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Overview of GST in Busy Accounting Software.

GST i.e. Goods and Services Tax is a proposed system of indirect taxation in India merging most of the existing taxes into a single system of taxation. The introduction of Goods and Services Tax (GST) is a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, it mitigates cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage is in terms of reduction in the overall tax burden on goods, which is currently estimated to be around 25%-30%. Last but not the least, this tax, because of its transparent and self-policing character, is easier to administer.

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Step By Step Guide to migrate from VAT to GST in Busy Accounting Software.

Step by step procedure for working in GST in your existing BUSY Company. Migration to GST is a very simple process and we have tried to create all the default Accounts, Bill Sundries, and Sale / Purchase Types for GST for your convenience. Also, the existing VAT Tax Categories will be updated to meet GST requirements so that a single Tax Category can be used for both VAT and GST transactions.

For migration to GST, you need to perform the following five steps:

  1. Set Tax Type to GST and create default GST masters
  2. Check / Update GST Rates in Tax Category master
  3. Check / Update Item HSN Code and Tax Categories in the Item master
  4. Check / Update Party GSTIN and State in Account master
  5. Configure Standard Invoice Printing Format

GST implemetation in Busy Accounting Software

GST i.e. Goods and Services Tax is a proposed system of indirect taxation in India merging most of the existing taxes into single system of taxation. The introduction of Goods and Services Tax (GST) is a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, it mitigates cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage is in terms of reduction in the overall tax burden on goods, which is currently estimated to be around 25%-30%. Last but not the least, this tax, because of its transparent and self-policing character, is easier to administer.

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Implementing GST for Composition Dealers in BUSY

Under the GST regime government has provided simpler compliance for small dealers known as the Composition Scheme. The Composition Scheme allows qualifying taxpayers — those whose annual turnover is up to Rs 1.5 crore — to pay a percentage of their sales turnover as tax. The tax paid by the composition dealer will be equal to at least 1% of the turnover.

Features of composition scheme

  • Composition dealers are not allowed to collect tax on sales. Due to this reason, ‘Bill of Supply’ is issued for sales transactions, instead of ‘Tax Invoice’
  • Composition dealers are not allowed to take Input Tax Credit (ITC) on purchases.
  • The composition rates are different based on the type of business. For traders and manufacturers, it’s 1%. For the restaurant sector, it’s 5%.
  • For transactions under the reverse charge mechanism, the composition dealers will be taxed at the normal GST rate
  • Composition dealers have to file a single quarterly return in place of multiple monthly returns

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Implementing RCM in BUSY

Under GST Regime, you need to pay tax under RCM to the government if you have made a purchase from an unregistered dealer. Basically, if you have purchased goods on which GST is not charged then it is your (recipient’s) duty to deposit the tax to the government and later on claim an input tax credit for it. This has been done to decrease the degree of un-registered purchases and to cover the maximum number of people under the GST net. With the implementation of RCM, companies/organizations would prefer to make purchases from registered dealers in order to avoid payment of tax under RCM and later on claiming Input Tax Credit for the same.

Apart from unregistered purchases, there are some other cases also in which you need to pay tax under RCM to the government. Various cases under which you are liable to pay tax under RCM are:

  1. Daily Consolidated un-registered purchases or expenses exceed Rs. 5000 or Compulsory Services like lawyers and transporters.
  2. Import of Services i.e. you have taken services from a foreign Company then also you need to pay tax under RCM to the government.
  3. Compulsory Services like that of lawyers and transporters whether taken from the registered or un-registered dealers.

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Implementing Additional Cess in BUSY

Additional Cess is levied on certain items after levying of GST and normal Cess. The government has categorized various items on which Additional Cess is to be levied. For example, On Cigarettes Rs. 3680 per 1000 sticks is charged as Additional Cess after charging GST 28% and Cess 5%. So let us say if the cost of 1000 sticks of Cigarettes is Rs. 4,200 then GST @28 % will be Rs. 1176, Cess @ 5% will be Rs. 210 and Additional Cess will be Rs. 3680. So the total cost of 1000 sticks of cigarettes including all the taxes will be – > 4200 +1176+210+3680 = Rs. 9,266.

Implementation of Additional Cess in BUSY:

  1. Enable Additional Cess in Administration – Features/Options – VAT/GST
  2. Enable Additional Cess in Tax Category Master and specify Tax Rate and Basis
  3. Tag Tax Category in Item Master
  4. Apply Additional Cess at the time of entering transactions

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Import Purchase (Purchase From Outside Country) Under GST in BUSY

Under the GST regime, apart from custom duty, IGST is also paid during the import of goods. IGST is levied at the local GST rate applicable to the goods being imported. The importer can claim a tax credit of IGST paid on imports. No tax credit is available on custom duty paid and it remains a cost for the importer. This type of import where IGST has been paid is called as ‘Taxable Import’.

