GST Composition Levy Explained

The current state indirect tax regime has provided a simpler compliance for small dealers known as the Composition Scheme. Under this scheme you,

• Pay taxes only at a certain percentage of turnover
• File periodic returns only (usually on a quarterly basis)
• Have an option of not having to maintain detailed records or follow tax invoicing rules
• Are not allowed to take Input Tax Credit (ITC)
• Are not allowed to collect tax on sales

Moving to GST Era: For Registered Manufacturers

The first and foremost task for you, as a business registered under the current law, is transiting to GST (Goods and Services Tax). While it is important to know the fundamentals of GST, it is also very critical for you to understand GST transition provisions available, and take necessary actions to ensure a smooth transition to GST and leverage on transition benefits.

You will need to review your accounting and reporting procedures, procurement, logistic decisions, and so on in advance to avail the appropriate GST input tax credit.

Can I Carry Forward Input Credit on Closing Stock to GST ?

As per the Central Excise Act and Rules, a manufacturing unit is required to register if its aggregate value crosses Rs 1.5 Crores, and needs to discharge the duty liability.

Similarly, under VAT, a manufacturer is liable for registration if his turnover during the financial year crosses the threshold limit. The threshold limit differs from state to state. Given the fact that VAT threshold limit ranges from Rs 5 – 20 Lakhs, let’s assume that most manufacturers will be registered under VAT.
On the date of transitioning to GST, there will be manufacturers who are:

• Registered
• Unregistered

Demonetization and Business Accounting – How does it Tally?

On 8^th Nov 2016, India’s Prime Minister announced demonetization of Rs 500 and Rs 1000 currency notes. This news came as a surprise to many of us! However, if you carefully think through the sequence of measures undertaken by the Government such as opening of bank accounts, linking with Aadhar numbers, introducing the tax amnesty program, announcing a warning for defaulters and so on, you will see a pattern that makes you believe this was well planned.

On the heels of the demonetization, on 20^th Nov, the IT department announced that it would send notices to anybody who deposits more than Rs 2.5 lakhs into bank accounts.

GST– What you Need to Know as a Trader

As we gear up for the final move – to GST – it becomes important for all of us to be prepared. Moving to GST is inevitable – whether you are a manufacturer, a trader or a service provider.

As a trader, today you are liable for registration under State VAT, if your turnover exceeds the prescribed threshold limit. You are also liable for registration under Central Excise if you trade in Excisable goods. You are allowed to avail input VAT credit and set it off against the output tax liability. However, the excise duty you pay will not be available as credit, and it will be added to the cost of the product, and subsequently passed on to the buyer.