Form GSTR-9 – Annual Return in GST

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It’s been more than 15 months since the introduction of GST  and by now, most of the businesses registered under GST are quite familiar in filing GST returns i.e. GSTR-1 which needs to be filed either quarterly or monthly and GSTR-3B on a monthly basis. Now, it’s time for businesses to file yet another return ‘Annual GST return in GSTR-9 Form’.

On 4th September 2018, the new GSTR-9 format for filing annual return was notified by CBIC which details the information to be furnished.  In this blog, we will understand the following:

What is GSTR-9?
Who Should File GSTR-9?
Different types of GST Annual returns
Due date to File GSTR-9
Penalty for Late Filing of GSTR-9

What is GSTR-9 Form?

Form GSTR-9 is an annual return to be filed by the businesses registered under GST. In Form GSTR-9, you need to declare the consolidated details of outward supplies, inward supplies, GST payable and ITC claimed for the previous financial year. For the previous financial year 2017-2018, you need to furnish the consolidated details of supplies made or received from July, 2017 to March 2018.

All you need to do here is to consolidate the details which you have already furnished through GSTR-3B and GSTR-1 either on a monthly or quarterly basis and declare it in the prescribed format of GSTR-9.

Who Should File GSTR-9 Form?

The annual return in GSTR-9 form needs to be filed by all the businesses who have obtained regular GST registration. In other words, the annual return in form GSTR-9 is not required to be filed by the businesses registered under Composition scheme, Input Service Distributor, casual taxable person, non-resident taxable and e-commerce operator.

Different Types of GST Annual returns

The following are the different type of annual GST returns applicable to the businesses.

Type of Business GST Annual Return Form
Regular Registered Business GSTR-9 Form
Business opted for Composition scheme GSTR-9A Form
E-commerce Operator GSTR-9B Form

Currently, only Form GSTR-9 format has been notified by the CBIC and other formats are yet to be notified.  Over and above the annual return form GSTR-9, the business who have obtained regular GST registration and if the aggregate turnover during a financial year exceeds 2 crore rupees, they are required to submit audited annual accounts and a reconciliation statement by filing GSTR-9C.

Form GSTR-9 Due Date

As prescribed in the GST Act, all the annual returns should be filed on or before the 31st of December following the end of such fiscal year. Thus, the GSTR-9 form for July’17 to March’18 is 31st December, 2018, unless it is extended through a notification. Currently, the provision for filing of GSTR 9 form in GST portal is yet to be made available.

Penalty for Late filing of GSTR-9 form

Failure to furnish the annual return in GSTR-9 form will attract penalty. A late fee will be levied if GSTR-9 is not filed with the due date. Late fees for failure to furnish GSTR-9 is 200 Rs per day (CGST 100 Rs + SGST 100 Rs). However, the maximum amount of penalty cannot exceed 0.25% of the total turnover of the taxpayer.

How to File GST Sahaj Return

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Form GST Sahaj is a quarterly GST return to be filed by 20th of the subsequent quarter. The businesses whose turnover in the previous financial year is up to 5 Crores and engaged in making outward supplies only to B2C i.e. end consumers or unregistered businesses can opt to file GST Sahaj return.

Though the GST Sahaj return filing is on a quarterly basis, the payment of GST needs to be made on monthly basis using the payment declaration form. The businesses need to determine the payable tax and Input tax credit on the self-assessed basis to determine the monthly tax payable.

In this article, we will understand the GST Sahaj return filing Cycle.

The details of outward supplies in GST Sahaj form are required only at a summary level. This is because, GST Sahaj is applicable only if you are making B2C supplies and your customer (the buyer) who is either an end consumer or an unregistered business who will not be in a position to claim ITC on the supplies made by you. Hence, the details are required only at summary level instead of invoice-wise.

