked in GST regime.
    Further as per circular no. 26/2017-Customs dated 1st July ,2017 we have to mentioned GST Tax invoice detail(INR) in shipping bills as well as commercial invoice (in FC) details but till date requisite field have not been prescribed by Govt the where should we mention GST invoice in shipping bills as to claim rebate details of tax invoice mentioned in GSTR shall be matched electronically with details of Tax Invoice mentioned in shipping bill.. (earlier there was procedure against submission of ARE-1). We have to prepare one Commercial Invoice of 6-7 GST Tax Invoice of same party for single lot as our goods of various sizes is dispatched in factory sealed full containers and for each container a separate GST tax Invoice is prepared during removal of goods.
    NOW WE ARE IN GREAT TROUBLE HOW WILL THE TAX INVOICE BE MATCHED ELECTRONICALLY WHEN THERE IS NO PRESCRIBED FIELD IN SHIPPING BILL TO MENTION GST TAX INVOICE DETAIL.

    IF ANY ONE CAN HELP US IN ABOVE REGARD

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