Udyog & GST

enComply is a new tax returns offering tailored to the GST and it is offered by Udyog which is a leader in Indirect Tax in India since 1993. While enComply will take care of the needs for compliance, Udyog is updating and refining both iTax and Visual Udyog for the new GST era. These products when used with enComply provide a cost-effective solution to make a business GST ready, which will allow your business greater control over its business and tax specific data. Making this transition will be the first step in gaining more insights from your sales and purchase data.

Visual Udyog is a powerful ERP for any size business which also provides business process and taxation, which is an amazing combination for our 13,500 happy customers. This ERP has a modular approach and modules can be added for different offering such as order amendment, multi-company reporting, VAT/CST, Services Tax, TDS, which means the offering can grow as your business grows.

iTax is a powerful tax bolt on which gives a business the ability to automate transactional taxes, track input tax credits and provide insightful analytics to its users. This solution offers users the ability to maintain information about invoices and reports for taxes for each state, credit and set off management, business rules and a powerful calculation editor which can be used for special situations for your business.

With our powerful enComply offering for returns you will want to consider our other products because these will allow you to manage your businesses tax needs in the new GST. While compliance is a key piece of the GST puzzle so is the ability for you to enforce tax treatments and make sure you can create the accurate tax data for the GSTN. This is where our existing solutions come into play. These solutions have been happily keeping businesses up to date, on time and headache free for years.

Visual Udyog is a great ERP for your business which combines business automation, process automation and tax automation all together into a single package. As Visual Udyog is a modular software, you can customize it to your needs and it can grow with your business. Many of the processes which were engineered to work under the old regime with its separate tax systems such as VAT, CST, Excise and Service Tax are presently being re-engineered to work under the GST.

For example, many of the masters which you are used to will be updated to reflect new information for the GST. Similarly, there will be transactions and reports which will be updated and added for the GST. For example, going forward Visual Udyog will have reports specific to the GST returns as well.

These updates change changes will ensure the product will continue to help run your business by providing efficient and cost effective:

• Business intelligence
• Financial Accounting
• Sales and Marketing Support
• Inventory and Order Management
• Production Management

Visual Udyog can help a manufacturer raise and order, check stock and inventory and then make sure there are updates to registers and ledgers as needed. Also, it will make sure the tax consequences under the GST are taken care of.

Where your business will gain is when you link these products with enComply. Going forward with the GST, the challenge for the businesses will be creating correct, timely and complete data for invoices and the GSTN. Consider that when you submit information to the GSTN for GSTR-1 for outward transactions your business will need to have first segmented invoices along these categories:

• B2B
• B2C Small Supplies
• B2C Large Supplies
• Nil Rated Supplies
• Exports
• HSN/SAC Summaries
• Credit and Debit Notes
• Advanced Tax Paid
• eCommerce Invoices

Each of these categories will requires different pieces of information. When you utilize solutions like ours which keep these regulatory changes in mind then you can have places for the data to be stored and reported against as the transition occurs.

Data flowing from VU to enComply to GSTN

This ability to map data from between our solutions allows the tax relevant data to be moved based on the schedule you want. Also, tax relevant data for the purchase side for input tax credits will need to make the return journey into Visual Udyog so it can be used to update ledgers and manage the Input Tax Credit liability going forward.

Some of our customers have chosen the route of iTax which provides the ability to use their existing ERP but offload the thinking to our solution. Again like with Visual Udyog, our iTax solution compliments your business and takes the guess work out of the tax and gives you repeatable processes and procedures you can create for the taxation. iTax can be configured to add missing data to the tax data to help calculate and process taxes accurately, we call this feature Delta Capture, and this can be crucial to inserting data which might not yet be in the ERP or source system but is necessary for the GST.

When dealing with a complex area such as taxation, it is important that you create a set of rules to apply to ensure the proper tax treatments are applied. The maintenance effort required to update and maintain these rules across multiple systems can be costly and time consuming especially in a fast moving area like taxation. Therefore, centralizing the rules in a system like iTax provides your IT and tax professionals comfort because now the work is located to one place. Combine this with the ability to have the data updated easily and missing data completed this saves time, money and effort for your IT and tax teams.

When the tax data is ready, enComply is ready to upload, transform, create returns and submit data to the GSTN. 

Data processing and submit to GSTN

Again we have provided a way to create the data which is critical for efficient GST processing through our solutions.

If you are looking to invest in an ERP or migrate to a new one, the Visual Udyog could be a good choice for your business. If you have an ERP or multiple systems then iTax could provide an answer to your tax challenges. Finish with enComply which is a SaaS GST compliance offering which can allow you to collaborate with your tax partner on a single secure data platform. This can give you a complete tax processing lifecycle form the start of the tax liability when the sale is made to the completion when you file your annual return for the year.