Let us understand GST Sahaj return filing with an illustration

sahaj return

We have considered the April-June, 2019 to explain the GST Sahaj return filing cycle. In the above illustration:

  • The taxpayer makes the self-assessed payment for the month of April, 2019 and May, 2019 using Payment Declaration Form.
  • On completion of the quarter April to June, 2019, GST Sahaj return needs to be filed by 20th of July 2019 with the payment of Tax.
  • In GST Sahaj form, the taxpayer needs to furnish the consolidated outward supplies details at rate-wise (5%, 12% etc.) and place of supply-wise.
  • Input Tax credit details will be auto-populated in GST Sahaj form.
  • As illustrated, as and when the invoices are uploaded by the supplier, details of ITC will be auto-captured in inward supplies annexure and which in turn gets auto-populated in GST Sahaj return form.
  • Remember, quarterly returns forms will not have a concept of claiming and reporting ITC on missing invoices which supplier has not uploaded. You can claim the ITC only to the extent of invoice uploaded by the supplier.
  • Once the required details are furnished in GST Sahaj return, the next step is to make payment.
  • The tax payment here includes :
    • Tax payable for supplied made during 3rd month of the quarter.
    • Adjustment due to the difference in tax paid on the self-assessed basis in the first and second-month versus the outward supplies details declared in the Sahaj return.
    • Adjustment due to ITC claimed on self-assessed basis versus the auto-populated ITC available in inward supplies annexure.
  • Once the tax payment is done, you can submit and file the GST Sahaj returns.

Conclusion

For businesses, the Sahaj return filing cycle is very simple. All you have to do is self-assessed monthly payment and mention the consolidated details of outward supplies. The rest of the details are auto-populated in Sahaj return. The businesses can leverage on simplification only when they carefully assess their businesses profile and choose the one which is suitable.

Simplified GST Returns – New GST Return Forms

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New-GST-Returns

In order to simplify the GST return filing process, the GST council meeting held on 21st July, 2018 has approved the new GST returns. Different new GST return forms have been introduced considering the diversity of businesses operating in the country.

In another way, you must have heard the famous quote ‘One Size Does Not Fit All’. This is exactly the same reason for having new GST return forms. Based on the size the businesses, the type of supplies, the customers you deal with and the geography, the GST council has designed different type of new GST returns which will simplify the GST return filing process each of type of business instead of having a common GST return format for all.

In this article, we will understand the different types of new GST return forms which are approved by the GST Council.
gst returs

As illustrated above, broadly the new GSTreturns are classified into quarterly returns and Monthly returns. Again, the quarterly returns are further classified into Form GSTR Sahaj, Form GSTR Sugam and GSTR quarterly.

Worried! Because there are too many GST Returns forms to be filed?

No need to worry! You are not required to file all the forms illustrated above. Just like selecting the right size which fits you, you need to select one of the new GST return forms which suits your business profile.

Let us understand each of the new GST return forms in detailed.

Quarterly Returns

The Registered businesses with the turnover up to 5 Cr in the previous financial year are allowed to opt for filing quarterly returns. However, the payment needs to be made on monthly basis and it will be a self-assessed basis. The input tax credit will be available only to the extent of invoices uploaded by the supplier. The quarterly returns will not have a concept of claiming ITC on missing invoices which are not uploaded by the supplier.

As illustrated above, quarterly returns consist of three different GST return forms which business can choose based on their profile.

Let us understand the different type of quarterly GST returns forms

1. Form GSTR Sahaj

The businesses who often purchase only from the domestic market (within India) and their 100 % outward supplies are made to end consumers and unregistered business, known as B2C supplies can opt for GST return Form Sahaj.

The details of outward supplies are required to be captured at summary level with a break-up of tax rate and place of supply.  The details of ITC from inward supplies annexure which gets auto-populated based on the invoices uploaded by the supplier.

2. Form GSTR Sugam

The Form GSTR Sugam can be opted by the businesses who supply to both B2B as well as B2C. This implies that businesses who make outward supplies to registered businesses (B2B), as well as end consumers or unregistered business (B2B), can opt for Sugam

The details of B2B supplies need to be captured at invoice level in outward supplies annexure from where the details will be auto-populated to Form GSTR Sugam. The details B2C supplies should be reported at a summary level in Sugam returns. Similar to Sahaj, the details of ITC will be auto-populated from inward supplies annexure based on the invoices uploaded by the supplier.

