GST Tax planning:

Goods and service Tax (GST) changed all indirect taxes levied on goods and services. The most important thing that the GST did is, it removed the cascading effect of the indirect taxation. That is it removed the Tax on tax effect that items specially the goods had from the Manufacturer to the end user.

GST is a very important tax reform witnessed in the post independent India. Considering the complexities in its implementation, no Government until now has even dared to implement GST in India.

What’s Tax planning?

Tax planning is the systematic technique of lowering the tax liability of a tax payer by using various provisions of the law. With tax planning, not only the tax liability is reduced by also litigation is also reduced. There are many points and places where a business owner fails to take advantage of provisions under the law. Careful examination, study and experience of an expert of the law, can help a business owner to avoid paying high taxes and also save his time by not entering in to any litigations.

Under GST, we can minimise Tax legal responsibility through powerful procurement planning.

Why is powerful Procurement planning required?

Raw material cost is a major cost contributor to any product at a manufacturing company. Sometimes the raw material cost has upto 65% of its impact on the cost of the product. Even if we save 1% on the raw material procurement cost through effective procurement planning, it will have significant impact on the final product margins and ultimately the bottom line of the company.

We have given a few factors that will assist one to minimise the Tax evasion and cost of effective procurement:
I) Registered provider: Maximize Procurement from registered vendors. This will allow you to get 100% input tax credit and this will not increase the landed cost of the raw material. The major advantage of buying from registered vendor is, the manufacturer gets 100% input tax credit and as a result cash outflow in the form of GST to unregistered vendors can be avoided.  Compliance is very easy and smooth. At Manisha Mohol and Associates, we help in GST registration and also fulfill GST compliances. Purchasing from a registered vendor is more easy as compared to from an unregistered vendor. Also, price comparison is easy while buying from a registered buyer, as compared to unregistered buyer.
II) Composite supplier: input tax credit score score isn’t available at the purchases from provider who opted underneath Composition Scheme. Taxes are inclusive withinside the expenses and obviously landed cost of fabric is better than procurement from the registered company. Procurement planning must be in this kind of way that there need to be minimal purchases or set a goal of zero purchases from composite company.
Iii) Inter-state or Intra-kingdom Purchases : Inter-country purchases attracts IGST at the identical time as Intra-state attracts SGST & CGST. From coins outflow angle, IGST input tax credit score score can be utilised to prompt tax liabilities from IGST, CGST and SGST at the same time as CGST & SGST enter credit score rating tax may be utilised to setoff for respective liabilities best.In case, inter-state earnings and intra-state purchases are better, cash out float is closely impacted and accumulation of enter credit rating will increase the stress on running capital. Price & benefit assessment is to be required for preference making about inter-state v/s intrastate procurement withinside the purview of GST provisions.
Iv) Unregistered supplier: usually try and avoid buying from unregistered issuer in particular due to non-availability of input credit score score and secondly, due to the reality price benchmarking can be very tough.The possibilities of fluctuations in charges are more and it is able to reason increase withinside the material value. Compliance troubles can be cropped up and tax desires to be paid beneath opposite rate for the purchases from Unregistered provider.
V) most important Procurement: analyse the impact of GST at the economic organisation of most critical agencies and discover probable saving avenues and negotiate the rate with the vendor. It can result in remarkable saving in procurement cost & taxes.Further, it’ll undoubtedly effect the lowest line of the organisation.
End: Procurement price may be saved via analysing & effective packages of GST provisions. Tax planning permits to minimise the tax criminal responsibility and maximize Compliance.In distinctive words,Tax planning is an essential a part of effective procurement. I agree with “A RUPEE saved IS A RUPEE EARNED”.