COVID-19 has significantly changed life as we knew it. From restrictions on movements to social distancing; the lockdown has become the new normal. Most experts say that Coronavirus is here to stay and we will have to learn to live with it.
As the lockdown restrictions are being lifted, businesses will go back to running their operations. However, nothing will be the same as it was before COVID-19.
From being creative about selling your products to ensuring their safety, small business owners will have to adjust to a new routine. Moreover, gst composition scheme and implications may also change in the post-lockdown era.
Do not worry if you plan to have a boutique of your own, and are concerned as the gst no search is not giving you enough clarity. Here is all you need to know about how GST will impact your business in the post lockdown era.
Delayed payment by customers
Does the invoice contain any clause about fines in the case of payment delays by the customer? If yes, then GST shall be applicable on the overdue amount. In such cases, you can remit the GST at the time of receipt of the fine from the customer. For more details, you can study the section 15 of CGST ACT, 2017.
Are you facing a cash crush and planning to offer post-sale discounts to the customers? Are the customers asking for discounts because there has been a decrease in the market value of the products?
Please note that these discounts will hold valid for deduction under the GST law only if it is mentioned in terms of the agreement.
If you have availed any subsidy given by the government, GST shall not apply to that. However, it shall apply to subsidies given by other industrial bodies.
Non-export of goods
Are you into exports and your goods, that were to be exported, still lying with the exporter? If this period has exceeded three months, you can hold the exporter to pay the tax along with interest. However, there needs to be a valid bond or letter of undertaking for this.
Delay in the payment to the supplier
There is a restriction on input tax credit if there is a delay in the payment to the supplier. If the period exceeds 180 days from the date of the invoice, you will have to reverse the input tax credit availed on these supplies along with interest.
Credit on the slow-moving or non-moving goods
Are you planning to dispose of your goods that are not moving in the market? In the case of slow-moving or disposal of goods in this period of lockdown, you can reverse the input tax credit.
Transferring business assets
The lockdown has been a tough period for businesses, and several owners have had to take tough decisions. If you are in a similar position and had to transfer your business assets, then it is advisable to analyse the GST impact.
As the owner of a boutique, you may have to consider the input tax credit for your employee-related expenses. For instance, if you provide medical insurance for your employees, you need to understand the input tax credit. If you are reimbursing your employees’ expenses of the internet or phone bills, you may want to know the input tax credit.
Non-uploading of invoice by the supplier
Are you worried about not getting credit because the supplier has not uploaded the invoice? The government has relaxed its norms for the period between Feb-Aug 2020. Now you can avail credit even if the supplier has not uploaded the invoice.
As per the current norms, you cannot submit two E-way bills for the same document. However, the lockdown may have interrupted the delivery of your goods. You may have to understand the implications in such scenarios where the validity of the document may have expired.
Are you seeking to recover damages caused due to non-fulfilment of obligations by customers or suppliers? Before you go ahead, it is advisable to study the impact of GST on this.
As the lockdown will ease and you will start your business, you may want to keep a note of a few aspects. Firstly, understand your tax obligations and compliance in detail. Besides, ensure that you pay your tax by the due date. Lastly, verify all your documents and understand the GST impact to avoid making any mistakes.