3. Form GSTR Quarterly Return

This is similar to Sugam and the only difference is that if you are engaged in making exports including SEZ, you need to choose GST quarterly return form. The format of the quarterly form will be similar to monthly return form applicable to large taxpayers.

The details of B2B supplies along with exports need to be captured at invoice level in outward supplies annexure from which the details will be auto-populated to Form GSTR Quarterly return.  The details B2C supplies should be reported at a summary level.  Similar to Sugam, the details of ITC will be auto-populated from inward supplies annexure based on the invoices uploaded by the supplier.

Monthly Return

The Registered businesses with the turnover exceeding 5 Cr in the previous financial year should file the monthly return with payment of tax.  Here, the businesses are required to upload all the B2B invoices which in turn gets auto-populated in outward supplies annexure and then the details will get auto-captured in your monthly return. ITC will be available on the invoices uploaded by the supplier with an option to claim and report the missing invoices which are not uploaded by the supplier. The monthly return along with the payment need to be filed by 20th of the subsequent month.

Conclusion

The new GST return forms are designed keeping in mind the diversity of businesses operating in the country. The simplification in new GST return filing will be possible only when you chose the right type of new GST return suitable to your business. Therefore, it is utmost important for a business to carefully asses their vendors, type of supplies, customers etc. and chose the return which will simplify the compliance.

ITC on Goods in Transit

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In a business world, it is quite natural to have a situation where the date of supply of goods by the supplier and the date of receipt of goods are in two different months. Let’s say, the supplier has billed and dispatched the goods on March, 2018 but you have received the goods on 3rd April, 2018. In general, this situation is known as goods in transit. In this article, we will understand all about ITC on goods in transit.

How to handle goods in transit in GST

While the reasons are many for good in transit situation but what makes the situation a little difficult is the treatment of GST on goods in transit.
You must be wondering WHY? How it is different compared to the situation of goods billed and received on two dates but belongs to same month?

To answer, we need to understand the conditions prescribed in GST Law to claim ITC.

The following are conditions which the registered businesses need to fulfil to claim ITC.

  • You should have the Tax Invoice/Debit or Credit Note issued by a registered person.
  • The goods/services should have been received.
  • You should have filed GST Returns for the related month
  • The tax charged has been paid to the government by the supplier, either in cash or through utilization of ITC

If you closely look at the first 2 conditions, it clearly states that you should have a tax invoice and more importantly the goods in question should have actually received by you. To be more clear on GST on goods in transit,  let us discuss this considering the example used above.

The supplier has billed and dispatched the goods on March, 2018 but you have received the goods on 3rd April, 2018

In the above case, you will become eligible to claim ITC only in the month of April 2018. This is because, only when the invoice and the goods are received, will you be allowed to claim ITC. This is the current provision to claim ITC on goods in transit under GST.

Proposed changes – ITC on goods in transit under GST

With the proposed simplified GST Returns, the provision to claim ITC on goods in transit is simplified. The new proposal allows ITC claim on the date of invoice even if goods are in transit if the following conditions are met:

  1. Your supplier uploads the tax invoice to GST portal (outward supplies annexure) by 10th of the subsequent month.
  2. You should receive such goods before 20th of the subsequent month.

Let us understand this change of ITC on goods in transit under GST with some examples.

Scenario-1

Date of Invoice Date of Invoice Upload by the Supplier Date of Receipt of Goods by the Recipient
30th April,2019 8th May,2019 15th May,2019

In the above case, you will be eligible to avail the ITC in the Month of April, 2019 to be filed by 20th May, 2019. This is because, the invoice is uploaded by the supplier before 10th May, 2018 and the goods are received before 20th May, 2019 which is before the due date to file returns for the month of April, 2018.

