The GST is scheduled to roll out on the 1st of July and with just a few days left out for the final roll out,it is the right time to make all the SMEs and MSMEs aware about this decisive& historic moment of GST. This is the most crucial juncture for all the small entrepreneur(SME) in India to be totally prepared for the roll out of GST.
Today SMEs and MSMEs are the backbone of Indian economy and are believed to provide 40% employment for the total Indian population. It is expected that more than 26 million SMEs and MSMEs across the nation would get registered in the GST regime.
The basic need of the hour is to help MSMEs and SMEs to get for an easy transition into GST would include
1. Having a true knowledge about the GSTN ID of all the vendors
2. Is the Business Application compatible with GST
3. Awareness about the HSN code of items used in transactions
4. Clear knowledge about the present status of your Inventory and Stocks
5. Becoming GST compliant
Having a true knowledge about the GSTN ID of all the business vendors
For all the SMEs and MSMEs it is the right time that they should approach their CAs as they are the right guidance stream for easy adoption of the GST. As per the CAs, every Businessmen would require changes in their accounting charts.
Before the GST rolls out all the entrepreneurs should capture the unique GSTN ID of the respective locations or parties with whom the company is dealing in the business.
The GSTN ID of all the people involved in the supply chain starting from (raw material provider – manufacturer-wholesaler-retailer) is must as it would help them in filing the returns easily and get the desired input credit taxes. Filing any returns without the GSTN ID would not complete the transaction.
In the GST scenario, all the businesses are required to upload all the invoices on the GSTN portal which will ask for the GSTN ID of the seller and the buyer. In case of services provided by the company the Service Account Codes (SAC Codes) would also be required to be tagged to each service type.
Is the Business Application compatible with GST
The business application which the SME and MSME is using should be GST compliant. If his software is still not updated he needs to get it clarified with the software provider or should switch on to a software provider who is having a GST ready software
Awareness about the HSN code of items used in transactions
The HSN code is another major aspect of GST wherein the HSN code is to be captured for all the items you are dealing within your business program and while filing the returns all these information needs to be filled on the GSTN portal.
Businessmen with a turnover of less than 1.5 crores will not need to follow HSN codes whereas those with a turnover above 1.5 crores and less than 5 crores would be using a 2 digit HSN codes.
Businessmen with turnover above 5 crores will need to use 4 digit HSN codes for transaction and those having import and export business world will.
Clear knowledge about the present status of your Inventory and Stocks
A true businessman is one who has a current knowledge about his or her inventory and stocks. If you are aware about how old your stock is then it would be of great help for you in claiming its input credit .
For all the SMEs the GST council has announced that stocks which were taxed above 18% will be able to claim 60% of the input credit whereas the goods which were taxed below 18% will be able to claim 40% of the input credit taxes.
All the SMEs should be aware about the stock status they have in their storehouses and should sell out stocks which are more than two years old before the roll out of GST as claims would be available on stocks which are one year old only.
Becoming GST compliant
The GST regime will have all the laws like the CGST act, SGST act and IGST act. So if you are a trader in Madhya Pradesh with a business turn over of more than Rs 20 lakh you should be aware of all these laws.
If you are having business in ten different states you need to have 10 different registration ID for every state where you are doing business. As per the different states there may be software where in you may state wise CGST account, SGST account and IGST account.
A reminder for all our SMEs and MSMEs that those who were filing tax twice a year will now have to file three returns in a month or a total of 37 returns in a year. These returns include one purchase, one sale and one final return for every month.