The GST Council of India has sought views of states on hiking rates on 143 items. Here’s what you need to know as a small online business owner.
Proposed GST rate change
To make rates more rational, the GST Council of India occasionally revises the rates of products under the Goods and Services Tax (GST) regime to bolster revenues.
Currently, most of these products are in the 18 per cent tax slab, and they may rise to the top 28 per cent slab.
What items will experience a rate change?
GST rates for items such as papad and jaggery may move from zero to the 5 per cent tax slab.
Leather apparel and accessories, perfumes, pre-shave/after-shave preparations, dental floss, wristwatches, razors, chocolates, waffles, cocoa powder, extracts and concentrates of coffee, non-alcoholic beverages, handbags, plywood, doors, electrical items may see the GST rate being hiked to 28 per cent from 18 per cent.
Some of the reasons for these GST rate changes are:
- To correct the tax structure which is very important for businesses to run smoothly
- To reduce the price of goods which are essential items so that it becomes more affordable
If the proposed GST rate changes are confirmed, it will be announced at the GST Council meetings and will be updated on their official website.
How your business can deal with GST rate change
Here are some important things to be checked when the tax rate of products get amended:
1. Correct tax rates
The liability to pay tax on goods or service will arise at the time of supply. So it is very important to understand when the “time of supply” arises in case when there is a change in the GST rate.
2. Change in business tasks
You will need to check and update illustrative aspects when there is a tax change:
- Changes/Updation in the accounting software, inventory software etc
- Aligning or realigning selling price for goods or service particularly cumbersome process for manufacturing industry
- Evaluation of working capital cycle due to accumulation of input tax credit in case of lower tax rate on outward supply, higher tax rate on procurement of goods or service etc.
- Evaluation/Revision of legal agreement
- Changes in the printed stationary such as pre-printed tax rate invoice (tax rate already mentioned), packaging items (printed already printed)
Know more about GST
To run a long term business, you need to know about the nuances of GST and how it impacts your business.
Enrol in this free GST course to get started. Save time, reduce costs and claim an Input Tax credit with GST compliant e-invoices.
You can also file your GST invoice directly though your Instamojo online store. Don’t have one yet? Start now.