Topics: The Good & Bad of GST Impact of GST on e-Commerce startups Invoicing guidelines checklist TAX AUTOMATION Conclusions Queries session.

1. Impact of GST on
Indian Startups
By: Mehak Chhabra
(Chief Marketing Officer, Registrationwala)

2. Topics
Impact on Indian startup
industry.
•The Good & Bad of GST
•Impact of GST on e-Commerce
startups
•Invoicing guidelines checklist
•TAX AUTOMATION
•Conclusions
•Queries session.

3. Introduction
Goods and Services will usher in the biggest tax reform since 1947. It attempts
at integrating all of India economically. And since it is being passed at a time
where India has become a hub for budding entrepreneurs, exploring the effects
of GST on Indian startups makes all the more sense.
Currently, India has over 4000 startups and forms the third largest startup
ecosystem in the world.
Overall, startups should be happy that the GST bill has been passed.

4. The Good & Bad of GST

5. The Good of GST
Taxation is simple
•Every state currently has its own taxation rules and regulations, making the entire
process a function of geography and hence very cumbersome.
• GST attempts to simplify it all for the startups.
•All the indirect taxes will be combined into one, making everyone pay only a single tax.
•And as a consequence of GST's implementation, the tax calculations will be much
simpler, saving time and energy, and encouraging the startups to invest it where it is
much more needed.

6. The Good of GST
Simple registration
To start a new business, VAT registration is necessary but it is often a put-off to
someone starting up. Different fees need to be paid in each state right now.
With GST, there will be a uniform and a much simplified common registration for
companies all across India. Entrepreneurs will need to just obtain one simple license.
They can do their business in as many states as they like, just that they need to be
paying their taxes. That is it. As simple as that.
This should encourage the businesses to think about expanding, since the new format
allows easier ease of business in other states too.

7. The Good of GST
Improved logistics
Logistics are a major headache to startups.
Firstly, regular, sometimes unnecessary checks , at the border cause delay, resulting in the customer
receiving the product late. And in a way, the customer pays for it - through time and money.
Secondly, startups are not organized. What big players do is to stock-transfer goods in bulk, thus
getting things done in a single delay and also avoiding paying charges of inter-state transit. Startups
cannot afford that.
They neither have stock-transfer nor do they have logistics in place to combat the delays. So they
have to procure goods through inter-state sales, which makes them bound to pay central sales
taxes.

8. The Bad of GST
Startups with lesser turnover or startups in the manufacturing sector can have
things complicated.
According to the current excise laws, any manufacturing business
with a turnover of less than INR 1.5 crore is exempted from paying
any sort of duty. After GST comes in full force, this limit - which stands
now at INR 1.5 crore - may be reduced to INR 25 lac, in turn killing
many a small startups.

9. The Bad of GST
Apart from the manufacturing sector, e-commerce sector will be affected too.
Firstly,Tax Collection at Source, or TCS, directs the companies to file
quarterly as well as monthly returns, making the compliance issues
more complicated. Also, they will need to collect the taxes made from
the portal, and it is not an easy job, given they have so many vendors.
Secondly, ecommerce startups are going to suffer because the terms
'operators' and 'aggregators' have been vaguely defined. Operators
will need to pay the taxes while aggregators will not need to.

10. The Bad of GST
The extra documentation is set to creep in
When GST is implemented, food prices may shoot up, forcing an
inflation of sorts. Food taxes are set to suffer not only because of this,
but also because there is no clarity whether "mandi tax" is included in
GST or not.
The extra documentation is set to creep in, which will kick up the
administration costs, and the burden will ultimately be on the
customers, who will be paying higher prices for the goods and services.

11. Conclusion
Logistics, retail and automation sectors emerge as clear winners. They will
hugely benefit from GST and its enforcement. Warehousing is the next in terms
of benefit, as now the inter-state transit and trade taxes will be controlled by the
Centre and are set to be reduced, making the entire process easier and
cheaper.
The future seems rosy but it is yet to be seen how GST individually impacts
different sectors and the startups those sectors house.

12. Impact of GST on
e-Commerce Startups

13. Introduction
GST is a bill that will have far reaching impact on the economy and that impact
will be a sum total on its impact on many of the live sectors in India, a country
only second to China in terms of internet market.
To put it simply, e-commerce basically means conducting any commercial
activity using internet as a medium.
GST attempts to address the issue by having a separate chapter on e-
commerce but the proposed rules and regulations could lead to higher
compliance challenges.

14. Who is under the
umbrella?
According to the chapter, an
'electronic commerce operator'
is any person who owns,
operates or manages an
electronic platform that is used
to facilitate supply of goods and
services or in providing
incidental information or
services as per need.

15. Who is NOT
under the
umbrella?
Any online retailer who supplies
goods and services on their own
behalf is not included under the
definition of an electronic
commerce operator. Thus, the
process of tax collection at the
source and other suggested
compliances will not be
applicable to them.

16. Key Issues
Challenge 1
Higher compliance costs
The GST law, will force every ecommerce player to collect tax at source and so deposit the
applicable GST when payment is being made to the supplier.
This will increase the compliance burden on many of the players as they work with a large
number of vendors.
Previously, ecommerce players used to be treated only as service providers and hence
needed to comply only with a central service tax legislation.

