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According to the GST, goods and services are finalised to be divided into four tax
slabs wiz. 5%, 12%, 18%, and 28%.
Pwc in view coa
The first level of differentiation will come in depending on whether the industry deals with
manufacturing, distributing and retailing or is providing a service.
Pwc the gst force
Benefits of gst
Dual Control system: In this new GST system, the dual control
system is introduced. According to this system, the GST is divided into
two categories that were controlled by the state and central
governments.
Conclusion
The proposed GST regime is a half-hearted attempt to rationalize indirect tax structure. More than
150 countries have implemented GST. The government of India should study the GST regime set up
by various countries and also their fallouts before implementing it. At the same time, the government
should make an attempt to insulate the vast poor population of India against the likely inflation due to
implementation of GST. No doubt, GST will simplify existing indirect tax system and will help to
remove inefficiencies created by the existing current heterogeneous taxation system only if there is a
clear consensus over issues of threshold limit, revenue rate, and inclusion of petroleum products,
electricity, liquor and real estate. Until the consensus is reached, the government should resist from
implementing such regime.
GST transition is not only about a tax change but a complete business, finance,
accounting and reporting overhaul. As management teams start assessing
these changes, they will also need to factor in changes in financial reporting
and indirect tax accounting. In spite of initial transition challenges, GST will bring in
clarity in many areas of business including accounting and bookkeeping.
One of the biggest advantages a trader will have is that he can set off his input tax on
service with his output tax on the sale.
Following are some key areas where companies will need to focus from
financial accounting and reporting perspective on transition to GST.
The combining of Central (CGST) and state (SGST) taxes in the new tax regime, enterprises who annual
turnover of Rs 20 lakh or above (10 lakhs in some specific states) will have to follow all the GST
provisions. The new GST rule will adversely influence the SMEs working capital. Under the previous tax
regime, the exemption limit for SMEs was Rs. 5 lakhs, whereas in the new tax regime the exemption
limit is enhanced to Rs. 20 lakhs ( 10 lakhs in some specific states) which have a positive impact.
"Treatment of GST on the sale of goods is in sharp contrast to that of the excise duty. Under Ind As, the
excise duty was considered a tax on manufacture/production and was therefore treated as part of revenue
and the cost of manufactured goods, adding that when a company sells a product or service under the GST,
the tax amount collected from the customer would be excluded from the reported revenue as they are
remitted to the government in full.
..
According to a recent research, Indians companies saw their revenues jump by about 7% after
moving to the Ind AS system. But under GST, they will again see a reduction in their top line, as GST
replaces the existing excise-duty tax based on production and will be reported net of revenues. "Although
the net income won't be affected, it surely impacts comparability including deciphering various performance
ratios such as gross and EBIT margins,"
India moved to new standards — Ind-AS — based on global accounting system IFRS in April 2016.
Experts also point out that the compensation paid by companies to its dealers under GST will also be
treated differently now. Some companies may agree to pay compensation to its dealers on transition to GST
mainly to reimburse them for additional tax burden arising from the higher GST rate vis-à-vis VAT rate, on
unsold inventory lying with the dealers as on June 30, 2017.