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.

TravTalk - India - - GUEST COLUMN - ( The views ex­pressed are solely of the au­thor. The pub­li­ca­tion may or may not sub­scribe to the same.) CA Man­ish Ga­dia Part­ner at GMJ & Co

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.

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