GST: Immediate action is essential
The suspense surrounding Goods and Services Tax (GST) has sent the travel industry in a tizzy. Here is some advice to help travel agents be GST-ready.
What is GST?
It isn’t just another indirect tax; it is one of the biggest economic reforms since Independence after demonetisation. GST is going to affect each and every person of India. What we will face is dual GST. This means that big players like Akbar or Riya will need de-centralised registration – a separate registration for every state. So each state will be a separate agency as far as GST is concerned. How will this help?
Under this, agents may apply for credit on assets bought for business (computers, furniture, etc). Therefore, the cost of provision of service will reduce substantially. Another advantage is that GST will make everything very systematic. The mechanism that they are developing is similar to Income Tax where all transactions are recorded. Once a person records an expense in his books, it will automatically reflect in my account under GST. Monthly Filing of Returns
Filing of returns will go from half-yearly to monthly. Each state will have a separate return. So the agent will have to file three returns every month – the Statement of Sales on 10th of every month, Statement of Purchase on 15th, and the final return on 20th. So they will have to gear up on their accounting software on immediate basis because giving all these details on a monthly basis that too within 10 days will be difficult without a proper accounting system. The benefit will be that everything will be systematic. As of now, things are not streamlined. Multi-state Presence
One major after-effect of GST will be that agents will need to pick states where they do a majority of business and get themselves registered in that state to avail seamless credit. For instance, if a Mumbai agent is selling a hotel room in Bengaluru, he will need to be registered in Karnataka state to avail credit. So agents will need to have a multi-state presence depending on their size of business or lose credit on the same. If they don’t have a multi-state presence but selling a multi-state product then they will face a challenge. Agents can migrate from ST to GST only between January 1 and 31, 2017. Airline Ticketing
When it comes to booking airline tickets for corporate clients under GST, the agent will need to issue the invoice, etc. in the name of the firm and use the individual’s registration number. Only then will they be able to apply for the credit. Currently, the credit is not passed down to the consumer by the agent. For this to happen, they will have to change their software that will incorporate data of all their corporate clients so that the credit can be passed on to them. Outbound
Currently they are paying Service Tax (ST) at 15 per cent. In GST, this might increase to 18 per cent. Whether the government is planning to come up with any abatement scheme or not remains to be seen. We will know more by March. This applies to all services that agents buy for their clients like car rentals, sightseeing, etc.