Representations by Tally Solutions – Issues in GST Laws and Rules

Last updated on August 2nd, 2017 at 03:44 pm

With each passing day, GST is inching closer to becoming a reality. The law makers are giving final touches to the GST law. As part of the process, the government had made available a copy of the draft law in the public domain for feedback. We at Tally have gone through the law, rules and procedures in detail. Our reading and understanding tells us that multiple aspects of the law need to be revisited and revised as in their current form they are potentially detrimental for the small and medium businesses in the country and therefore for the economy.

We have spent the better part of the last 3 decades of our journey in not only providing software for this group of businesses but understanding their pulse and way of life. This has guided us to review the GST law in light of their hopes and aspirations. We have also gone ahead and sent feedback on the law to the government, tax and revenue authorities and industry bodies.

We firmly believe that GST is a great thing for our country and economy. However, the issues that we have identified need to be addressed for it to be useful and effective for all of us. We are committed to the cause of taking up these issues with relevant authorities and decision makers so that necessary corrective measures can be taken.

Given below are the feedback and representations sent by us.

1.Payment linkage to input credit

Law : Sec 16 (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––

(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and


The GST Bill denies input credit to the tax payer if the supplier has not paid his tax liability. This creates a lot of friction in the trade by increasing working capital, especially for small businesses who work on thin margins. This can have a manifold effect for the economy as a whole and can derail the successful implementation of GST. Once invoice is issued by a supplier with applicable tax reflected on it and on filing of the Return and also matching the Invoice, the recipient cannot be burdened with the responsibility of knowing if that tax has actually been credited to the Government. Here onerous burden is being cast on recipient to prove tax has been deposited by the supplier.

Supplementary problem due to payment Linkage to Input Credit

SMEs will not be able to find new buyers, or only find buyers who will pay after ITC mismatch report, making it impossible for anyone to start a new business, or grow an existing business.

SMEs will take panic loans to ensure that they don’t appear as defaulters when the ratings are public. There will be cases where occasional and intermittent cash flow problems will reduce the rating, and start causing customer erosion leading to spiralling of problems, and forcing SMEs to take ‘panic loans’.

Section of the CGST law defining a compliance rating as highlighted above
149(1) Every registered person may be assigned a goods and services tax compliance rating score by the Government based on his record of compliance with the provisions of this Act. (2) The goods and services tax compliance rating score may be determined on the basis of such parameters as may be prescribed. (3) The goods and services tax compliance rating score may be updated at periodic intervals and intimated to the registered person and also placed in the public domain in such manner as may be prescribed.

2.Advances-Determination of time of supply and treatment

12. (1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.
(2) The time of supply of goods shall be the earlier of the following dates, namely:

(a) the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or

(b) the date on which the supplier receives the payment with respect to the supply: Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount

Explanation 1––For the purposes of clauses (a) and (b), “supply” shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.

Explanation 2––For the purposes of clause (b), “the date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.

(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely:

(a) the date of the receipt of goods; or

(b) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

(c) the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.

(4) In case of supply of vouchers by a supplier, the time of supply shall be— (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases.

(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall––

(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or

(b) in any other case, be the date on which the tax is paid.

(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value

Similarly, for time of supply provision for Service under sec 13


Tax on advance payments will become a non-starter, including the need to identify the HSN Codes against which an advance is made.  Typically, a large order may contain multiple HSN codes, while the advance will be for a fraction of the order value.  There will be no practical way for people to segregate and conform to the current specified rules.  Advances should not be taxed at all, unless the period of advance has exceeded (say) 6 months, in which case it is treated as ‘purchase’ and tax applied at the standard rate on the entire advance amount, rather than attempting to get an ‘HSN’ basis involved.

3.Treatment of e-way bill

Law: Rule 1 (1) Every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees —

(i) in relation to a supply; or

(ii) for reasons other than supply; or

(iii) due to inward supply from an unregistered person,

shall, before commencement of movement, furnish information relating to the said goods in Part A of FORM GST INS-01, electronically, on the common portal and

(a) where the goods are transported by the registered person as a consignor or the recipient of supply as the consignee, whether in his own conveyance or a hired one, the said person or the recipient may generate the e-way bill in FORM GST INS-1 electronically on the common portal after furnishing information in Part B of FORM GST INS-01; or

(b) where the e-way bill is not generated under clause (a) and the goods are handed over to a transporter, the registered person shall furnish the information relating to the transporter in Part B of FORM GST INS-01 on the common portal and the e-way bill shall be generated by the transporter on the said portal on the basis of the information furnished by the registered person in Part A of FORM GST INS-01:

Provided that the registered person or, as the case may be, the transporter may, at his option, generate and carry the e-way bill even if the value of the consignment is less than fifty thousand rupees.