Scenario-2

Date of Invoice Date of Invoice Upload by the Supplier Date of Receipt of Goods by the Recipient
30th April,2019 8th May,2019 25th May,2019

In the above case, you will not be eligible to avail the ITC in the Month of April, 2019 to be filed by 20th May, 2019. This is because, the goods are not received before 20th May, 2019 which is the due date to file returns for the month of April, 2018. You will be eligible to claim the ITC in the month of May, 2019 to be filed by 20th June, 2019.

Scenario-3

Date of Invoice Date of Invoice Upload by the Supplier Date of Receipt of Goods by the Recipient
30th April,2019 15th May,2019 9th May,2019

In the above case, you will not be eligible to avail the ITC in the Month of April, 2019 to be filed by 20th May, 2019. This is because, the invoice is uploaded by the supplier after the 10th of May, 2018. You will be eligible to claim the ITC in the month of May, 2019 to be filed by 20th June, 2019.

Conclusion

The simplification proposed on claiming ITC on goods in transit under GST will help the businesses in having an additional ITC claim on all those goods which are in transit but received before the due date of filing GST returns. It also helps in reducing the number of pending invoice compared to the existing provision of claiming ITC on goods in transit under GST.

New GST Input Tax Credit Rules

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Input Tax Credit is the heart of GST compliance for all taxpayers. It is the provision of input tax credit that ensures that taxpayers only need to pay GST on the value added to the goods or services supplied. In the first phase of GST implementation, taxpayers are required to claim input tax credit on a self-assessed basis, as declared in GSTR-3B. In the second phase of GST implementation, as discussed in our article ‘New GST return filing process’, input tax credit of each taxpayer will be arrived at based on the invoices uploaded by their suppliers and locked by them. Let us understand all about the new GST input tax credit rules.

New GST Input Tax Credit Rules – Mechanism

As per the new GST input tax credit rules, only an invoice uploaded by a supplier and locked by the buyer will be a valid document for claim of ITC by the buyer.

Suppliers must pay the tax liability on supplies made during a month by 20th of the next month. Suppliers will also have the facility to continuously upload invoices for their supplies to the GST portal. These invoices will be instantly shown to the buyers in the GST portal and can be locked by them. Input tax credit for a month will be arrived at based on the invoices uploaded by suppliers until 10th of the following month. Invoices uploaded by suppliers after 10th of the following month will be considered for ITC in the following month, as per the input tax credit rules under new GST returns.

Let us take an example to understand the input tax credit rules under new GST return:

Example: Super Cars Pvt Ltd supplies cars to Rakesh Automobiles. In April ’19, Super Cars Pvt Ltd makes the following supplies to Rakesh Automobiles:

Date of invoice Date of invoice upload by Super Cars Pvt Ltd Return in which Super Cars Pvt Ltd has to pay the liability Return in which Rakesh Automobiles can avail input tax credit
5th April ‘19 25th April ‘19 April ‘19 April ‘19
15th April ‘19 9th May ‘19 April ‘19 April ‘19
30th April ‘19 12th May ‘19 April ‘19 May ‘19

In the above table,

For the invoice dated 5th April ’19, Super Cars uploads the invoice on 25th April ’19. Super Cars has to pay the liability on the supply in the return for April ’19, as the supply has occurred in April ’19.  Rakesh Automobiles can also avail input tax credit on the supply in the return for April ’19, as Super Cars has uploaded the invoice by 10th May ‘19.

For the invoice dated 15th April ’19, Super Cars uploads the invoice on 9th May ’19. Super Cars has to pay the liability on the supply in the return for April ’19 as the supply has occurred in April ‘19. Rakesh Automobiles can also avail input tax credit on the supply in the return for April ’19, as Super Cars has uploaded the invoice by 10th May ’19.

For the invoice dated 30th April ’19, Super Cars uploads the invoice on 12th May ’19. Super Cars has to pay the liability on the supply in the return for April ’19 as the supply has occurred in April ‘19. Rakesh Automobiles can avail input tax credit on the supply in the return for May ’19, as Super Cars has uploaded the invoice after 10th May ’19.

