GST what’s it?

GST will be implemented  from 1st July, 2017.  There are two major aspects  of GST
– A four-fold dual GST system Invoice Matching Concept.GST in India is going to be fourfold, i.e. there will be four different types of GSTs –
CGST – Central Goods and Services Tax
SGST – State Goods and Services Tax
UTGST – Union Territory Goods and Services Tax
IGST –  Integrated Goods and Services Tax
It is worth noting that concept of UTGST will come into play only when the transaction happens within a union territory “without legislature”. Union territories without legislature mean union territories administered directly by president of India or any other person appointed by him. They are Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep.
Union Territories with legislature mean the union territories which have their own elected legislative assemblies and the executive councils of ministers with partially state-like function. Currently, out of 7 union territories only DELHI & PUDUCHERRY are union territories with legislature
Further, there are specific provisions for allowance of credit-
Further, SGST/UT-GST tax credit of one state cannot be used to pay SGST/UT-GST of another state/union territory. For e.g., SGST Tax credit available of Maharashtra state cannot be used to set off SGST liability of Gujarat State.
Whether, credit of CGST paid in one state will be available for payment of CGST of another state is still not clear.
Invoice Matching Concept In GST, every Business to Business (B2B) Invoice will be cross matched with the filing done by counter party. For e.g. X traders have disclosed purchase of Rs. 10,000/- vide Invoice 101 from Y Enterprises. This purchase entry will be cross verified with the sales entry submitted by Y enterprises in its return. If it does not match the mismatch will be communicated to both parties. If the mismatch is not resolved in 60 days the Input Tax Credit taken by X Traders on purchase will be reversed. All this will be automated with minimum manual intervention. Further, if tax is not paid by the supplier the purchaser’s input tax credit will be automatically reversed. Hence, purchasers will have to play the role of recovery officers of the government. Because until and unless their suppliers have filed accurate returns and have paid the tax the purchasers’ input tax credit is at stake. This demands a lot of discipline from Indian Businesses. As Finance Minister had commented in his budget speech this year, “India is largely a non-compliant society”. It seems such reforms are stepping stones of a compliant society. I will not be surprised if other countries will follow India and introduce invoice matching in their compliance systems.


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