Provided further that where the movement is caused by an unregistered person either in his own conveyance or a hired one or through a transporter, he or the transporter may, at their option, generate the e-way bill in FORM GST INS-01 on the common portal in the manner prescribed in this rule.

Explanation – For the purposes of this sub-rule, where the goods are supplied by an unregistered supplier to a recipient who is registered, the movement shall be said to be caused by such recipient if the recipient is known at the time of commencement of movement of goods.

1.Need to enhance the threshold limit of Rs 50,000 to higher limit for generation of e-way bills,
2. B to C purchases to be excluded from generation of e-way bills alternatively higher threshold limit to be fixed (IPhone are today sold at Rs 80,000)

Law Rule 1 (3) Any transporter transferring goods from one conveyance to another in the course of transit shall, before such transfer and further movement of goods, generate a new e-way bill on the commo n portal in FORM GST INS-01 specifying therein the mode of transport.

Comments: Practical difficulty of this provision

When courier is booked by a courier like DTDC or First flight etc.

Their branch or booking counter generate a e waybill for shipment he booked for said courier and then he moves it to branch near to him, again that branch (where multiple booking counter consolidate their load) again generate an E-WAY BILL to transfer it to their HUB.

Again courier hub will generate an E-way bill for connection to

1) Airlines

2) Train

3) Road

And then again one E-way bill for co-loader to airlines or train or road.Same process for destination till the end recipient. This is practically impossible.
3.Law Rule 1 (8) The details of e-way bill generated under sub-rule (1) shall be made available to the recipient, if registered, on the common portal, who shall communicate his acceptance or rejection of the consignment covered by the e-way bill.
Comments Need clarity if the recipient is rejecting the e-way bill what will be the consequence on that shipment. Is the supply stopped and accordingly issuing of Invoice?
Law Rule 3 ( 1) The Commissioner or an officer empowered by him in this behalf may authorise the proper officer to intercept any conveyance to verify the e-way bill or the e-way bill number in physical form for all inter-State and intra-State movement of goods

Comments – The authorised officer’s right to intercept any conveyance to verify or inspect the e-way bill will be leading to Transportation delays and also bring back the Check post Raj.

Issues in draft rules of accounts and records


1. Maintenance of accounts by registered persons

Rule –  (2 )The account or records specified in sub-rule (1) shall be maintained separately for each activity including manufacturing, trading and provision of services, etc.

When one takes all the transactions which happen in an accounting environment, it includes all inter-bank transfers, cash deposits and withdrawals, payments, receipts, non-tax transactions such as loans, repayments, and so on.  These are generally not done ear-marked for a kind of ‘activity’ – but are organizational in nature.  Requiring that every single transaction is segregated out so that accounts/records can be maintained ‘separately’ would be almost impossible for any organization to fulfill.

Proposed: The account or records specified in sub-rule (1) shall be maintained such that it is possible to get all revenue details associated with each separate activity including manufacturing, trading and provision of services, etc.

Rule – (3) Every registered person, other than a person paying tax under section 10, shall maintain accounts of stock in respect of each commodity received and supplied by him, and such account shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples and balance of stock including raw materials, finished goods, scrap and wastage thereof.

Several types of businesses rely on ‘exhaustion of stock’ in order to ‘replenish’ rather than ‘tracking of stock’ simply due to the nature of their business, which deals in enormous number of SKUs or products which are difficult to count/cross-count.  Examples which come to mind are pharma shops, grocery/FMCG stores, food/sweet shops, ball-bearings and hardware stores, garment shops, to name just a few.  Except for very structured organizations or those dealing with high-value SKUs, this is an impractical expectation for several such businesses.

Rule –  (4) Every registered person shall keep and maintain a separate account of advances received, paid and adjustments made thereto.

Comments This is good for traceability of the full transaction, but this should NOT be brought into the tax net unless an extended period has expired (like 6 months). Today the provisions are to bring it into the tax net if it remains outstanding in the same Return Period (which is a month).  So, essentially, if an advance is received on (say) 28th of a month, and the invoice raised on 3rd of next month, the tax payer has to ‘pay the tax on the advance’ separately for the previous month, and the balance for the invoice in the next month – making it complex to comply.