Hence, taxpayers can expect a systematic and simplified process for claiming input tax credit in the next phase of GST implementation. However, the focus on the buyer’s input tax credit being based on the supplier’s invoice remains a key feature in the entire system. Hence, it is important for taxpayers to become aware of the input tax credit rules under new GST returns and choose their suppliers carefully.

New GST Return Filing Process – A Quick Guide

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new-gst-return-filing-processAfter the introduction of GST on 1st July, ’17, the GST Council has repeatedly taken measures to simplify the GST return filing process for taxpayers. As part of this exercise, the GST Council is working to bring in the second phase of GST, with greater simplification in multiple areas of compliance. In our article ‘Highlights of new GST returns’, we learnt that the new GST return filing process can be summarised as ‘Upload-Lock-Pay’. Let us understand this process in detail.

New GST return filing process – Upload

Upload refers to the upload of invoices by suppliers. In the new GST return filing process, suppliers will have the facility to continuously upload invoices anytime during the month and the invoices uploaded will be instantly visible to the buyers.

New GST return filing process – Lock

Once a supplier uploads an invoice, the next step is for the buyer to lock the invoice. In this respect, the buyer has the following options:

Lock

Locking of an invoice by a buyer indicates that the buyer is accepting the transaction reported by the supplier. Only an invoice uploaded by the supplier and locked by the buyer will be eligible for claim of input tax credit by the buyer. Once a supplier uploads an invoice, buyers can lock the invoice any time before filing of the GST return for the period. Buyers who have a huge number of invoices to lock can make use of the facility of deemed locking. Under deemed locking, all invoices which are not marked as rejected or pending will be automatically locked when the buyer files the GST return for the period.

Here, an important point to note is that once an invoice is locked by a buyer, the supplier cannot make any amendments to the invoice. The supplier will need to issue a credit note or debit note to amend such invoices. However, in case a buyer has wrongly locked an invoice, the invoice can be unlocked by the recipient, provided input tax credit claimed on the invoice is reversed.

Reject

In case the supplier has entered the GSTIN of the buyer wrongly, the invoice would appear for a taxpayer who is not the actual recipient of the supply. In such a case, the taxpayer can reject the invoice.

Pending

A buyer can mark an invoice uploaded by the supplier as pending in the following scenarios:
a. The supply has not been received by the buyer
b. The buyer believes that the invoice needs to be amended
c. The buyer is not able to decide whether to take input tax credit on the invoice for the time being

A buyer cannot avail input tax credit on invoices marked as pending. An important point to note is that the facility to mark an invoice as pending is only available to persons filing monthly returns, and not for persons filing quarterly returns. We will discuss more about this in our blog on key features of the new GST quarterly returns.

New GST return filing process – Pay

The new GST return filing process is complete with the filing of return and payment of GST liability by both suppliers and buyers, after considering their respective input tax credit. As discussed earlier, every taxpayer’s eligible input tax credit will be automatically arrived at based on the invoices uploaded by their suppliers and locked by them. Similarly, their GST liability will be arrived at based on the invoices uploaded by them. Hence, majority of their new GST return will be auto-populated, thus ensuring that manual effort required to file the GST return is reduced significantly.

Hence, the new GST return filing process seeks to simplify compliance for taxpayers with the new feature of continuous locking of invoices by buyers. Buyers will not need to wait for the supplier to file their return to know whether the supplier has uploaded their invoice. Also, the facility of deemed locking will make buyers’ life easier by reducing the time required to lock invoices.

Highlights of New GST Returns

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In the 27th GST Council meeting, the GST Council first announced the new GST return filing process. In the 28th GST Council meeting, the new GST returns and return filing process have been approved. Within a week, a draft of the new GST return forms has been placed in the public domain, to seek feedback from businesses, CAs and other industry members. As per the latest update, the GST Council is likely to implement the new return filing process from January, ’19. It is important for businesses to know the changes proposed in the GST return filing process. In this blog, let us understand the key highlights of the new GST return filing process.

a. Simplified monthly return for persons having turnover of more than Rs. 5 Crores

Regular taxpayers having turnover of more than Rs 5 Crores can now file a simplified monthly return. The new GST return form will have 2 main tables:

