New Stat.900 Version is available free for existing Tally User
Major Enhancement are :
As per the notification, effective 17 Sep 2016, the following VAT classifications are provided to support the revised VAT rate from 5.5% to 6% :
Composition Tax – Restaurant Etc @ 6%
Composition Tax – Retail @ 6%
CST @ 6%
CST – Works Contract @ 6%
Input VAT @ 6%
Input VAT – Works Contract @ 6%
Input VAT – Works Contract @ 6% (Construction)
Interstate Purchases @ 6%
Output VAT @ 6%
Output VAT @ 6% on Works Contract (Construction)
Output VAT – Works Contract @ 6%
Purchases – Capital Goods @ 6%
Sales – Restaurant Etc @ 6% (Composition)
Sales Retail @ 6% (Composition)
- As per the notification, effective 17 Sep 2016, the following VAT classifications are provided to support the revised VAT rate from 12.5% to 13.5% :
- Composition Tax – Motor Vehicle @ 13.5%
- CST @ 13.5%
- CST – Works Contract @ 13.5%
- Input VAT @ 13.5%
- Input VAT – Works Contract @ 13.5%
- Interstate Purchases @ 13.5%
- Output VAT @ 13.5%
- Output VAT – Works Contract @ 13.5%
- Output VAT – Works Contract @ 13.5% (on Going)
- Purchases – Capital Goods @ 13.5%
- Sales Motor Vehicle @ 13.5% (Composition)
Note: Currently, the values from transactions recorded using the above classifications are captured in the VAT Computation report. In the future releases, the relevant VAT forms will be enhanced to capture these values.
One of the fundamental features of GST is seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country. In this section, let’s discuss about various conditions laid down by law to avail input credit on supply of goods or services.
All of the following conditions need to be satisfied to avail Input credit:
• The dealer should be in possession of Tax Invoice / Debit or Credit Note / Supplementary Invoice issued by a supplier registered under GST Act.
• The said goods/services have been received.
• Returns (GSTR-3) have been filed.
• The tax charged has been paid to the government by the supplier.
What do these conditions imply?
Once GSTR-1 (Outward supply details) is filed by the supplier, recipient has a visibility of the purchase through the auto populated GSTR-2 (Inward supplies details). After necessary modification, additions (if any) and acceptance, the Input credit will be credited to the recipient’s electronic credit ledger on a provisional basis.
Input credit will be available only when the Monthly returns (GSTR-3) are filed by the supplier along with payment tax.
Let us understand this with an example
Super Cars Ltd, a manufacturer of cars purchased 30 tons of steel from Ratna Steels. Ratna Steels supplied steel and issued tax invoice on 5th April with GST of 2, 40,000.
With this example, let us examine the process to understand the flow of availing input credit.
GSTR-1: Furnish all outward supply details on or before 10th of Subsequent month.
GSTR-2: This is auto-populated by System on 11th of subsequent month. This includes all inward supplies details
GSTR-3: Monthly Return auto populated by system on 20th of subsequent month
What does this mean? What will be its impact?
GST proposes to remove the geographical barriers for trading, and transform the entire nation to ‘One Common Market Place’.
Let us understand the fundamentals of GST, it is a dual concept tax system. Under this system, tax is administered, collected, and shared by both the Centre and the State governments, based on the nature of transaction (within the state or interstate).
The tax components of GST
While we now know the tax components of GST, it is equally important for you to know the taxes existing in the current regime, and how they are subsumed under GST.
Current Indirect Tax structure
Taxes subsumed under GST
In the current regime of indirect tax system, the chain of input credit, at a certain point, is broken. Let’s say Central Sales Tax (CST) applicable on interstate trade is non-creditable, leading to a break in the input credit chain. Similarly, a manufacturer charging excise duty on sale to a dealer causes the chain to break. This leads to taxes forming a part of the product cost.
In the year 2005, VAT was introduced with the similar objective to overcome cascading affect. If VAT was designed to eliminate it, how is it different in GST?
Yes, VAT eliminated the cascading tax effect on the state indirect tax, while the cascading effect of other indirect taxes still remained. GST allows for seamless flow of tax credit, and eliminates the cascading effect of all indirect taxes in the supply chain from manufacturers to retailers, and across state borders.
