System Changes form 1st April 2021 for Businesses

The new financial year starts tomorrow, and there are many activities to be done as per year ending for the organization. Apart from those year-ending activities, some changes must be done from 1^st April 2021 with respective compliances from GST, Income Tax & MCA purposes. These changes are statutory for some and for some in improving the ease of doing business. Key changes required to be carried out from 1^st April in are listed below

1. New document series

As per provisions of Goods and Service Tax, the taxpayers must maintain unique number series for the documents being issued by them for every financial year. The document sequence has to be re-set for some accounting packages. It is automatic in some accounting packages, cases where it has to be done manually; the taxpayers have to be careful and complete this step before creating any new transactions for the new financial year. Document Sequence/numbering has to be changed for the following documents in GST

• Tax Invoice
• Bill of Supply
• Tax Invoice Cum Bill of Supply
• Debit Note
• Credit Note
• Delivery Challan
• Payment Voucher
• Receipt Voucher
• Refund Voucher

2. HSN Code

There is also a change in the HSN code requirement under GST to be printed on the Tax Invoice. The following are the changes

• For taxpayers how are having turnover above ₹, five crores are required to show six digits
• For taxpayers whose turnover is below ₹, five crores are required to show four digits in business-to-business transactions. In the case of Business to Customer Transactions, it is optional.

The taxpayers have to make necessary changes for the Item master if not updated with the latest provisions.

It is recommended to make changes for the item master with eight digits as it will be applicable in the near future, and changing master data frequently is not advised. Moreover, it is time-consuming and unproductive work.

3. E-invoice

e-invoice is required to be issued by taxpayers whose aggregate turnover is above ₹ 50 crores during the last three years from 1^st April 2021.

It is recommended to make changes to the accounting or ERP system to address the above change.

If the taxpayer does not issue an e-invoice, is it not considered a tax invoice, and the recipient cannot take input tax credit at all.

It can be implemented using any of the four methods

• Application Program Interface (API)
• Secure File Transfer Protocol (SFTP)
• Bulk JSON
• Single JSON

For adopting any of the above methods, the taxpayers can approach any of the GST Suvidha Providers (GSPs or Application Service Providers (ASPs).

Even though the taxpayers will be using the Bulk or Single JSON upload for the generation of e-invoice from the department portal or ASP/GSP solution, the same will not be integrated with the Accounting/ERP system; this may pose a challenge in the future. It is strongly recommended to update the Accounting/ERP system with e-invoice details for future references.

4. LUT

Letter of Undertaking is required to be taken by taxpayers who are making Zero Rated Supplies, and a new one has to be obtained before 1^st April 2021.

It is recommended to take the same at the earliest, or it may impact your outward supplies accordingly.

5. Accounting package with audit trail and edit log

As per the latest notification from the Ministry of Corporate Affairs, all companies using accounting packages have to ensure that there is an audit log in the accounting package with the edit log.

Companies have to ensure that they are enabling the same if they maintain the same or request their accountant or CA to do the same.

There is a difference between the audit trail and edit log, in case of audit trail only Who is Who information is captured and in case of Edit log the date elements changed is also captured for future reference.

6. Change in Income Tax Rates – TDS & TCS

Due to the pandemic and lockdowns, the Government has announced a reduction in tax rates up to 31^st March 2021 for some sections, and now from 1^st April, the new rates or actual rates will be applicable.

It is recommended to verify and enter the new TDS / TCS rates in the masters with the effective date to maintain the audit trail as per MCA notification. In case of shot, deductions of TDS or recovery of TCS penal provisions are applicable.

The above listed are major changes required to be carried out and same may vary from each taxpayer based on his nature of business and turnover. The taxpayers should always remember one thing, cost of non-compliance is a costly affair compared to the cost of compliance. Wherever required the taxpayers should take professional advice and not relay in information available in public domain to their best interests.

Disclaimer

Any views or opinions represented above are personal and belong solely to the author, and do not represent those of people, institutions, or organizations that the author may or may not be associated with within a professional or personal capacity unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

GST Tip – 230

As per the Tax Invoice, Credit and Debit Note Rules, released for GST on 18th May 2017, as per Rule 5 at the time of creation of receipt voucher, if the tax rate is not determinable, then the tax rate to be considered is 18%.

GST Tip – 229

As per the Tax Invoice, Credit and Debit Note Rules, released for GST on 18th May 2017, the document issued like Tax Invoice, Bill of Supply, Receipt Voucher, Payment Voucher, Refund Voucher, Delivery Challan, Revised Tax Invoice, Debit / Credit Notes &  Tax Invoice in special cases should be unique for a financial year and the length should not exceed 16 characters.

GST Tip – 227

As per the Tax Invoice, Credit and Debit Note Rules, released for GST on 18th May 2017, on receipt of advance from customer for supply of goods or services or both under GST for future supply a receipt voucher is being issued by the recipient to account tax,  if the same supply is not executed for some reason or other, the recipient has to return the money to the customer which is taken as advance and for this a new document has to be issued known as refund voucher along with the tax amount to the customer. The data elements to be shown on refund voucher are given in Rule 6.

GST Tip – 184

As per the CGST Act, a receipt voucher can be issued for recording the receipt of advance from the customer under GST, as taxes are applicable on receipt of money under GST for the supply of goods and services.

GST Tip – 91

After the Receipt of advance from the customer, the tax invoice issued by the supplier and the recipient or customer cannot take input tax credit from this tax invoice/receipt voucher. The input tax credit can be taken on the tax invoice issued for the supply of goods or services for the whole value of the supplies including the tax paid on the advance. The tax invoice issued during the supply of goods or services has to be reported in Table 12 of the GSTR – 1, along with the reference number issued during the receipt of advance.