  • Outward supplies
  • Input tax credit based on invoices uploaded by suppliers

The due date of the monthly return will be 20th of the next month. However, the new GST return filing dates will be staggered, based on businesses’ turnover, to avoid undue load on the GSTN server.

b. Quarterly return for persons having turnover up to Rs. 5 Crores

Businesses having turnover up to Rs. 5 Crores (against the earlier limit of Rs. 1.5 Crores) will have an option to file quarterly returns. Businesses opting to file quarterly returns will, however, have to pay taxes and avail input tax credit on a monthly basis. These businesses have an option to file 3 types of new GST returns:

  • Sahaj: Businesses which purchase from suppliers in India and make supplies only to consumers (B2C) in India can opt to file the Sahaj return
  • Sugam: Businesses which purchase from suppliers in India and make supplies only to other businesses and consumers (B2B + B2C) in India can opt to file the Sugam return
  • Quarterly returns: Businesses which make imports, exports, supplies to SEZ, etc. can opt to file the quarterly return. The quarterly return will be similar to the monthly return but will be simpler and will not require certain details present in monthly returns, such as missing invoices, pending invoices, exempted supplies, etc. to be filled. However, these details will still be required to be filled by businesses filing quarterly returns, in their Annual return.

c. Simplified new GST return filing process: Upload-Lock-Pay

The new return filing process can be summarised as ‘Upload-Lock-Pay’. This means:

Upload: Invoices for supplies made will be continuously uploaded by sellers. Invoices uploaded till 10th of the next month will be available for input tax credit for the buyer.

Lock: The invoices uploaded by sellers can be continuously viewed and locked by the buyers. Here, ‘lock’ means to accept an invoice uploaded by a seller. Buyers also have options to reject the invoice, mark as pending, etc.

Pay: Taxpayers can pay the tax due on supplies after claiming input tax credit on invoices locked.

Here, a point to note is that unlike the current return filing process, only the invoices uploaded by the supplier will be considered for input tax credit for buyers. There is no provision for buyers to upload invoices.

This process will also ensure that the new GST returns are largely auto-filled based on invoices uploaded by sellers and accepted by buyers. Also, all the invoices which are not rejected or marked as pending by buyers will be considered to be accepted and locked at the time of filing of return. These steps will reduce the manual effort required to file the new GST return, especially for businesses where number of invoices is huge.

d. Profile-based return filing

Businesses will have the facility to configure their profile with details of the nature of supplies they usually make and receive. Based on this configuration, each business will be shown only the relevant fields of the return to be filled. This is again a step to customize and simplify the return filing process.

e. Facility to file return by SMS for nil return filers

Persons filing nil return (no purchase and no sale) will have the facility to file the GST return by simply sending an SMS.

f. Facility to amend return filed

Businesses will have the facility to amend invoice details and other information of a return already filed. Amendment of a return can be done by filing an ‘Amendment return’ and taxpayers can pay the additional tax payable through the amendment return. This will help them to save on the interest liability applicable if they have to wait for the next return to amend the details.

Hence, there are many changes that the GST Council has planned to ensure that the new GST return filing process is simple and easy for all businesses. However, it is important for businesses to prepare for the changes that are coming and set in place the required processes to ensure a smooth transition to the new GST return filing process. In our upcoming articles, we will help you understand each of these changes in more detail.

Freedom From Fear – Avoid GST Mismatches and Notices

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Over the past few months, several businesses across the nation have been plagued with GST notices from the government. If reports are to be believed, there has been a nearly 34% of GST mismatch or underpayment of GST, amounting to an overwhelming deficit of INR 34,400 Crores. Both taxpayers and firms have been served these notices, in response to all GST returns that have been filed between July and December 2017 – leading to a general feeling of fear surrounding GST compliance. As we start off yet another year as an independent nation, presenting a blog on how we can possibly get freedom from fear – and avoid GST mismatches and GST notices.