Rule –  (6) Every registered person shall keep the particulars of –  (a) names and complete addresses of suppliers from whom he has received the goods  or  services; (b) names and complete addresses of the persons to whom he has supplied the goods or  services; (c) the complete addresses of the premises where the goods are stored by him, including  goods stored during transit along with the particulars of the stock stored therein.

Comments This seems impossible for any retail supplier to comply – which is, names and complete addresses of the persons to whom he as supplied the goods or services.  Similarly, for the vegetables and fruits markets (mandis), this will be impossible.  While the addresses of the premises where goods are stored are definitely going to be possible, it also seems impossible to state that the registered person will have all the addresses of the places where goods are stored in transit – since that is generally outside their area of control, and in control of the persons who have taken custody to deliver the goods.

Proposed: Every registered person shall keep the particulars of –  (a) names and complete addresses of registered suppliers from whom he has received the goods  or  services; (b) names and complete addresses of the registered persons to whom he has supplied the goods or  services; (c) the complete addresses of the premises where the goods are stored by him.

Rule – (7) If any taxable goods are found to be stored at any place(s) other than those declared under sub-rule(6) without the cover of any valid documents, the proper officer shall determine the amount of tax payable on such goods as if such goods have been supplied by the registered person.

Comments This does not take into account exigencies that an organization may face due to occasionally running out of space when consignments arrive and needing to keep things in temporary storage, needing to shift things when there are natural problems (like rain/floods), needing to shift material when there is restructuring/construction activity in their own premises, needing to shift material due to fumigation/pest control activities, and so on.  Making this as a broad-based statement will simply open the subject for arbitrary interpretation.

Proposed: (7) If any taxable goods are found to be stored at any place(s) other than those declared under sub-rule(6) without the cover of any valid documents or valid explanation, the proper officer shall determine the amount of tax payable on such goods as if such goods have been supplied by the registered person.

Rule – (8) Every registered person shall keep the books of account at the principal place of business and at every related place(s) of business mentioned in his certificate of registration and such books of account shall include any electronic form of data stored on any electronic device.

Comments In today’s world, where it is ‘access’ to data which is important rather than ‘storage’ of data, this is a retrograde provision.

Proposed: Every registered person shall keep the books of account in a such a manner that it is accessible at the principal place of business and at every related place(s) of business mentioned in his certificate of registration and such books of account shall include any electronic form of data stored on any electronic device.  All electronic form of data stored should be stored within the boundaries of the Republic of India.

Rule – (9) Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries shall be scored out under attestation and thereafter correct entry shall be recorded, and where the registers and other documents are maintained electronically, a log of every entry edited or deleted shall be maintained.

Comments This will make every single business in the country, large and small, immediately non-compliant.  Larger businesses have processes like maker, verifier, approver – simply because human errors are expected (and not an exception).  Human errors in an electronic environment – due to key punch errors – are far more frequent due to the nature of the human interface.  Errors do not imply manipulation or mala fide intent.  Inability to support an entry through counter-party transaction, and/or bank records and/or other manual supporting should be the focus, rather than ‘trail of error correction’.  Requiring that every error should remain ‘visible’ will make every system of records untidy, and promote people to keep things ‘outside the system of records’ until they are ‘certain to be able to punch it in without error’ – causing more harm than good.  This provision is equivalent to asking companies like Microsoft to prevent Word or Excel from having the ‘delete’ and ‘backspace’ key, and people should only be able to ‘score out their error’ and not ‘erase’ them!

The benefit and purpose of this clause from a revenue angle is also debatable – as to whether it will yield any valuable inputs or insights for revenue maximization or policy intervention.  In fact, it has the potential to yield the opposite result as people avoid using electronic means, or avoid recording events with regularity – yielding more opaque records, or less efficient businesses (leading to lesser revenue collection).

Proposed: Any entry in registers, accounts and documents shall be fully supported with either scanned or manual documents, or traceable to the counterparty records (like banks), and should be reconciled with all records submitted in returns, including modifications made to such submitted records, if any.

Rule – (10) Each volume of books of account maintained by the registered person shall be serially numbered.

Proposed: Each volume of manual books of account maintained by the registered person shall be serially numbered.

Rule – (13) Every registered person manufacturing goods shall maintain monthly production accounts, showing the quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured including the waste and by products thereof.

