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CA Tejinder Pal Singh

CA Tejinder Pal SinghVarious companies are rushing to merge their subsidiaries with themselves ahead of the implementation of Goods and Services Tax (GST) to reduce tax, operational and administrative costs and to eliminate multiple legal entities. Many of the companies had created multiple units in the past to save on taxes but such incentives will cease to exist under GST.

How GST Model will impact these companies?

Increase in Compliance burden

At Present, Service Tax is a central levy, requiring a single registration and a half-yearly filling by the service provider but under GST taxable person will have to file number of returns on periodic basis.

Currently, a telecom operator with Pan India operations can discharge its service tax compliances through a single ‘Centralized’ registration. However, under GST, such operator would need to obtain a separate registration for each state where the company operates.

Change in Input Tax Credit

Current framework allows limited inter levy credits between excise duty and service tax.

Under the GST regime, Centre will give input tax credit only for Central GST and the state will give input tax credit only for State GST. Cross utilization of credit between Central GST and State GST will not be allowed.

Stock transfer from one state to another state

Presently interstate Stock transfers are not taxable under CST on submission of duly completed Form F.

Are self-supplies taxable under GST?

Inter-state self-supplies such as stock transfers will be taxable as a taxable person has to take state wise registration in terms of Schedule 1(5). Such transactions have been made taxable even if there is no consideration.

Stock transfer to branches/consignment agents within the state

Presently treatment of these transaction varies from state to state. However, under GST, these transfer may also subject to tax, unless the BIN of transferor and transferee is same.

If a dealer is transferring any goods or service from one branch to other branch in the same city having same BIN (Business Identification Number), the dealer will not be liable to pay GST on such transaction.

Upgradation of Accounting/Tax software

All Companies needs to upgrade their Accounting and Tax Software. Mostly Companies have software like SAP etc. To upgrade and customized the same will be a big challenge to the software companies. Huge cost to begin with continuous training and development of people at each level and continuous updation of all operating system.

Procedure to Find GST Number

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April 2024