Reasons behind GST mismatch

To begin with, there are two major reasons, why GST mismatches occur. First, difference between the self-declared GST liability and available input tax credit, after one has filed summary returns in Form GSTR-3B, and provided invoice-wise details of all outward supplies in Form GSTR-1. Second, difference between values appearing in Form GSTR-3B and Form GSTR-2A i.e. the details of purchases from one’s suppliers. Quite understandably, the latter reason is more crucial for the government, as any incorrect ITC allocation against the tax that is actually paid by the supplier, results in GST revenue loss.

Penalties due to GST mismatch

With the emergence of these GST mismatches and GST notices, it can be fairly assumed that the tax department’s previous soft approach towards non-compliance may be coming to an end in the GST era. The government has gone about its business in a stern manner indeed, mandating a time of 30 days to all businesses who have received a notice. Upon issue of the notice, if no explanation is received within the stipulated date, it will be assumed that one has no explanation to provide, and the relevant proceedings will be initiated against a business. Not to forget the stringent GST procedures, which have stipulated an 18% interest on wrongly claimed ITC, which is bound to discourage tax evasion or manipulation practices. Thus, it is important that businesses know what is to be done to avoid GST mismatches and in turn, avoid GST penalties.

Steps you can take to avoid GST mismatch

Under such circumstances, what could a business possibly do to avoid GST mismatches, thus attaining freedom from GST notices?

Work with the right vendors

One of the first steps that can be taken is to work with the right set of GST compliant suppliers. Doing so will ensure, that at no point in time, is there any GST mismatch between the purchase details uploaded by a business and the data uploaded by its suppliers. This will eliminate the possibilities of varying ITC calculations, and could go a long way to ensure that the data in Form GSTR-3B and Form GSTR-2A is consistent.

Maintain records systematically

Another step, is the need for businesses to keep a close watch on the data being fed in while filing summary returns in Form GSTR-3B and while filing final returns in Form GSTR-1. This requires a fairly high degree of GST compliance concentration from businesses, which can only be made possible by adapting a systematic way of maintaining books of accounts and records of transactions. Quite understandably, those businesses who still go about manual records or who maintain business records on spreadsheets, would be finding it a tad difficult to bring in the necessary corrections, and that too within the short time-frame, which is available to respond to such notices. The need of the hour, naturally, is some automated system or GST software system, which enables a business to be compliant.

However, what is encouraging to note is, that even with the original return filing model having given way to a condensed model with Form GSTR-1 and Form GSTR-3B, the government is able to enforce a fair degree of GST compliance across the country. With the simplified return filing model knocking at the door, it will be the right time for businesses to adapt the right technology, and enjoy freedom from GST notices, avoid GST mismatches and stay away from hassles at the end of the day.

Why you need freedom from the clutter of spreadsheets?

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Spreadsheets are a popular method for most small businesses to start maintaining computerized business records, but, as the business grows and the scope of its operations increases, it becomes increasingly difficult to continue working with the clutter of various spreadsheets.

In this blog, we will attempt to discuss, why you probably need freedom from the clutter of spreadsheets, and look at more efficient alternatives such as software to maintain your business processes:

Software better designed for business than spreadsheets

Most book-keeping softwares have been developed by those who understand the various facets of business – accounting, inventory and compliance, and thus are ready to use products. For e.g. an accounting software does not really require any accounting know-how nor any additional formulas or programming; an inventory software has in built stock classification features. With spreadsheets however, you have to design your own process, which may or may not be optimal. While the basic usage of spreadsheets is prevalent, advanced features require time for proper learning and experience. Not to forget the hassle of tedious manual entry, managing multiple worksheets and feeding in complex formulas.

Software provides automated reports quicker than spreadsheets

Business management softwares can quickly generate helpful, high-level financial reports, the reason being – financial transactions are consolidated and managed from one central location, eliminating the need to maintain data in different spaces. Most importantly, financial accounting software provides access to real-time data, which gives you an insight into the financial health of your business. With spreadsheets, compiling such financial reports is a challenge, as data with regards to a transaction is spread across separate worksheets. Thus, the financial reports that you need can be compiled only via careful manual calculation, which is a time consuming process.