Let us examine this with an example of car as a product with overall rate of tax being considered @22% under existing and GST regime – to illustrate elimination of tax on tax
Savings of 5,280 catching your eyes! Isn’t it? Let’s us examine this.
If you observe closely, in the example, the taxes paid by dealer (CGST + SGST) to manufacturer is not added to cost. This is because GST allows the dealer to set off the tax liability of CGST+SGST. This is one of the fundamental features of GST, which allows seamless credit from manufacturer to dealer, and eliminates the cascading effect.
Great way to prepare for GST
Get 40% off on upgarade to Tally.ERP 9 Release 5.4
All you need to do is upgrade to Tally.ERP 9 Release 5.4 and Tally will take care of your compliance – now and during GST!
|Actual Price||You Pay||You Save|
|Tally 6.3/7.2 Silver to Tally.ERP 9 Silver||7,200||4,320||2,880||Upgrade now|
|Tally 6.3/7.2 Gold to Tally.ERP 9 Gold||21,600||12,960||8,640||Upgrade now|
|Tally 8.1/9 Silver to Tally.ERP 9 Silver||3,600||2,160||1,440||Upgrade now|
|Tally 8.1/9 Gold to Tally.ERP 9 Gold||10,800||6,480||4,320||Upgrade now|
Tally.ERP 9 Release 5.4 Vs. Older Versions of Tally
|Tally 6.3||Tally 7.2||Tally 8.1||Tally 9||Tally.ERP 9 Release 4.93||Tally.ERP 9 Release 5.4|
|Statutory General Features|
|Triangulation Report (To prepare for GST -Detect & Correct Errors)|
|E-filing (VAT/CST,TDS,Excise, Service Tax)|
|Excise for Dealers||
|Excise for Manufacturers|
|Banking – Auto Bank reconciliation|
|Post-dated Cheque Management|
|Point of Sale (POS)||
|Pre-closure of Order||
|Item Cost Tracking||
|Form 26/27 Quarterly/Annually returns||
|National Pension Scheme|
|On Demand Sync (Advanced next generation Sync)||
|Audit & Verification Tools|
The new Tally.ERP 9 Release 5.4.3 is available now!
Whats new in Tally.ERP 9 Release 5.4.3
- As Jewellery Business is under central excise, we have enhanced the title of the sales invoice and type of copy, as per rule 8 of Articles of Jewellery.
- The change in file name and increase in length of fields in Maharashtra e-VAT template are supported.
- For a better license management experience, we have simplified the text on licensing related screens and e-mails.
- MAV error does not occur when you mark reconciled bank vouchers as Optional.
- The currency of a party ledger is retained when it is imported into a company with a different base currency and with multi-currency enabled.
- When you view the POS extract report remotely, only the POS sales transactions are displayed, as expected.
Release 5.4.3 – Highlights :
- To support Article of Jewellery Rules to make jewellery establishments part of Central Excise:
- An option is provided in Excise Registration Details screen to set a company as jewellery business.
- The title of sales invoice of jewellery business is changed to ISSUE OF INVOICE UNDER RULE 8 OF ARTICLES OF JEWELLERY (COLLECTION OF DUTY) RULES, 2016 as per Rule 8 of Articles of Jewellery Rules, 2016.
- When number of copies of sales invoice is more than 1, the type of copy title is changed to Original for Buyer for the first copy, Duplicate for Assessee for the second copy, and Not for CENVAT from the third copy.
- In an accounts only company, while creating a sales invoice in Accounting Invoice mode, the Billwise Details screen did not appear if,
- the invoice was created by selecting a sales voucher type and
- the options Enable default accounting allocation? and Set/Alter Default Accounting Entries? are enabled in the sales voucher type. This issue is resolved.
- MAV error occurred when,
- two payment vouchers with bank as party ledger were created and reconciled
- the later payment voucher was made optional and
- the payment vouchers were created in Release 5.4 and Release 5.4.1 This issue is resolved. If you are using an earlier version of Tally.ERP 9, run the rewrite procedure to solve this problem..
- Show Nett Rate? option in F12:Configure of Stock Query report is set to No, by default.
