The decision to revise the rates by GST Council for 66 items out of 133 items on which the representations were received from the industries and the State governments has ignited the consumer interest. The Goods and Services Tax will come into effect by 1st July 2017.
Most of the items on which the GST rates have been reduced are of daily use for a common man.These include insulin, printers, school bags, children’s coloring books, notebooks, cutlery, tractor components etc. With printers being cheaper, it is expected that the sales of printers might go up. It will bring cheers to companies such as HP, Canon, Epson and others.
However, there is relief for restaurants, manufacturers and traders who are having a turnover of up to 75 lakh. They can avail composition scheme with lower rates of 5%, 2% and 1% respectively. A GST rate of 5% on job related to textiles, jewellery sector , the gems and outsourcing of manufacturing would be levied.
As the July 1 rollout nears, traders are worried about their business who do not have complete clarity on what changes GST will bring. The government has launched a new twitter handle to answer the small queries related to filing taxes. With the rollout of revised GST will change the way these traders file taxes.
Besides, many companies are yet to put in place new systems and software such as ERP that complies with the GST regime. A host software and hardware IT companies have rolled out GST solutions for small traders. Biggies like SAP, Tally and others have tied up with trade organizations to sread awareness and sell GST-ready applications. Some public companies are in a process of hiring financial consultants. According to the reports, any under-preparation will lead to non-compliance with the tax laws. They will have economic consequences such as delayed availability of input credit and loss of business.
GST is a technology driven system where every transaction is done digitally. The government has invested heavily in the technology ecosystem of GST. The companies will need to hire the right candidates who will be able to capture input tax credits for the company. The companies and taxpayers have to invest in proper ERP and other software providers. They would reconcile with suppliers so that there is no mismatch and in case there is then tax credits will get blocked.
The success of GST is in the hands of taxpayers. The GST ecosystem is based on IT-enabled platform and as soon as the taxpayers adapted to it, it will be helpful for them. But Indian taxpayers will take some time to adapt to this new online way to pay tax. They are not keen on using technology as the way GST requires them to.
According to reports, the next GST council will take place on 18th June 2017 to finalize the remaining issues that includes taxation of lotteries and eway bills.