When these products come together your business is ready for a data driven tax like the GST. 

How the GST will change Business?

The Goods and Services Tax (GST) promises to bring a single unified tax regime for India. But what exactly does a single unified tax regime mean and why is this better than what exists today.

The current situation is there are different taxes for different activities:

Different tax for different activities

Each of these taxes will apply to different items sold and purchased, at different points in the supply chain and be paid by different parties. This leads to a situation where you can have certain items taxed under two taxes which increases costs. An example of this is off the shelf software which can attract value added tax and service tax, which can push up the cost of the software. Also, as the rules are not clear on how to apply the taxes to the sale of software this leads difficulties for businesses because there is not a standard rule to apply, and in an abundance of caution businesses will apply VAT and Service Tax.

Now let’s consider how this would work under the GST. Under the proposed Model Law, if the service purchased over the internet and is supplied to a business located in Madhya Pradesh from a software company located in Karnataka then the treatment of the supply would be IGST.

The word ‘supply’ is the next big change because it is a concept which integrates goods and services together and helps to paint the picture of how broad the GST, which is a very long section and includes two schedules of the GST law. But what comes from this is that now any type of item will be taxed under the GST, there is not a concern like above with the software if it should be VAT or Service Tax. Rather it will always be subject to the GST or it won’t be subject to the GST.

The impact on an enterprise with the GST can be quite significant because GST will make it easier for enterprises to figure out what tax it will pay and collect for its transactions. Once GST comes in place, a business will worry about tracking how much GST it pays and how much GST it collects rather than how much VAT, Excise, Service Tax and other taxes it looks at.

India’s GST will be different than other GST regimes globally. If we compare the GST in India to other countries some major differences appear.

First, in terms of rates, India will have items that will be exempt, zero-rated, 5%, 12%, 18% and 28%. Finally some of the items at 28% will have a cess placed on them as well. In contrast, most countries which have VAT or GST have items which are exempt, zero-rated, a reduced rate and then a standard rate. This means an enterprise must do more in terms of tracking and validation for supplies they provide and receive to ensure the correct rate is charged.

Country	Rates
India	0%, Exempt, 5%, 12%, 18%, 28%
Australia	0%, Exempt, 10%
New Zealand	0%, Exempt, 15%
United Kingdom	0%, Exempt, 5%, 20%

Second, there will be multiple components to the GST: CGST, SGST and IGST. Each of these components represents different portions of the GST. CGST is the portion reserved for the Central Government, SGST is the portion reserved for the State Government and IGST will apply to imports, exports and all interstate transactions. When a business makes a sale, it will need to figure out which of these components applies. The components will be tracked separately because the input tax credits can only be utilized against certain components, for example, CGST can be offset against CGST and then IGST not SGST.

Input Tax Credit

Is it SGST and CGST or is it IGST? The way this works is to figure out of the transaction is interstate or intrastate.

Third, understanding how the components are determined requires a business understanding of  a concept called place of supply. Place of supply rules tell a business where an item is to be taxed. One advantage under GST is that the place of supply rules for goods and services are now the same across the country but this means that every business needs to understand how place of supply can impact their business. So, depending on your business you need to understand what the place of supply rules are so you can charge the correct components of the GST. Sometimes the place of supply rules change if the transactions is to a consumer or if it is to a business. This means that enterprises need to keep up to date with the status of their customers, for example, who is a consumer and who is a business because the data requirements are different between the two types of businesses.

Transactions between States

Fourth, compliance will dramatically differ under the GST because all businesses file returns electronically and upload transactional data. After the data is uploaded businesses will reconcile the uploaded data against data they have generated and collected from counter-parties. This activity will be the basis of allowing the input credits for purchases to be claimed so businesses. Remember from above there are specific rules for tax credits can be utilized, so it is not as in other countries where output tax can be offset against input tax.

The GST is a change for enterprises because it introduces a complete overhaul of the tax rules and returns. Overall, this is a net benefit for businesses because it creates a single set of rules for the sale of goods and services and creates a single tax regime. Also, it removes the cascading impacts of tax on the sale of interstate goods which will simplify distribution chains nationally. Businesses which report data on a timely and accurate basis will see their net costs decrease and they will gain customers. Businesses which attempt to avoid the taxes will see their costs rise and eventually this will transform many sectors and improve transparency across the country. As more businesses pay taxes on time there will be a lower incidence of tax fraud and rates could decrease more.

GST is a positive change and to realize the full potential of the GST, a business must make tax part of its sales and purchases. Using tax compliance and determination solutions will improve the quality of your tax data which will speed up compliance, saving you time and money. 

