In InfoMails so far, some substantive and important aspects relating to GST were discussed along with possible business effects and implications, as could be contemplated.
Team feels that the same may be reflected at a glance in the businessman's language (accounting) through Financial Statements as an aide memoire.
Enclosures contain Financial Statement(s) along with GST considerations essential for implementation of GST.
Team hopes that it would be found useful.
All the best for implementation of GST.
With regards,
Yours sincerely,
Team, Instavat.
The company is engaged in small scale manufacture/ trading, rental and maintenance services.
| Business information and details | GST considerations | |
|---|---|---|
| Principal Place of Business | Maharashtra Continuation of registration and compliance with transitional and other provisions. |
|
| Branches and/or Operates in / from | Gujarat, Delhi, Tamilnadu | Separate registrations for each state in respect of all the laws: IGST, CGST, SGST. Stock transfers and tax, if any. |
| Other Places of Business | Godown in Mumbai & Gujarat | Decision about continuation of separate registration in respect of different places of business in the same state. |
| Procurement and Sale | Based on commercial considerations and/or Tax considerations (like, CST or octroi duty or Local body tax) | · Review of business or commercial considerations · Review of mode and manner of procurement or sale, where planned based on tax considerations · Review of terms of contract |
| LIABILITIES | GST considerations | |
|---|---|---|
| Shareholders' Fund | ||
| Non-Current Liabilities | ||
| a) Long term Borrowing | ||
| b) Deferred Tax Liabilities (Net) | ||
| c) Long term Provision | Provision for liabilities under Earlier law | Payable, as per and in compliance with Transitional provisions |
| Current Liabilities | ||
| a) Short Term Borrowings | ||
| b) Trade Payables | Provision for liabilities under Earlier law | Payable, as per and in compliance with Transitional provisions |
| c) Other Current Liabilities | Provision for liabilities under Earlier law | Payable, as per and in compliance with Transitional provisions |
| a) Short Term Provisions | Provision for liabilities under Earlier law | Payable, as per and in compliance with Transitional provisions |
| Assets | ||
| a) Fixed Asset | Pending unavailed credit | Carry forward possible in compliance with Transitional provisions |
| Tangible Asset | Eligible for credit, wholly or partly, to examine. | |
| b) Non-Current Investment | ||
| c) Long term Loans & Advances | ||
| d) Other Non-Current Assets | Refund receivable | Receivable, as per and in compliance with Transitional provisions |
| Current Assets | ||
| a) Inventories | ITC embedded in inventories | Carry forward and availing it as ITC possible, in compliance with Transitional provisions |
| b) Trade Receivables | ||
| c) Cash and Bank Balance | ||
| d) Short term Loans & Advances | ||
| e) Other Current Assets | Credit receivable under and as per Earlier law | Carry forward and availing it as ITC possible, in compliance with Transitional provisions |
| GST considerations (stated broadly in this Statement; for details, refer to the Schedules of Revenue and/or Expenses) | ||
|---|---|---|
| Income | ||
| Revenue from Operations | Entity may follow certain business model, policies, processes and procedures for effecting sale having regard to business or commercial considerations and Tax considerations. | They may have to be reviewed (including terms of contract). Application of new provisions need to be examined. Price determination is essential. |
| Other income | If goods or service not involved | No effect |
| Otherwise | May have effect as stated above and detailed in relevant income details hereafter | |
| Total | ||
| Expenses | Entity may follow certain business model, policies, processes and procedures for procurement having regard to business or commercial considerations and Tax considerations. | They may have to be reviewed (including terms of contract).Application of new provisions need to be examined; source of purchase; classification; rate |
| Purchases and Services | Application of new provisions and its effects on cost, price and cash flow need to be examined. | |
| Changes in inventories | Discussed earlier / see details later | |
| Employee Benefits Expenses | May or may not have effect | |
| Finance cost | Interest - No effect; Others may have. | |
| Depreciation | No effect | |
| Other expenses | May have effect. | |
| Total |
| Purchases & Service | ||
| Purchases of Raw Material and Trading Goods | Mode, manner and methods may be based on tax considerations. | That may need to be reviewed. Source of procurement relevant. GST payable: CGST/SGST or IGST. ITC eligible; to check: classification, valuation / price and rate. |
| Purchases- Import | Customs duty payable. GST in lieu of additional customs duty etc. | Taxable on same basis as other purchases |
| Purchases- High seas | May be considered as imports; IGST may be payable | Taxable on same basis as other purchases |
| Maintenance of Sub- Contract and Other Services | -do- | -do- |
| Details Of Purchase of Raw Material ('RM') & Trading Goods ('TG') | Classification as goods or as a service. Applicable rate of tax. Credit eligibility. Impact on cost, price and cash flow. |
|
| RM | -do- | |
| TG | -do- | |
| Job Work | Specific provision – no effect, subject to compliance; otherwise, same as above | |
| Good Return | Earlier year | No impact if in compliance with Transitional provision |
| Price difference / other adjustment | Earlier year | No impact if in compliance with Transitional provision |
| Details of Maintenance Sub- Contract and Other Services | Classification as goods or as a service. Applicable rate of tax. Credit eligibility. Impact on cost, price and cash flow; classification, valuation / price and rate need to be examined. |
