While ruling out the possibilities for any further delay in implementation of GST, Finance Minister Arun Jaitely had expressed, “Of the total 8.09 million existing tax payers, 81.1% have already registered.” But would only registration itself suffice for smooth transition to GST? When the whole law has been drafted with an intention to ensure “Financial Discipline” from the very grass root level.
How can we expect from a boy, who is not well dressed while entering to the school, to be discipline throughout the day? Similarly, how we can expect the tax payers to attain financial discipline, without cleaning their books and ensuring accurate carry forward of input tax credit.
Less carry forward of input tax credit would result in blockage of fund while excess would attract scrutinized assessment and interest cost.
So how to ensure accurate carry forward of tax credit with invoice level matching for the tax credit lying in our books?
Reasons for inaccurate input tax credit:
- Deduction made for quality issues, delay in delivery, damages etc.
- Rejected material not sent back.
- In case of works contract where quantum of work completed is pending to be approved, escalation claims, claim for change of scope etc.
- Service tax credit on advance payment.
- Invoice for goods and services not received; and so on,
Now what can be done to ensure that accurate input credit is availed?
A. Request your suppliers, service providers and customers to notify about all pending invoices, debit notes, credit notes and details of the deduction or rejection made and not communicated.
B. Get transaction and balance confirmation from suppliers, service providers and customers.
The feasibility of the above activity is effected due to the strict deadlines a firm has to adhere with respect to Excise & VAT returns for month ended June 30, 2017. And that’s where FIRMWAY plays a pivotal role of expediting the process by using a digital platform for obtaining these confirmations. Firmway has a track record of 80% reconciliations (In value) within a week’s time with very minimal involvement of accounts team.
Click here to know more about Firmway.