Free GST Updates 11th Mar!

There are no updates in GST from yesterday. Today being weekend and Holi Eve, lets understand some key concepts in GST:

  1. Why GST is destination based and not origin based?
    1. In the long-term aspect the destination-based taxation is a boon for less developed States who consume more than what they produce
    2. And in present scenario it seems the only reason of being destination based tax because govt seeking for the long term growth of the economy.
    3. Otherwise there are many disadvantages of this destination based tax system but for short period of time and this is one of the reasons for delay in implementation of GST because the selling states are trying to put restrictions on interstate sales to avoid flow of revenue outside own state.  This could hamper the progress of trade and overall growth of India.
    4. Also looking at other countries like Canada, France, Brazil etc. GST is destination based tax
    5. Industry trackers say that many states that are set to lose out on revenues could become aggressive and can challenge GST calculations conducted by companies that doesn’t benefit them. This would really be the saddest part in case states dont speak with each others in harmony.
  2. Stock transfer – Whether GST?
    1. Under GST, levy of tax is on Supply which includes transfers and with the definition of distinct person, branches need to be treated as a different entity. Accordingly, any stock transfers are taxable in the following two cases:
      1. Intrastate stock transfer: Only when an entity has more than one registration in one state
      2. Inter State Stock transfer: Transfer between two entities located in different states
    2. The taxability of stock transfers under GST will have an impact on cash flow. Since tax is paid on the date of stock transfer, and Input Tax Credit (ITC) will be available only when stock is actually sold by the receiving branch resulting in blocking of funds.
    3. However, under GST, tax paid on stock transfer will be fully available as input tax credit. Thus, it eliminates the cascading effect (Unlike Current Tax structure) and as a result, the product will be cost effective.
    4. There will be no need to furnish any forms for stock transfers. This will ease the process of stock transfers by eliminating the time and effort involved in such activities.
  3. SAP India Initiative for all size businesses in India:
    1. SAP India has launched “GST in a box”, an all inclusive solution designed to help organisations of all sizes.
    2. It aims to evaluate GST readiness of local businesses and educate organisations prepare for transition to the GST regime.

That’s it for today. Hope you enjoyed updating your GST knowledge! Wish you and your family a very happy holi. Do write us your valuable feedback!

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