In some special cases, IGST is not levied during the import process and that is called as ‘Exempt Import’.

In the case of Import, apart from the supplier’s invoice (overseas), various other expenses are incurred during the import process such as Shipping Charges, Custom Clearing charges, Freight charges, etc. which also need to be taken care of.

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Export invoicing in BUSY

Under the GST regime, the following two options are provided for export under the IGST Act:

(a) A registered taxable person may export goods or services under bond, subject to such conditions, safeguards, and procedure as may be prescribed in this regard, without payment of IGST and claim a refund of an unutilized input tax credit.

(b) A registered taxable person may export goods or services, subject to such conditions, safeguards, and procedure as may be prescribed in this regard, on payment of IGST and claim refund of IGST paid on goods and services exported.

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Managing Tax Rate Change in BUSY

Under the GST regime, there have been frequent changes related to reporting and tax rates and will continue for some more time. One such latest change is the change in the tax rate of many products. A lot of items have been moved from 28% to 18% or 12%. Some other items have been moved from 18% to 12% and so on.

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Generating Service Invoice in BUSY

Under the GST regime services are taxable and attract GST. While supplying outward services, the user needs to generate GST compliant invoices same as in the case of goods. Since goods and services are different concepts, there are a few things that need to be taken care of while generating a service invoice. In this document, we will discuss all the problem areas related to the generation of service invoices.

Steps Involved to Generate Service Invoice

  1. Create Item Masters for Services
  2. Enter Sales/Supply Outward Voucher
  3. View/Print Sale Reports

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GST on Advance Receipt in BUSY

Under the GST regime, you need to pay GST on the advance received from various parties if billing is not done within the same tax period. Basically, if you have taken advance from a party and at the end of the month there is some pending amount left with you against which billing is not done or it has not been refunded then you need to pay tax on the pending amount. However in the next month when the billing will take place, you can adjust the already deposited tax in the previous month with the tax to be deposited this month. If the month in which the advance amount is received and billing is done is the same then there is no need to deposit tax on advance received.

GST rate will be the same as applicable for the item for which you have taken the advance amount. For example, you got a Sale order of 6 pieces of Vacuum Cleaners (@ 5000 per piece) on which GST 28% is chargeable and you receive an advance amount of Rs. 38,400 for it. In such a case Rs. 30,000 will be your goods amount and Rs. 8400 is the GST amount which is to be deposited to the government if the billing is not done within the same tax period.

Steps to implementation in BUSY

  1. Enter the Receipt voucher and create a reference for the amount received.
  2. Enter Sales/Refund transaction and adjust it against the reference created for the advance amount.
  3. Check/Post Tax against Advance Receipt.
  4. Check / Post Tax Adjustable Against Advance Receipt

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Managing Expenses under GST in BUSY

As per GST, all expenses can be categorized into three major categories:

GST Applicable Expenses: Most of the expenses like Office Stationery, Food & Beverages, Telephone Expense, Transportation Charges, Office Maintenance, and Job-work Charges, etc. come under this category. Each expense has a specific GST Rate, SAC/HSN Code, Reverse Charge Nature, and Input Tax Eligibility. These expenses need to be configured and booked with utmost care as all the details related to these expenses will be reflected in GST reports.

GST Not Applicable Expenses: Some of the expenses are out of the scope of GST like Salary & Wages to Staff, Interest on Loan and Bank Interest etc. These expenses do not attract GST and need not be reported in GST reports.

Non-GST Expenses: Some of the Goods/Services have been classified as Non-GST expenses, which means some other tax is levied on them. Expenses like Water & Electricity and Petrol & Diesel are Non-GST Expenses. Although GST is not applicable to these expenses, they need to be reported as Non-GST supplies in GST reports.

So, while creating/modifying an expense account, we need to specify the correct ‘GST Type’ (out of above three).

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E-Way Bill Implementation in BUSY

E-Way Bill is an Electronic Way Bill for the movement of goods that can be generated through the EWay Bill Portal (waybill.nic.in). It is applicable for any consignment value exceeding INR 50,000. Even if you have an inward supply of goods from an unregistered person, E-Way Bill is required.

When an e-way bill is generated from the E-Way Bill Portal, a unique E-Way Bill Number (EBN) is allocated and is available to the supplier, recipient, and the transporter.

The complete implementation of the E-Way Bill in BUSY can be divided into two parts:

  1. Part I: Data Entry related to E-Way Bill in BUSY
  2. Part II: Generation of Excel / JSON file from BUSY for upload on the E-Way Bill portal to generate E-Way Bill No.

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