|
| Maintenance Sub- Contract and Other Services | -do- | |
| Other Service | -do- | |
| Rentals Charges | Possibly, under Earlier law credit was not available | -do- |
| Changes in Inventories | ||
|---|---|---|
| Stock at close | ||
| Trading goods / Raw Material | Credit carry forward | Possible, as stated earlier |
| Service Support Packs | Service tax credit, if any, may or may not be available. | |
| Shares in Indian Companies | ||
| Stock in Trade | Credit carry forward | Possible, as stated earlier |
| Spare Parts | Credit carry forward | Possible, as stated earlier |
| Less: Stock at Commencement | ||
| Trading Goods | ||
| Service Support Packs | ||
| Shares in Indian Companies |
| Employee Benefit Expenses | ||
|---|---|---|
| Salaries, Allowances and Bonus | Not taxable under GST | |
| Directors Remuneration | May be taxable under GST (if not an employment contract). ITC can be availed. Under Earlier law, if taxable, Credit was not available if relate to Trading. Thus, affects cost, price and cash flow. | |
| Welfare Expenses | It may include procurement of certain goods or outsourced services. | It may entail GST. Credit may or may not be available. Under Earlier law, if taxable, Credit was not available if relate to Trading. Thus, affects cost. |
| Contribution to Provident Fund & other Fund | Not taxable under GST. | |
| Contribution to LIC Group Gratuity Scheme | May be taxable under GST. ITC can be availed. (?) Under Earlier law, if taxable, Credit was not available if relate to Trading. Thus, affects cost. |
| Finance Cost Interest | May not be taxable under GST. | |
|---|---|---|
| On bank Cash Credit | -do- | |
| On Term Loans | -do- | |
| On Unsecured Loans from Shareholders | -do- | |
| On term Loan for Motor Cars | -do- | |
| To Supplier | -do- | |
| On Delayed Payment of GST | -do- | |
| Other Borrowing Cost | Depending on nature, taxable under GST. | ITC may be available; under Earlier law, if taxable, Credit was not available if relate to trading. Thus, affects cost. |
| Bank Commitment & other Charges | -do- |
| Other Expenses | Depending on nature, taxable under GST. | ITC may be available; under Earlier law, if taxable, Credit was not available if relate to Trading. Thus, affects cost. |
|---|---|---|
| Retainer ship Fees | Depending on nature, taxable under GST. | ITC may be available; under Earlier law, if taxable, Credit was not available if relate to Trading. Thus, affects cost. |
| Travelling Expenses | ||
| Telephone & Internet Expenses | ||
| Insurance Premium | ||
| Legal & Professional Fees | ||
| Repairs to Rented Office Premised | ||
| Repairs to vehicles | ||
| Repairs to other Asset | ||
| Maintenance Charges- Office Premises | ||
| Computer Spare Parts & Consumables | ||
| Commission on Sales | ||
| Motor Car Expenses | ||
| Miscellaneous Expenses | ||
| Membership & Subscription | ||
| Freight & Carriage outward | ||
| Auditors Remuneration | ||
| Audit fees | ||
| Tax Audit fees | ||
| Certification & other Services | ||
| Rates & Taxes | May not be taxable | |
| Conveyance Expenses | ||
| Electricity Expenses | ||
| Foreign Exchange Rate Difference | ||
| Loss on sale of Fixed asset | Classification need will continue. | · Classification as goods or service · rate · interstate or intrastate |
| Long term Loss on Sale of Shares | May not be taxable | |
| Preliminary Expenses | ||
| Fixed Assets Written Off | Position not clear. | |
| Wealth Tax | ||
| Security Transaction Tax | ||
| Bad Debts written off | ||
| Custom Duty | Partial to be replaced by GST | |
| Octroi Duty | To be subsumed in GST. Would affect cost, price and cash flow. |
| Revenue from Operation | ||
|---|---|---|
| Operating Revenue | ||
| a) Sale of Products or Trading goods | Classification need will continue. | · Classification as goods or service · rate · Value determination · interstate or intrastate |
| Details of Product | ||
| Finished goods | -do- | -do- |
| Trading goods | -do- | -do- |
| Accessories | -do- | -do- |
| b) Sale of Service | Classification need will continue. | · Classification as goods or service · Rate · Value determination · interstate or intrastate |
| Details of Service | -do- | -do- |
| Rental | -do- | -do- |
| Overriding Commission | -do- | -do- |
| Maintenance Contract Charges | -do- | -do- |
| Service Support Packs | -do- | -do- |
| Implementation and Support charges | -do- | -do- |
| Deputation/ Facility Management Service | -do- | -do- |
| Labour Credit | -do- | -do- |
| c) Sale of Shares | May not attract GST | |
| Goods Returns | Earlier year | May or May not have effect having regard to Transitional Provisions. |
| Price difference and other adjustment | Earlier year | May or May not have effect having regard to Transitional Provisions. |
| Other Operating Revenue | ||
| Incentives & Purchase Target | May or may not be available as a deduction from purchase price. Will depend on terms of contract. | |
| Cash Discount | May or may not be available as a deduction from purchase price. Will depend on terms of contract. |
| Other Income | May not be taxable | |
|---|---|---|
| Interest on | -do- | |
| Bank Fixed Deposit | -do- | |
| Debentures | -do- | |
| Income Tax Refund | -do- | |
| Dividend From | -do- | |
| Wholly Owned- subsidiary | -do- | |
| Shares under Portfolio Management Scheme | -do- | |
| Mutual Fund under Portfolio Management Scheme | -do- | |
| Leave and Licence fees received | Classification need will continue. | · Classification as goods or service · Rate · Valuation · interstate or intrastate |
| Profit on sale of Investment | May not be taxable. | |
| Profit on sale of Fixed Asset | Classification need will continue. | · Classification as goods or service · Rate · Valuation · interstate or intrastate |
| Profit on sale of Mutual Fund | May not be taxable | |
| Foreign Exchange rate Difference | May not be taxable | |
| Miscellaneous Income | Will depend on the nature |