Comments For many SME manufacturers this will be an impossible task.  Examples include lathe/milling shops, carpentry, pottery, toys/artefacts, and so on.  The unstructured nature of their raw materials, and their finished products, will resist any ability to capture the details as expected.

Rule – (14) Every registered person supplying services shall maintain the accounts showing the quantitative details of goods used in the provision of each service, details of input services utilised and the services supplied.

Comments Identical observation to the previous point for SMEs.  Like Beauty Parlors, Restaurants, and so on.  Generally, the ability to correlate information as proposed in the clause will be impractical (for many), and impossible (for some).

Rule – (15) Every registered person executing works contract shall keep separate accounts for each works contract showing – (a)  the names and addresses of the persons on whose behalf the works contract is executed; (b)  description, value and quantity(wherever applicable) of goods or services received for the execution of works contract; (c)  description, value and quantity(wherever applicable) of goods or services utilized in the execution of each works contract; (d)  the details of payment received in respect of each works contract; and (e)  the names and addresses of suppliers from whom he has received goods or services.

Comments This is again impossible for any SME contractor to do – and in fact, probably impossible for ANY contractor to do (that is, maintain separate accounts for each contract).  In most cases, people use multiple shared services across a host of currently running contracts, and maintaining what services are utilized for ‘each works contract’ will be impossible to segregate even for highly structured organizations (who may still use some form of ‘allocation’), but no SME will be able to do it sensibly.  The benefit and purpose of this clause from a revenue angle is also debatable – as to whether it will yield any valuable inputs or insights for revenue maximization or policy intervention.

Rule – (16) The records under these rules may be maintained in electronic form and the record so maintained shall be authenticated by means of a digital signature.

Comments Accounting Records tend to be stored in databases, and the concept of a ‘digital signature’ is designed to sign a ‘document’ and not sign a ‘database’.  This is, therefore, a non-executable clause.

Rule – (17) Accounts maintained by the registered person together with all invoices, bills of supply, credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and outward supply shall be preserved for the period as provided in section 36 of the Act and shall be kept at every related place of business mentioned in the certificate of registration.

Comments Requiring ALL records to be maintained at EVERY related place of business, will be impractical – and particularly when paper records are also involved (which are supportings to either manual or electronic records).  When a registered person has multiple outlets in a given city or state (which are the related places of business) it is impractical to expect that ALL records will be replicated and kept at every place.  Also, for electronic records, there is need for ‘access’ rather than physical availability of the records in every place, and several (if not all) businesses tend to use centralized systems to operate their transactions.

2. Generation and maintenance of electronic records

Rule – (1) Proper electronic back-up of records shall be maintained and preserved in such manner that, in the event of destruction of such records due to accidents or natural causes, the information can be restored within reasonable period of time.

Comments This cannot be a ‘rule’ but a ‘suggestion’ – as the ability to adhere to this rule will be beyond the means of every SME, and is beyond the means of most large companies also.  The concepts of Disaster Recovery are nascent, and the costs prohibitive, and it should suffice to say that people should have the ability to reconstruct their books of records in the event of loss, rather than the choice of words used above.  Typically, this will involve reconstruction by using data from previously submitted records to the Government, GSTN, Banks, counterparties, and any manual or electronics records that may have survived.

Rule – (2) The registered person maintaining electronic records shall produce, on demand, the relevant records or documents, duly authenticated by him, in hard copy or in any electronically readable format.

Comments One must be clear that the concept of ‘duly authenticated’ is a manual certificate claiming that a particular set of supplied records are indeed representative of their affairs – again due to the fact that databases will not have any other electronic authentication process.  It is entirely possible to seek a checksum of the submitted electronic data, to prove that the verified records were the same as the submitted records – so that a taxpayer cannot subsequently claim that these records are not the ones they have submitted.

Rule – (3)  The registered person shall also provide, on demand, an account of the audit trail and inter-linkages including the source document, whether paper or electronic, and the financial accounts, record layout, data dictionary and explanation for codes used and total number of records in each field along with sample copies of documents.

Comments While this may be potentially possible to seek from the developer of the software application, it is unlikely that a registered person will be able to provide the technical details being asked.  This is equivalent to making the buyer of a car responsible for explaining the hydraulics and associated calculations which go behind the braking system.  Additionally, several tens (or hundreds) of thousands of SMEs use software which is not written/created in India, and their ability to comply to this clause is questionable.  We should again examine the purpose and benefit of this clause, and what problem it is trying to solve.