Software manages data more accurately than spreadsheets

One of the biggest advantages of small business book-keeping software is that the mathematical back-end is completely managed – including automated postings to ledgers and journals – allowing for accurate business data. Checks and measures can be built into the system to streamline date entry and reduce potential errors. When you use spreadsheets, there is always a possibility to make errors in entering data, or in the formula being used or due to accidental changes or deletions.

Software integrates business operations better than spreadsheets

Mostly, you will come across small business accounting software with inventory handling capabilities. For instance, in a typical trading firm, the accounting package doubles up as an inventory management software as well as an inventory control software and an inventory tracking software. Thus, while you record an accounting transaction, you can also easily send electronic invoices to clients, track payments, manage budgets, reconcile banking records etc. However if you use spreadsheets, separate sheets or systems will need to be maintained for other business operations such as sending, receiving, and resolving payments.

Software manages compliance better than spreadsheets

While some small businesses in India do have internal accountants, some also do outsource accounting to book keepers. In addition, when it comes to compliance, most businesses take the services of auditors with whom the business data is shared for GST return filing. In such scenarios, the external accountant or auditor can work more efficiently, if the data is maintained in conventional business softwares, rather than customised spreadsheets, which makes life easier for the business as well.

While the spreadsheets vs. software debate may rage on and find its natural conclusion, it is important for businesses to understand the difference between “computerized business” and “business on computers”. The need for the hour is not just to understand the advantages of computerized system over manual system and therefore, do the activity of managing business on the computer, but also to use a system that follows the business owner’s train of thought. Given the demands of stringent compliance norms in the GST regime, more businesses across the country will be seen discontinuing their usage of spreadsheets, appreciating the benefits of software and adopting the right technology for their business.

Why You Need Freedom From Manual Business Processes?

Posted on by Tally Academy

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Speed & Accuracy – Freedom from time wastage of manual business processes

One of the key differences between manual business processes and automated systems is speed. Business process automation not only helps to process business data faster, but also allows faster data entry and reporting. Add to that the boon of accuracy and you have a strong case for digitalization of business. Traditional manual accounting is a tedious process requiring accountants to spend copious amounts of time mathematically checking numbers in the company’s accounting information. Simple mistakes such as transposing numbers or entering information into the incorrect column could create significant errors – which can be eliminated via automation.

Because of its efficiency and ease of use, computerized systems also allow you to improve inventory control and payment collection, saving time and improving cash flow. As a business owner, one can potentially spend less time looking for errors and more time analysing information for decision purposes. The plethora of reports a business owner has access to while using automated systems – stock valuation, profit and loss, receivables and payables, return on investment – is surely a game changer for any business.

Integration – Freedom from confusion of manual business process management

Another key aspect, which most business owners will need to appreciate, is the importance of integration. Accounting, inventory, compliance are not isolated activities, but are inter-linked with each other, having implications across the businesses. For instance, while accounting, a single transaction is bound to affect your financial records, your stock, as well as your taxes. This indeed becomes a challenge in manual business processes wherein, the same transaction may need to be recorded at multiple places to ensure that all relevant ledgers are affected, whereas in computerized systems, the same can be achieved by the click of a button.

Compliance & Security – Freedom from problems of manual processes

Last but not the least, compliance under GST is something, which can be best handled by automating your systems. Early prevention, quick detection and hassle-free correction of errors, is why digitizing business will surely score over manual business processes any day, especially in the era of GST, which demands a fair level of compliance supported by the right technology. Equally important are the ever-growing concerns surrounding data security and data storage – and it goes without saying that a business using manual systems will obviously find it very difficult to maintain historical business data over the years in bulky books, and also to recover data in case of any mishap or breach of trust within the organisation.

Thus, it is safe to conclude that the preferred step for businesses at this point – is to move on from the age-old system of maintaining manual books, and embrace automation across all aspects of business – accounting, inventory, compliance, banking and much more. Most importantly, moving on from manual systems will guarantee freedom from stagnation, freeing up time for a business to focus on growth, efficiencies and velocity of commerce.