How GST affects small business accounting?
After demonetization, GST i.e. Goods and Services Tax is the new twist in the Indian economy which has completely altered the system of business entities of the country. The presence of GST has poured a sigh of relief for many business owners as its one nation one tax approach prevents them from paying multiple taxes. But they also need to make some arrangements to make their business entities compatible to GST.
There are more than 3 million small businesses in India with a noteworthy contribution in 42% of exports. After GST they will need to do some big alterations in their strategy, including their accounting and billing system.
Immediate effects of GST on business accounting
1 One nation, one tax, one account.
Due to presence of various taxes before GST, one had to maintain various separate accounts for taxes like VAT, excise, CST and service tax. Below is a list of accounts (excluding accounts like sales, purchase, stock) a business entity were supposed to maintain before GST.
- CENVAT credit a/c (for manufacturers)
- Excise payable a/c (for manufacturers)
- Input Service tax a/c
- Output Service tax a/c
- Input VAT a/c
- Output VAT a/c
But After GST
All taxes have been merged into one account. Following accounts are maintained now
- Input CGST a/c
- Output CGST a/c
- Input SGST a/c
- Output SGST a/c
- Input IGST a/c
- Output IGST a/c
- Electronic Cash Ledger (To be maintained on the Government’s GST portal)
Other accounts to be maintained are
- Register of Goods Produced
- Sales Register
- Purchase Register
- Stock Register
- Output Tax Liability
- Output Tax Paid
- Input Tax Credit Availed
- Other Records Specified ( Additional records that need to be specified by the government through notice)