3.Records to be maintained by owner or operator of godown or warehouse and transporters

Rule – (5) Subject to the provisions of rule 1, every owner or operator of a warehouse or godown shall maintain books of accounts, with respect to the period for which particular goods remain in the warehouse, including the particulars relating to dispatch, movement, receipt, and disposal of such goods.

Comments This should be re-examined in context of ground reality of the way trans-shipment depots work, and the practicality of maintaining rigor of records considering their business context, and the skill levels of the people operating such a context.

Rule – (6) The owner or the operator of the godown shall store the goods in such manner that they can be identified item wise and owner wise and shall facilitate any physical verification or inspection by the proper officer on demand.

Comments This will typically be impractical where movement of small quantities of goods – which are normally what an SME ships – gets consolidated from a transportation point of view.  While the traceability of such shipments/containers will ultimately yield the source constituents and owners, this clause implies the ability of every intermediate point of the journey to be able to identify item-wise/owner-wise, and is unlikely to be available.  It should be sufficient to say that they should be able to identify the ‘source of shipment’ and ‘associated document of shipment’ – and the reverse trail will ultimately yield the details being sought for.

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About the author

Tally Solutions


  • I am a small transporter have not been registered for Service Tax, (give declaration under ST notification ). The consignee or consignor responsible for freight payment pays service tax directly to government. Now in GST regime, is it necessary for me to be registered for GST? WOULD IT BE BENEFICIAL FOR ME?

    • A registered dealer has the benefit of being able to take input credit of tax paid on all inputs used in the course of or for the furtherance of business. Since you are providing transportation service, the liability to pay GST lies with the recipient of the service. As a result, you will not have any liability against which the input credit can be adjusted. Hence, you can consult your tax practitioner and take a call.

  • Representation made are based on practical approach and the Govt should look into this. There would be many more practical problems once the GST is rolled out on 1st July. In the transitional phase lot many problems will come out. Government will definitely take steps to eradicate the problems. First year will not be a smooth ride. Broadly, it is understood that the Govt. do not wish to allow any loopholes to exist in the system and that is why the system is designed so meticulously, however, many areas are there such as threshold limits, composition scheme, exempted items etc which the govt allowed keeping in view the practical difficulties. We can expect more such relief once GST is rolled out.

  • Thanks Tally for highlighting these basic stuff. Is govt serious in GST implementation. Most of them are impractical. How is Tally approaching from application side, else you may have separate tax-addon to be planned for your erp solution. Did Dal-lake meeting discussed these problems or enjoyed their time-off from Delhi?

  • Really appreciate the Tally team’s Best efforts to highlight the practical issues & solution. Let the Appropriate authority make the necessary changes to make Law easy to comply by all the concerneds.

  • Adherence of the law would not be possible without electronic devices,software etc and adoption of electronic devices,software etc would not be possible by most of seems that businessman would be more busy in recording compliance of law than in doing business. Any law should be feasible to compliance or it will be opposed by the public.
    Thanks to TALLY for its effort to highlight problems and suggestions.

  • The rules made in air conditioned office are only theoretical. we , the small business people doing daily hard work have hard time to meet our both ends meet . Such complicated procedures are not practical . oh, rule makers come to ground level and feel the agony and hardships of small traders. In your views ” Trader or business man means a dishonest person ” .

  • Good job by Tally team but it is the job of all of us also to see that govt. of the day take corrective action and come out with solutions and honest businessmen are not punished because of people with bad intentions are people who incur loss and fail to pay taxes. Unfortunately, we can not even wait for some time to get solutions from teething problems.


  • Wonderful submission by Tally experts but I don”t think how Mr. Jaitley to react on this…. my surprise
    comparing all with other countries why not on simple taxation?? I have learnt that In Australia only
    one tax that will be applicable for all even for petty shop.. the rate of tax included in commodity and
    sale to person .. in the month 1-10 they will remit the tax to dept. online with single challan not like
    here to maintain so many records & forms… very difficult for small traders [big concerns they have all infrastructures/ team of people so no problem for them]

  • Further issue is also regarding 3 returns every month.. Here dealers dont file returns once in a month on due date.. The matter of three returns is highly non acceptable

  • Very true situation – as GST Consultant and as external speaker we get such quiries especially on input credit depend on supplier’s tax payment