- When Godown Summary was viewed at stock group level, all stock items grouped under the stock group were displayed even if,
- the stock item does not belong to the selected godown, and does not participate in any transaction, and
- the option Exclude stock items with no transaction? was enabled. This issue is resolved.
- The Page size was getting reset to default when Columnar Register was exported to PDF, with Show Columnar Register? enabled. This issue is resolved.
- The company logo is displayed, when vouchers are e-mailed in HTML format. To view the company logo in the voucher, open the company logo, and open the HTML file.
- When printing purchase order, delivery note and receipt note from display mode, the title was getting printed as Purchase order voucher, Delivery Note voucher, and Receipt Note voucher, instead of PURCHASE ORDER, Delivery Note, and Receipt Note, respectively. This issue is resolved.
- In the reports displayed on drilling down to ledger level from Collection Details section in Form 27EQ report, the values were not printed and only header information appeared. This issue is resolved.
- The date format exported to VAT Form 15, Annexure 23 and 24 excel templates was incorrect. This issue is resolved. Now, the date is exported in DD/MM/YY format, and not with – as the separator.
- CST annexure Form C was not capturing CST value from interstate purchase transactions, and only assessable value was displayed. This issue is resolved. Now, CST annexure Form C combines CST amount with assessable value, and displays the value as Total Amount of Goods.
- Form 7A was displaying assessable value and tax amount for non-creditable purchase as a combined value. This issue is resolved. Now, assessable value and tax amount from Non Creditable Purchase – Special Goods transactions are displayed in separate columns in Form 7A.
- Details of Form 12A could not be migrated from Release 4.9x to 5.3.2. This issue is resolved. Now, the migration process is enhanced to migrate details updated in Form 12A.
- In the CST number field of annexures Part GG, Part I, Part L,and Part M, provision is made to display alphanumeric and special characters, and to accept values with length up to 14 characters. The field will be exported to e-VAT templates, as per the requirement.
- The Local Sales Tax number field in POS invoice print out is changed to Company’s VAT No.
Click here for release notes
Click here for download
August 3rd, 2016 will be recorded as a red letter day in the history of Indian taxation due to the near unanimous passage of 122nd Constitutional Bill in Rajya Sabha, paving the way for roll-out of GST in India from 1st of April 2017. Goods and Service Tax Bill has significantly evolved over the past decade and is touted as the single largest tax reform in India since independence. It is estimated to boost GDP by 1.5 to 2%. ‘One India, One Tax’ will be the new reality with GST subsuming over ten indirect taxes and making India a common market. Apart from elimination of cascading effect, the benefits of simplified compliance, technological backing and uniform process across India will contribute significantly to ‘Ease of doing Business’. However, the success of a business will significantly depend on the ability to understand and adopt to this new reality as certain existing business practices will have to undergo changes.
Goods and Service Tax is a comprehensive tax levied on manufacture, sale and consumption of goods and services across India. GST is a Destination based Consumption tax, and the taxable event is Supply as against the existing taxable events of sale, manufacture or provision of service. Draft Model GST Law was made public in June 2016, and the government has sought public opinion on the same. It is high time that businesses, industry/trade bodies, professional associations and the like provide valid inputs at an early date, and ensure the final GST Law addresses all the concerns to make the transition smooth.
The indirect taxation regime in India has undergone many transformations over the past 5 to 6 decades. Introduction of MODVAT scheme in 1986, fungibility of credit between Excise and Service Tax (2004), rollout of VAT (2005 onwards) have over the years increased transparency in tax administration, reduced hassles to tax payers, and eliminated the cascading effect, thus benefitting the consumer. However, the federal structure of India has resulted in tax being administered by both Centre and State. Lack of facility to utilize credits across these two entities has resulted in partial cascading still being left in the system. Added to this, the burden of compliance has also increased due to involvement of multiple agencies. GST precisely addresses these concerns by driving uniformity across India through a single tax and ensuring an unrestricted flow of tax credit. Conceptually, GST is similar to VAT, meaning tax will be applied only on the value addition at each point in the supply chain.
Some of the salient features of GST are:
GST Registration threshold is proposed at Rs 4 Lakh for NE states + Sikkim, and Rs 9 Lakh for Rest of India. However, the liability to pay tax will be only after crossing the threshold of Rs 5 Lakh for NE states + Sikkim and Rs 10 Lakhs for Rest of India. Approximately 7-8 million businesses are likely to be registered under GST. Small dealers with turnover below Rs 50 Lakh have the option of adopting the Composition scheme and pay flat ~1 to 4% tax on turnover.
