The Government of India has approved the operationalization of the Goods and Services Tax (GST) – a unified indirect tax regime across the country, which is identified to be one of the biggest tax reforms post-independence. GST will replace the multiple Central and State-level taxes that were being levied on Indian businesses till date and will make India one unified common market. As per the latest official announcement, the GST will come into effect on July 1, 2017.
Read on to know what exactly GST is and how it affects OrderBox.
WHAT IS GST?
GST is a comprehensive indirect tax levied on the supply of goods and services; right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
Since it is a destination-based consumption tax, GST will be charged based on the location of the recipient’s state. We will raise an invoice for our Reseller based on the Reseller’s location, and in turn, the Reseller will raise an invoice based on his/her customer’s location.
WHAT ARE THE TAXES THAT GST WILL REPLACE?
The GST replaces a host of indirect taxes such as:
- Central Excise Duty
- Service Tax
- Countervailing Duty
- Special Countervailing Duty
- Value Added Tax (VAT)
- Central Sales Tax (CST)
- Entertainment Tax
- Entry Tax
- Purchase Tax
- Luxury Tax
- Advertisement taxes
- Taxes applicable on lotteries
HOW DOES THIS IMPACT ORDERBOX?
GST is a fundamental change in the framework of indirect taxes and impacts not only the rates of tax but also various business processes and associated documentation. There will be a wide range of changes dealing with processing reverse charges, the treatment of credit and debit notes, and the manner in which invoices are raised for resellers/customers. We are in the process of making all the necessary changes to integrate your GST IDs in OrderBox for simplifying tax collection and easing business operations. You will be notified of these changes as and when they happen.
While we ensure constant communication from our side during the entire development period, we also request you to please follow any announcements coming from the Government of India regarding this matter. Always feel free to get in touch with your account manager for any queries that you may have, no matter how small.
Coming up: More information on GST and its impact on different entities.