Is it the End of Of­fice Sta­tionery?

SEEK­ING A RELOOK Most tax ex­perts feel a small tweak to the GST reg­u­la­tions can do away with this com­plex­ity Dif­fer­ent tax rates and codes for most items forc­ing cos to stop or cut down on of­fice sup­plies

The Economic Times - - Companies: Pursuit Of Profit - Sachin.Dave@ times­

Mum­bai: If you aren’t get­ting your com­pany-branded writ­ing pads or pens, blame the scarcity on the Goods and Ser­vices Tax (GST).

For tax ad­vi­sors and in-house fi­nance teams, deal­ing with ven­dors that sup­ply pens, writ­ing pads, pen­cils, sta­plers, and print­ing pa­per-rolls has turned out to be a ma­jor chal­lenge af­ter the na­tional roll­out of the sin­gle pro­ducer levy.

Tax rates and codes for most sta­tionery items are now dif­fer­ent. Com­pa­nies can­not just en­ter a com­bined cost of sta­tionery, but will have to com­pare codes of each item and en­ter them sep­a­rately for rais­ing in­voices.

Due to this, sev­eral com­pa­nies have de­cided they would stop or re­duce the amount of sta­tionery pro­vided to em­ploy­ees, while a few others are look­ing to not take credit for th­ese pur­chases. For ma­jor com­pa­nies with large and dis­trib­uted oper­a­tions, not avail­ing in­put cred­its would be costly, with such ex­penses run­ning into sev­eral crores of ru­pees ev­ery year.

“On items such as sta­tionery pur­chased from un­reg­is­tered ven­dors, busi­nesses are li­able to pay GST un­der re­verse charge. For this, they need to do self-in­voic­ing and de­ter­mine HSN code for each item pur­chased,” said Pratik Jain, Na­tional Leader, In­di­rect Tax at PwC In­dia. Most In­dian com­pa­nies, in­clud­ing some of the coun­try’s big­gest, buy their sta­tionery from un­reg­is­tered and small play­ers. In this case, all the com­pa­nies would have to draw up some­thing called self-in­voic­ing for GST.

This also means that com­pa­nies would have to use their re­sources to put the code on­line for each and ev­ery item bought dur­ing the month.

Even where reg­is­tered sup­pli­ers are in­volved, in-house fi­nance teams would be required to go through each and ev­ery ven­dor en­try. Com- The Road Ahead pa­nies will have to check whether the ad­ja­cent code for each item is cor­rect as not do­ing so may cre­ate some ac­count­ing com­pli­ca­tions in the fu­ture, say ex­perts. Fi­nance heads at many com­pa­nies say that deal­ing with sta­tionery is one of the prob­lems that shouldn’t have been there in the first place.

“Can you imag­ine that for the last two days, four of my fi­nance col­leagues and some tax ex­perts we have hired are only key­ing in codes for sta­tionery items!” said the CFO of an au­to­mo­bile com­pany. “Dual HSN codes have been pub­lished for pen­cil sharp­en­ers, sta­ples, pa­per or pa­per­board and other simi- lar items un­der GST. Th­ese have to be en­tered sep­a­rately in the sys­tems to avail of ac­cu­rate tax cred­its… World­wide, the in­put credit sys­tem is far sim­pler and less oner­ous. One stan­dard rate is the norm in­ter­na­tion­ally,” said Vaib­hav Manek, part­ner, KNAV.

In­dus­try track­ers say that some of the big­gest man­u­fac­tur­ers and sup­pli­ers of of­fice sta­tioner­ies are un­branded and smaller play­ers. In most cases, th­ese small play­ers are more flex­i­ble with their sup­plies and work on thin mar­gins, some­thing that works well with buy­ers. Many tax ex­perts say that a small tweak in the GST reg­u­la­tions can do away with this com­plex­ity.

“While an ex­emp­tion of .₹ 5,000 has been pro­vided, it is lead­ing to sig­nif­i­cant com­pli­ance burden for busi­nesses. Since in most cases, it would be a rev­enue neu­tral ex­er­cise, the gov­ern­ment should relook at this pro­vi­sion,” said Jain of PwC. Many com­pa­nies may now only deal with or­gan­ised sta­tionery sell­ers to re­duce com­pli­ca­tions. Most sta­tionery play­ers may con­tinue to re­main un­reg­is­tered as they may show that their turnover is less than .₹ 20 lakh – the threshold for GST ex­emp­tion.

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