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Cost of Operations and Difficulty of compliance
Cost of Operations and Difficulty of compliance
Compliance is one of the major questions for business houses, mainly manufacturers. The GST law seeks to make compliance extremely smooth and easy. Most of the processes will move online and on the long run, all processes will move online, cutting out officers’ roles to vigilance.
With e-governance taking centre stage in the process, business houses will have the picture of their GST receivables and payables on their fingertips. Submission of forms and declarations too will become digitized, saving time and energy of business houses, thereby reducing cost of compliance execution.
With Excise and Sales Tax merged into single operations, confusions as well as physical clarifications with different departments too will be reduced, empowering businesses to work on Production and sales.
It is also believed that total digital processing will require bills to be submitted online as and when dispatch happens, automating the total GST transaction system and enabling advance GST payments, which will protect well managed firms from penalties.
It however remains to be seen what happens of stock management and inventory disclosure in the first three months and the period thereof.
The best part to come out of GST procedures will be total removal of C-form processes that were not just cumbersome for manufacturers, but rather also leading to losses in many cases. The traders were at times reluctant to give c-form to manufacturers who then suffered huge losses.
GST and Smaller Players
Will they benefit or won’t they?
A question irritating smaller business houses is this. Wholesalers, retailers and commission agents all are confused about this.
An expert as said that on the long run they will benefit from GST due to the turnover limit of Rs. 20 Lacs being non taxable under the law as well as Stock Transfers being taxable for Warehouse owning manufacturers.
On both the counts, the manufacturer will now wish that his buyer (the wholesaler) buys his requirements and the manufacturer will avoid keeping multiple stock points and warehouses.
Further, with online system, and e governance, the cost of compliance will reduce drastically after about a year for smaller players. This will reduce their cost of compliance and process management. It will also provide the much needed respite from procedural bottlenecks for single entrepreneur firms.
Stock in Hand
Should we keep more of it or less of it at the deadline? A real teaser here. This will have to be worked out on the value of your stocks and tax rates that may increase the price or decrease the price. While doing your calculations, remember old stocks will get 40-60% set off within the prescribed clearance period.
Whatever you do, make sure you have your account books and inventory registers in order. This is the spot where it may lead to problems of lack of compliance. Further, it is best to start taking physical inventory and match it to inventory and stocks on books.
All stocks, finished goods, Work in Process and Raw material will have to be kept correctly so the department gets the real picture.
Going Paperless, Contact Less
What will success of GST lead to?
It will lead to processes of indirect taxation where there will be very little contact with persons involved. With most of the processes online, contact with officials will minimize, saving loads of time and energy of government departments and business houses.
It will also reduce the fear of facing an official, a common feeling that prevents people from entering into big businesses.
It will empower total paperless operation, which is transparent and promotes equality. No behind the doors deals and hanky panky, leading to better faith in governance and hence growth of business.
From Build Avenue, we will be in process of publishing relevant inputs as GST implementation gets into operations. Stay tuned to our magazine.

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