In consideration of the federal structure of India, Dual GST has been chosen as the apt model wherein tax would be jointly levied by both Centre and the states on supply of goods and services.
The components of Dual GST are:
- SGST: State GST
- CGST: Central GST
- IGST: Integrated GST
On intra-state transactions CGST+SGST will be applicable and on Interstate transactions, IGST will be applicable.
There are likely to be 3 sets of rates as below:
- Merit Rate
- Standard Rate
- De-Merit Rate
There is also likely to be a lower rate for precious metals and zero-rate for essential goods.
The taxes which will get subsumed under GST are:
|Subsumed in GST||Not subsumed in GST|
|Central Excise||Basic Customs duty|
|Service Tax||Alcohol for human consumption|
|VAT / Sales Tax||Petrol / Diesel / Aviation fuel / Natural Gas*|
|Entertainment Tax||Stamp duty and Property tax|
|Luxury Tax||Toll tax|
|Taxes on lottery||Electricity Duty|
|Octroi and Entry Tax|
*To be included only at a later notified date
The manner of availing input tax credit for setoff of tax liability is defined as under:
|Input Tax Credit||Set-off against liability of|
|CGST||CGST and IGST (in that order)|
|SGST||SGST and IGST (in that order)|
|IGST||IGST, CGST, SGST (in that order)|
Please note that CGST and SGST cannot be set off against one another.
Goods and Service Tax Network or GSTN is a Not for Profit Sec 25/Section 8 company incorporated under the public-private partnership(private companies, central and state government are the stakeholders) to roll out the IT backbone (Backend and Frontend) and portal for meeting all the e-filing requirements of GST. This would be the nodal agency which would control all the processes, forms, and also the data of all the trade that happens in the country.
The council to be formed within 60 days of getting presidential assent, would consist of 2/3rd representation of states and 1/3rd representation of Centre. The GST Council will take all decisions regarding tax rates, dispute resolution, exemptions and so on. Recommendations of the GST Council (75% votes) will be binding on the Centre and states.
Existing dealers would be auto-migrated and given a 15-digit PAN based GSTIN with following structure.
|State Code||PAN||Entity Code||Blank||Check Digit|
The entity code will be applicable for taxpayers having multiple business verticals within the state.
The GST regime introduces the following changes:
- The GST regime requires all businesses to mandatorily file monthly returns along with the requisite quarterly or annual returns. Even businesses which now file returns quarterly or half-yearly (such as returns for service tax etc.) now need to file returns every month.
- There will now be ‘3 compliance events every month’ compared to 1 event today. This means, businesses will now need to comply with the requirements of filing GSTR- 1, GSTR-2 and GSTR- 3 (as mentioned below) as against filing 1 return today.
- The first compliance event (filing GSTR-1) has a due date of 10th of the subsequent month as against the deadline of 20th in the current VAT regime.
- Composition scheme will no longer be a favorable option since returns need to be filed quarterly and the details in those returns need to be filed relating to purchases, though sales would be lump sum like earlier. Another big deterrent in the scheme would be non availability of input credit to the chain below which would increase the selling price for the composite dealers. This would mean that businesses would reduce their purchases from these dealers.
Regular Dealer: Monthly filing
- GSTR-1: Upload all sale invoices (By 10th)
- GSTR-2: Accept the auto-populated counterparty sales as your purchase, and add any missing purchases (By 15th)
- GSTR-3: Submit the auto-populated GSTR-3 by 20th
Composition Dealer: Quarterly filing
- GSTR-4: Submit by 18th after quarter-end
GSTR-8: Annual Return for both Regular and Composition by 31st Dec of subsequent year.
- Mandatory e-payment for amount > Rs 10,000
- Online: NEFT/RTGS/IMPS
- Offline: Cash/Cheque/DD/NEFT/RTGS etc.
- Challan is auto-populated, and can be downloaded
Refund process will be automated and wherever applicable 80% refund will be granted provisionally when applied without scrutiny.