  • I appreciate the points raised by Tally Solutions ( being the solution provider to all business problems) and request to sharpen your efforts to get the necessary changes for ease of compliance.
    Please let me know about the treatment of ground stocks held by us on the day GST will come in force. We are a distribution house in Toys in Haryana which is mostly a tax free commodity in Haryana. The Dealers and Distributors are at a fixed margin say 25% and 10% on MRP. We get a total of 33.82% discount (25+10+cst input) on MRP from our Principle Company in Mumbai and pass 25% to our dealers.
    If the rate of GST is fixed 10-14% on toys , how will we be able to afford this on our existing stock as we need to pass 25% nett of taxes to our dealers. Pl. advises

  • Govt is working on big issue just see a small businessman how he will survive what is the problem in current system at least we don’t have to invest more

  • Being a SME owner looking at the plethora of mandatory requirements its better to find other alternates. This is only going to add to my costs – complying with all these formalities. Further I strongly reject the law – section which states input credit is subject to supplier paying the tax. How am I as a buyer responsible for other peoples tax compliance activities. The matter is even now the same in ITC profile mis-match where the onus of supplier paying up is on the buyer. This matter should be amended immediately.
    I also agree on Tally Suggestions on other sections.

  • Good compilation. One more thing is that for all unregistered dealer purchases the recipient is obligated to raise tax invoice. In my opinion it is impossible because for all expenses debited to profit and loss account be it a goods or services, all transactions should supported by valid documents issued by registered dealers. For ex. if small repair done to office furniture fittings say Rs. 500/- and if it is debited to profit and loss account and if it is not from registered dealer then under reverse charges the recipient need to raise tax invoice.

  • Tally no doubt has raised the valid points and these should be addressed at the Government level before implementation of GST but law is like this and has remained like this in the past. Solutions and clarifications will be provided through amendments, circulars and notifications however it is better that these be addressed in the law itself but GST is now an Act though Rules have not been notified can me modified now but Act for amendment require Parliament approval. It shall be however both ways in the few cases business shall have to adopt because nothing is impossible as well.

  • Sir/Madam,
    We are a small scale manufacturers. I was reading the above blog which is very informative.
    The activities required for compliance under GST will make people like us to concentrate
    only on the documentation/compliance part and ignore the main production / quality/delivery issues
    and finally closure of business. Here in my case I handle many activities as we work with minimum
    overheads and a competitive margin. When my customers expect Just In Time service in terms
    of supply of parts, under GST rules we will be at a loss to satisfy both GST rules and ISO procedures
    on the other hand which needs through documentation. Kindly keep us updated if there is any changes
    in GST rules regarding routine compliance, etc. For your information we have already migrated in GST portal
    and obtained the ARN reference.

  • Very Vital and Valid points described.

    [Govt. must think about the complicated portion and may release specific GST Tax Codes based on which different documents to be charged in GST
    for smooth run so that no confusion arises in different business model to charge GST]

  • the fitment rates are going to be decided in the city of Srinagar on 17th and 18th May 2017 by empowered committee . the real stakeholders i.e trade community and their advisers are as ignorant as any one in the country. the FM must open up.

  • i fully appreciate the critical issues raised above. it seems that the FM is in hurry to implement the law without taking all the stake holders on board. How on earth this law will become a success when even today many issues are not settled as yet like exact rate schedule, exemption list, and when all the states have not passed state level GST acts e.g jammu and Kashmir. no awareness camps have been organised among the business community.
    By all the probability July 1st 207 seems to be a tall order for our FM Mr. jaitly.

  • They should simplify the rules and make it user friendly and not put so much burden . The observations are frightening. Hope good sense prevail

  • It seems Government is hell bent on killing Entrepreneurship and SSI industry which is providing jobs to billions where the Government has FAILED and unsuccessful. Unemployment will raise for sure.
    After going through your posts even I am feeling that I have to close down my SSI unit where Government officials would be harnessing for no concrete reasons.
    I feel I am the collector of Taxes for Government of India.
    Instead of collecting Taxes for Government of India….. I think I need to move out of India for my good future prospects ….. It’s utterly chaos here in India

  • a thoughtful and practical analysis . please take it up with concerned authorities. The purpose of GST should be to minimise the formalities by SMEs and not complicate them ?

  • GST, instead of simplifying taxation seems to be complicating it further. The aim of the government is to raise revenue, then why burden citizens with complicated tax regimes. When simple tax like Banking Transaction Tax has been researhed into and suggested to the governments at the helm. No other tax will exist if BTT is implemented. The rich, the poor, even the beggar will have to pay BTT. Why is the government showing a cold shoulder to this valuable input? Is our ruling class collectively taking us for a ride, to pursue their own agenda?