17. Key Issues
Challenge 2
Taxation of stock transfer
GST says that under its regime, certain transactions will also be considered as supplies.
Intra-state and inter-state stock transfers, between any two branches or any two
warehouses of a single e-commerce entity, would be considered as supplies irrespective.
Even though the tax paid will be available as credit, it may cause cash blockages.
Like consider this: in case large quantities of goods are stock transferred, tax liability would
arise first of all which can be counterbalanced only at the time of the final supply, causing a
blockage in the cash flow.

18. Implications of GST
Challenge 3
Credit available only on tax payment
Credit, GST proposes, can only be asserted on the taxes which have been paid to the credit
of the government.

19. Implications of GST
Challenge 4
Valuation issues on discounts/incentives to continuous
GST law suggests that the 'transaction value' is the total value of the goods and services in question.
When it comes to discount's inclusion or exclusion, the case depends on the category it falls into.
Discounts have been divided as pre-supply discounts and post-supply discounts. As is obvious, pre-
supply discounts are those discounts which are allowed before or at the time of the supply. These will
not be a part of the 'transaction value'. Post-supply discounts are allowed after supply and need to be
included in the 'transaction value'.
Cash backs and promo codes fall in post-supply discounts but they have not been clearly addressed to.

20. Conclusion
Though the burden of compliance increases manifold, there are some
significant advantages:
•No cascading taxes
GST will effect a hassle free transfer of credit across supply chains, resulting in
major cascading of taxes, resulting in a lowering of the overall cost of supplies.
•Consolidated tax rates
In the GST regime, both central and state rates are to remain uniform,
simplifying things majorly. A lesser number of disputes is always welcome.

21. Invoicing guidelines
checklist

22. TAX INVOICE Checklist
Every registered person required to issue the tax invoices containing
the following particulars:-
(a) name, address and GSTIN of the supplier;
(b)a consecutive serial thereof, unique for a financial year;
(c) date of its issue;
(d) name and address of the recipient and the address
(e) HSN code of goods or Accounting Code of services;
(f) description of goods or services;
(g) quantity in case of goods and unit or Unique Quantity Code thereof;
(h) total value of supply of goods or services or both;
(i) amount of tax charged in respect of taxable goods or services

23. TAX AUTOMATION

24. Tax Automation –
What Does This
Mean?
You hear this phrase all the time
now but what does it really
mean? With rapidly changing
technology, people and
companies are all about
automating their various
functions and that’s a good thing
as long as you know what you
are automating and how to
automate it correctly
and efficiently.

25. Role of GSP and ASP in GST India
GST in INDIA
Goods and Services Tax (GST) is an indirect taxation in India merging 20 million existing taxpayers into
single system of taxation.
Technology backbone for GST in India is GSTN (the Government GST server)
Why every GST liable business needs an ASP/GSP?
To interact and file Tax returns every month, taxpayer will need a platform or software provided by
any of the Application Service (ASP) provider registered under GSTN.

26. GSPs and ASPs: important constituents of IT
ecosystem

27. Vital Check points to consider before appointing ASPs
Since a major part of the support provided to a taxpayer in the GSP
and ASP network relates to the enriched interfaces offered by ASP,
taxpayers need to pay particular attention when choosing an ASP.
FEATURES
Providing a basic and convenient front-end interface for Taxpayers.
Continuous and flawless services
Single window to manage ITR, TDS and GST compliance
Compliance filing as per GSTN guidelines.
Value-added services, such as tax alerts, other business registrations and legal
support, Billing Dashboard.
Providing varied input options to upload invoice details to file returns.
ByRegistrationwala

28. ASP’s will be processing raw data pertaining to a
taxpayer’s sales and purchases
Raw data provided by the taxpayer should contain all the sensitive information
relating to the sales & purchases of the Organization, such as:
•To whom does the taxpayer sell and where do the sales occur?
•What does he sell?
•How much does he sell and at what price?
•From where and from whom does a taxpayer purchase?
•What does he buy?
•How much does he buy and at what price?
ByRegistrationwala

29. The problem
Data privacy and protection
An Asp’s ability to strictly
maintain data privacy
under properly drafted
non-disclosure
agreements, data security
strengths, and the ASP’s
arrangements for the
protection of shared data.
Value-added services
The extent to which an
ASP provides other
value-added services,
such as trend analysis, tax
alerts, and legal support.
Data retrieval and audit trail
An ASP facility for data
retrieval are very
important, especially
given the statutory
requirements for record
preservation. For a
taxpayer to justify claims
before tax authorities, an
audit trail must be
available.

30. Conclusion
An important part of GST
compliance will be filing data
with the GSTN. An IT ecosystem
under GST, through a network of
GSPs and ASPs, will help
corporate and tax consultants
achieve better data-based
compliance under the GST
regime.
Registrationwala is an ASP
partnering with TAXMANN (GSP)
in India to provide cloud-based,
GST compliance solutions to
business corporations and
accounting firms.