Major Impact Areas
Principal areas of impact for business will be:
- Adoption of Technology is imperative: As all the processes will be online, and return filing is of granular nature (invoice-wise), the taxpayer will have to adopt suitable technology to ensure efficiency and effectiveness. Unlike earlier, paper filing will not be an option.
- Access to Pan-India market: Intra-state and interstate trades would become tax neutral, and the whole of India will open up as a market for both sourcing vendors and customers customers without hassles of compliance.
- Cash flow planning: Input tax credit on purchase will be provided only provisionally during return filing, and will be confirmed only after corresponding sale has been uploaded and after the liability is discharged by supplier. Hence, cash flows WILL get impacted in case of mismatch. As any supply would be taxable, branch transfers would result in tax liability leading to cash blockage. GST will also be applicable on advances received and reverse charge is extended to goods as well. Businesses will need to rethink how to effectively do business and structure deals.
- Easier Compliance: GST requires businesses to provide granular level of data (invoice-wise), that needs to be reported with HSN codes. The good news is that compliance is going to get easier with GST replacing most of the prevalent indirect taxes and with the support of technology. With GST, the government has shifted its burden of following up with vendors who have not uploaded their returns by cutting out the input credit.
- Branch / Supply chain re-engineering: Businesses having multi-state presence due to tax considerations (to avail concessional CST rate) need to re-plan their warehouse and branch networks and locate them nearer to markets rather than state-wise.
- Pricing strategy: Due to elimination of cascading effect, prices of products are likely to come down. Hence, businesses need to re-align to the new realities in procurement and sale.
- Re-negotiate contracts: Work contracts and other multi-year supply deals have to be renegotiated to absorb GST rates. As tax would be payable on advance, such conditions need a relook.
With the passage of the 122nd constitutional Amendment Bill in Rajya Sabha, the immediate next steps are:
- As this is a constitutional amendment, a minimum of 15 state assemblies also need to ratify the bill.
- Presidential assent to the bill and formation of GST council within the next 60 days from date of obtaining assent, is required.
- Passing of CGST and IGST Bills (probably as Money Bill) in winter session of parliament and of SGST Bill in 29 state assemblies.
- Rollout of GST Network by January 2017.
The tasks look daunting, yet achievable.
What next for all of us
With 1st of April 2017 being the likely date for launch of GST, the taxpayer needs to take several preparatory steps in this direction. The transition will be the key for having a clean opening balance to start with.
- Input tax credit (in returns/inputs/capital goods) from current regime(CENVAT, VAT) will be carried forward to GST(CGST, SGST). Hence, it is imperative to keep the books updated. It helps companies during assessment as only at that time the number will get picked up and if trail/clarity is not available businesses will go through a lot of financial and non-financial pain.
- All the accounting and party masters in ERP need to be kept updated with statutory details filled-in, such that transition to GST is smooth.
New Stat.900 Version is available free for existing Tally User
Major Enhancement are :
As per the notification, effective from 12th Aug 2016, the following VAT classifications are provided to support the revised VAT rate from 5% to 6% :
CST @ 6%/Interstate Sales @ 6%
Input Tax Credit on Purchase From URDs @ 6%
Input VAT @ 6%/Purchases @ 6%
Interstate Purchases @ 6%
Output VAT @ 6%/Sales @ 6%
Output VAT @ 6% to URDs/Sales @ 6% to URDs
Purchase From URDs – Taxable Goods @ 6%
Purchases – Capital Goods @ 6%
Purchase Tax @ 6%
- As per the notification, effective from 12th Aug 2016, the following VAT classifications are provided to support the revised VAT rate from 14.5% to 15%:
- CST @ 15%/Interstate Sales @ 15%
- Input Tax Credit on Purchase From URDs @ 15%
- Input VAT @ 15%/Purchases @ 15%
- Output VAT @ 15%/Sales @ 15%
- Interstate Purchases @ 15%
- Output VAT @ 15% to URDs/Sales @ 15% to URDs
- Purchase From URDs – Taxable Goods @ 15%
- Purchases – Capital Goods @ 15%
- Purchase Tax @ 15%
Note: Currently, the values of transactions recorded using the above classifications are captured in the VAT Computation report. The relevant VAT forms will be enhanced in future releases to capture values from transactions recorded using these classifications.