Have You Ever Wondered What Are The Rules And Regulations For GST For MNCs?

GST stands for Goods and Services Taxes rolled out in India as an integrated taxation system. GST is collected in three ways, namely CGST, IGST, and SGST replacing the former VAT, Service Tax, and Excise duty.

The liability for GST varies with the type of work in the value chain. Mainly, the manufacturer and service providers are responsible for the tax.

Though it was implemented three years ago, there is a lot of ambiguity with the new GST rollout. The states are not very well-informed about gstin registration and changes in the tax collection process.

The SGST (earlier VAT) are source-based indirect taxes. This taxation primarily focuses on the originating state. The new system fundamentally flips the entire indirect taxation system.

The new destination based nature of GST or integrated GST (IGST), has a profound effect on the MNCs mainly. A shedload of custom duties imposed earlier is now terminated. Now only the elementary customs are levied along with the IGST.

Manufacturers In India

1. The production cost in India fell sharply under the new regime, accoutring eye-catching benefits. Across the border, selling goods leads to an input tax credit, which further lowers the cost.
2. With GST, business locations PAN India are tax-neutral due to integrated taxes. Currently, the more productive and commercially viable site is selected.
3. The bank credit systems are also in action to provide aid for the businesses. The loans are subsidy-based credit schemes.
4. As the consolidation of industries is taking place, the economic clusters will benefit from scale economies.
5. The efficient inventory management system and central distribution network bring a boon to the manufacturer society in India.

Import/Export Conveniences

1. Imports are now majorly an interstate trade within the nation at IGST. Further cost reduction benefits can be availed by claiming the input tax credit. The GST implementation streamlines the import anatomy as auxiliary customs are now all consolidated into the IGST.
2. A more extensive national distribution system comes into existence due to the introduction of GST. Earlier, due to Central Sales Tax (CST), multinationals had to open small warehouses and setup state distribution systems.
3. The state fringes will not have any effect on the inventory and warehouses.
4. The reverse input credit scheme comes into action for foreign-based companies that have service recipients in India. Import transactions need to be tracked to avail input tax credit.
5. The reverse input tax mechanisms aid the entity of foreign companies to claim for the tax paid by the parent company at the time of import into the country.

Consolidation

The GST combines and integrates the taxation system across the country, deriving high trade and competition. The local traders are now compelled to improve on the quality.

The integration of the supply chain management system will lure the importers/exporters to come up with production units. The multinationals already manufacturing will look to expand.

GST Filing For MNCs

All foreign nationals supplying taxable goods in India must apply for gst registration. These are the forms that need to be filed:

1. GSTR-5
2. GST returns for inward and outward dispenses
3. GSTR-5A (for Online Information and Database, Access or Retrieval(OIDAR) services)

Data To Be Filled

1. GSTIN: Goods and Services Tax Identification Number
2. UIN: Unique Identity Number
3. UQC: Unit Quantity Code
4. HSN: Harmonized System of Nomenclature
5. B2B: From GST registered person to another GST registered person
6. B2C: From GST registered person to unregistered person

Categories

The taxpayer shall state the invoice-level statistics for goods and services as under:

1. For all B2B supplies, the tally needs to be synced in table 5.
2. For all B2C supplies, where account value exceeds more than Rs 2.5 lakhs, the taxpayer should supply the expound in table 6.
3. For all B2C supplies where account value is up to Rs 2.5 lakhs, state-wise synopsis of supplies needs to be filed in table 7.
4. Table 8 caters to the amendments with respect to –
   a) B2B outward locum
   b) B2C inter-state value exceeds Rs 2.5 lakhs in outgoing taxation term
   c) Authentic debit and credit details
5. Table 9 caters to the amendments of B2C outward flow.
6. Table 10 contains tax liability after outward supplies revealed in the current session and negative ITC following the import of goods.

Conclusion

The implementation of GST has resulted in the transformation from a source-based indirect tax to consumption-based direct taxation. With these rules in mind, you can ensure that your business is compliant with the new tax system.

Paul Petersen