Get ready for GST: 5 things traders must do ahead of historic tax reform

The government is poised to embrace its most historic economic reform by introducing the Goods and Services Tax or GST at the midnight of June 30-July 1. But, the question is whether industry is ready to face the another round of short-term disruption. Industry and states who think that they were not given enough time to get prepared for the new tax regime has a message from Finance Minister Arun Jaitley.

The Finance Minister recently ruled out any possible delay in implementation of the GST and said: "We have been saying for the last six months it would be July 1 - nobody has any business not to be ready."

Now that the government is all set to roll out the GST from July 1, here's what traders and enterprises needs to do:  

Clear old stocks: The GST has a provision called Input Tax Credit or ITC that allows traders to claim for credit while paying taxes on total output. However, the govt has added a clause - transition provision - under which ITC benefit won't be available to businessmen with stock older than a year. Many FMCG companies and other retailers have already started offering discounts to clear the old stocks fearing that they may have to sell these goods at a loss once the new taxation system is effective.

Hire financial consultants: As the Finance Minister has already made it clear that the GST would be rolled out on Jun 30-July 1, It's now certain that there won't be any delay. The companies and small scale enterprises should start consulting and hiring financial consultants for the easy and transparent compliance. In case of non-compliance, your business may have to suffer economic consequences such as delay in availability of input credit.

Invest in technology and software: The GST is a technology-driven system where every transaction from invoicing to payment of tax has to be done digitally. Therefore, companies and traders will also have to invest in software or hire third-party software providers. Earlier, the Finance Minister issued a press statement saying a robust and comprehensive IT system would be the foundation of the GST. All tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent, the statement further said.

Pass on the benefit to consumers: You need to pass on the benefit - generated due to lower tax rates under GST - to the consumers. The government earlier threatened to cancel the registration of entities that do not pass on the benefits to consumers. The government will also slap penalty prescribed under the law. The government has set up an Anti-Profiteering Authority under Anti-Profiteering Provisions to make sure the benefit is passed on to the consumers.

Check CBEC's GST APP: The Central Board of Excise and Customs or CBEC recently launched a Mobile Application for the Goods and Services Tax to inform the taxpayers of the latest updates on the GST. After downloading this APP, the taxpayers can access a host of GST information such as: migration to GST, approach and guidelines for migration, GST Law, GST Compensation Law, Draft Rules-Rules related to Registration, returns, payment, refund and invoice, frequently asked questions on GST, related website links, and helpdesk email contact.

The mobile application will also enable you to be well informed of the latest updates on GST. You can also provide feedback and contact CBEC's 24x7 helpdesk "CBEC Mitra" through a toll-free number or email, at the touch of a button.