    This is a question we small and medium ppl need to ask the government and start making a difference.

  • GST is sure to be implemented, it is important to learn / teach digitization, which is lacking amongst SMEs, Trading community. Tally team is doing excellent job. All of should raise these points through our MPs / MLAs

  • Govt is working on big issue just see a small businessman how he will survive what is the problem in current system at least we don’t have to invest more

  • Common man cannot understand the activities. It is more complicated unless some clear instructions are to be provided for each transactions.Rules of excise and service tax are more clear. For documentation and payment of GST procedures should be more clear and user friendly.There is no justification in putting everything to the supplier and recipients.What are the responsibilities of GST officials? No tracking will be done from our end for payment of GST. It should be just like excise and service tax payment.

  • Points raised by Tally expert are very important to be seriously examined in the light of MAKING A PRACTICALLY POSSIBLE GST LAW.
    At the first look, the details in the clauses of GST law seems to be making almost every small and medium businessman to be NON COMPLIANT and a tax evader and OPENING THE DOORS FOR INSPECTOR RAJ.
    Focus should be on doing the right things in a practically possible environment. One should not forget that the common man works hard and earns , pay taxes to govt. , still if he is declared GUILTY just because he can’t follows the intricacies of the GST Law, it will be on long term harmful for the white economy.

  • In my opinion the GST should be much simpler than the current formation. As we all are from different industries and different business models we really need to represent ourselves to the Government our concerns and Tally has done the right thing by doing this

  • Reading the rules and suggestions one clearly feels that inspector raj is going
    To come back with force specially for MSME and small dealers who do not have
    the ability to hire proper personnel due to their small margins. While preparing the law cost benefit analysis to be done at national level rather than government vs

  • Need more clarification about Gst paid on advance received from service tax it can be easier as the rate is clear but in Gst there is no certainty of the future deal what will be deal and the tax rate…how will it be adjusted

  • The observations of Team Tally are “GROUND REALITY” oriented. Furthermore their suggestions are VERY PRACTICAL.

    Our collective voice in support of the suggestions will indeed transpire a positive change.

    It will SUPPORT sustainability & growth of SME’s, and consequently increase REVENUES for the government.

    This TRULY is the purpose of the TAX REFORM

  • The observations of Team Tally are “GROUND REALITY” oriented. Furthermore their suggestions are VERY PRACTICAL. Our collective voice in support of the suggestions will indeed transpire a positive change. It will SUPPORT sustainability & growth of SME’s. This TRULY is the purpose of the TAX REFORM.

  • Thank u tally solution, you are doing such a great job, as a point of view of a businessman, also tax practitioner it is so complicated, there should be a easy and smoothly like VAT. so govt. should make necessary changes with these complicated rules.

  • The points are well taken but also try to understand that the Government is bringing all these provisions by past experience only . Many small concerns are not paying taxes to the Government . Hence such provisions came into the pictures .

  • i agree completely with the findings suggested by tally experts. government must review all points seriously and should not make it difficult for the businessmen to run their businesses.By reading such unnecessary rules we are getting scary of GST.

  • Dear Sir,

    I had written a query on this blog earlier. There is a fundamental issue. We are Registered under Vat and Excise. We are Buying Material Directly from Manufacturers who are charging Excise separately on the Invoice. However we do not take our Entire Purchases under RG23 since many products are sold wherein Cenvat is not passed on further. Are we eligible for Full Excise Refund for Both Purachses whether in RG23 or not. Please note that we once again clarify that Entire Purchases are from Manufacturers wherein Excise is charged separately on the Invoice. Traders stand to lose a lot of money in the transition stock if Credit for Excise paid is not given to them. Please pass this feedback also.

  • I agree with most of the observations of the Tally team. Appreciate their efforts to put these concerns. The govt should pay attention to these observations and make changes for smooth implementation of GST. The current law seems to be very onerous and difficult to implement by SME and in some cases even large organisations. The law should be easier to implement for each law abiding citizen and strict with the defaulters.

  • Tally expert team has done a tremendous job. The GST law has to be practical so that SME’S are able to pay the taxes smoothly, It should not become a big burden on them & they devote too much time & resources on GST as they have to concentrate on their businesss.

  • Unless every one in the chain gets the payment in time the GST can become the destroyer of SME. We definitely want the introduction of GST but please ensure that it does not create problems to do business.