The Goods and Services Tax

The Goods and Services Tax (GST) represents the single largest tax change since India’s independence and it will eliminate multiple tax regimes and consolidate them into a single tax regime.

The following taxes will be eliminated and replaced with the GST:

• Value Added Tax / Central Sales Tax
• Service Tax
• Central Excise

Multiple Indirect Taxes Subsumed to GST

Many of the indirect taxes in India are Value Added Taxes, which is a common form of indirect tax used in all major economies except for the United States and Saudi Arabia. The present indirect tax landscape contains many different indirect taxes with differing applications for example, Central Excise applies to the manufacture of goods across India but VAT applies to the sale and distribution of goods within a state. Thus, businesses must follow different rules for each tax regime, which leads to mistakes, errors, and penalties.

The inability to cross-utilize credits between tax regimes leads to under-utilization of input tax credits which in turn will drive up costs. Similarly, as the tax regimes are not integrated this creates a cascading effect where taxes get built into the cost of goods.

The GST has been in development for years and its design reflects India’s federal nature with portions for the state and central governments. The data exchange requirements are a nod to reducing the amount of tax evasion and tax fraud in India, and rewarding tax payers to be accurate and timely with tax amounts and compliances.

The GST creates a single set of rules for when to tax, where to tax, how to tax. The unification of the tax regime will lead to a situation where India has a single market as opposed to multiple regional markets where interstate trade is difficult, expensive, and time-consuming.

 

Inter State Transaction

The GST will have the following rates: 0%, 5%, 12%, 18% and 28%

As well there are exemptions and a luxury cess will be levied so the possible number of treatments are much higher under the GST. The GST is a destination-based tax and interstate transactions will attract the IGST while intrastate transactions will attract CGST and SGST.

Depending on what you sell and buy, the GST can mean the rules for determining that tax are more complicated for example in the case of services where tax rules vary by both the type of service and the nature of the recipient. Or very similar the sale of goods sold in a state is still taxed in that state like under the old regime.

While some aspects of the GST will lead to less work in terms of tracking rates and following notifications there is a large increase in the amount of data which will need to be collected, submitted, reconciled, and analyzed on a continuous basis. The GST requires monthly compliance for most taxpayers and for the first time they will require national reporting of goods and services transactional data. Suppliers will need to upload their transactional data for their sales along with providing invoices to purchasers. Purchasers will need to ensure the data which is uploaded matches the purchase information they have on their invoices in the purchase register. This complex set of checks will ensure that input tax credits are taken correctly and fairly and there is a reduction in the amount of tax credits which are fraudulently taken. The other goal of this exercise is to increase the input tax credits taken by allowing the cross-utilization of credits for businesses which purchase goods and services and report data accurately and on time.

enComply is a solution to manage the compliance and workflow obligations under the GST, which includes the requirements to register businesses, prepare returns and collaborate across organizations or with tax partners.

enComply can help your business consolidate all communications and notices to and from government agencies in a single location and this can be displayed on a dashboard which can help you keep track of where you are in the tax processing lifecycle.

Any organization filing GST returns will need to be able to manage, manipulate and transform data to be successful in the GST. Consider the following for each invoice uploaded to the GSTN the following data must be provided:

1. Date 
2. Value
3. Place of Supply
4. Reverse Charge
5. Provisional Assessment

Then per line the following information must be provided:

Type of transaction

1.  HSN or SAC
2. Transaction Value
3. Tax rates (IGST, SGST, CGST)
4.  Tax Amount (IGST, SGST, CGST)

All the information relevant to the transactions are uploaded to the GSTN and then reconciled against data you receive from your vendor. Businesses need a solution that can transforms data, execute rules against data, transform data and reconcile data. In a single month, a business could have to manipulate thousands of pieces of data to complete its filing obligations and this has to be done in a short period of time.

Under the GST, all outward transactions are uploaded into the GSTN by the 10th of the following month, the inward transactions by the 15th and the returns filed on the 20th. Even with processes in place upstream to improve tax data quality, a solution with powerful processing power and scale is necessary. Even the smallest business with 300 transactions a month could be looking to reconcile and match thousands of pieces of data.

enComply is powered by a world class GRC platform which provides you the connections you need to the GSTN to upload and reconcile data. enComply ensures data quality through predefined rules so you are uploaded acceptable data to the GSTN that counterparties can you use for their compliance obligations. The platform underlying enComply gives any business the ability to have enterprise level power but at a reasonable cost because our platform is on the cloud and multitenant by design. This saves you money and time by not having to invest in infrastructure and maintain it.

enComply allows you to quickly file your returns and allows your partners to collaborate to file returns. This eliminates the endless exchange of emails, phone calls and spreadsheets because your data lives in a single place. Now you have a solution, which matches the unitary nature of the GST: enComply https://www.encomply.com/