  • This new GST is just a wash. More complicated than it was shown to the public at large and with more powers to government officials to harass the small business people. It is nowhere simple as it is being advertised to public at large and giving Rosy picture.
    All the taxes are same with new names and more complex structure and compliance and more paperwork and reports to be filed.

  • Yes Sir, As I am doing Part Time Account since last 21 years in my field and i am attending presently one saminar on GST my thoughts is that GST is good for Indian Economy Growth because some times small traders or retailers will bare cost of Excice Duty, Service Tax duty ect now the small traders / retailers / manufactuer will take benefits of GST input tax credit so cost of products is reduce. Also cutoff on Cost of CST Purchase from outsited state. Now Traders / manufactuer / traders will take input tax credit of GST purchsase from outside state.

  • I agree and appreciate the findings and suggestions of the Tally experts. The government really needs to think once again over these points and have more concern of SMEs specially.

  • Why are the things being made so complicated , a small and medium scale businessman having 2-3 persons in office cannot handle all these complex transactions . Till date all these law points have not yet percolated to business community . For More and more people to get attracted to doing business , ease of business is what is required . A small and medium scale business man cannot handle all these tedious laws on his own. Need very simple ways to doing business and attract more and more people to come forward and become part of business community

  • Truly appreciate your feedback. The problem is that Mr Jaitley is just not willing to listen. Trying to implement everything through brute force seems to be the new mantra to show the voters that Govt is taking STRICT action against dishonest businessmen. So all are being painted in black colour. I have never seen this method of implementation anywhere else in the world


  • I agree completely with the findings suggested by tally experts. Government must review all points seriously and try to maintain an easy and fool proof system. In a place like Bangalore where there is so much scarcity of people due to booming IT industry, where shall we find people to maintain so many records and at what cost? The costs of products are going to increase and not come down, The corruption will be all time high and the middle men (Auditors) make most of it by these rules as it will be difficult by a common business man to completely understand them.

  • great that you guys are doing this !! the complex rules and regulations might cause the death of many SMEs sometimes i so pity the traders who do not know the ABC of computers just imagine their plight at the hands of advocates CAs accountants and others

  • All rules which complicate and sabotage the basic idea of simplicity and ease of doing business should be abrogated immediately and a holistic approach where all business community which are treated as a accused as per the rules set above. instead should be considered as contributors and once registered with tax department should be treated as government representative while issuing invoice and tax thereon.the buyer should be the last person to be bothered once tax invoice is issued to him and the said tax on the invoice should be a bilateral issue between a registered tax payer and the department or registration authority.

  • Yes, we totally agree with the suggestion recommended by tally experts.

    Concern Authority should review them and enact the hassels free law for the small and medium business.

  • Thanks for the points raised and each of them is going to be a horror story to try and implement without errors.
    In many of the cases, the objective behind such massive documentations is unclear to say the least

    The point referred to by Mr. Bhargava is very very Valid – If the supplier can be taxed for having received an advance, similarly the receiver should be duly penalised for making delayed payments or Cheque bounces.
    In that case, there should be an option for the supplier to upload a ‘Payment Not received’ on the GSTIN Portal so that the receivers Input Tax Credit claimed by them is Cancelled.

    Moreover, the concept of GSTIN is One Nation, One Tax – while we are going to live with 5 slabs and Cess, not to mention CGST, IGST, SGST, UTGST etc. Things are being more complicated instead of of stated objective of Ease of Doing Business.

    The mention of ‘Panic Loans’ is a very very likely scenario.
    If the HSN classification is going to be started in mid-May and details announced by maybe end of May, the ERP developers like Tally and others upload details, classify will have and then train their users in 1 month – June 2017.

    Also there is no clarity on what are SME’s and businesses going to do with their Existing Stocks as on June 30th where Excise Duty, CVD, local VAT or CST has been paid.


    • Every right thinking Indian has been welcoming the concept of GSTIN from 2006, when the initial bills were proposed in Parliament and passed this year.
      The point being made is that the initial rules be simpler for big, medium and small to get into groove and let the system kick-start. Further fine tuning can be done every 2-3 months and over a year, every thing will be smooth.

      One sector which the experts said would gain would be the Logistics Business. Now as pointed out by Team Tally, the E-Way bill to be generated by let’s say the Couriers at each stage of transit is something which we wonder, if they are prepared for or even if they are aware of it. I was not at least.

  • whatever your comments /observations are very much true it is very bane to follow new gst rules for sme’s as they run with small investment & little manpower and it makes so complex atleast GST should be minimal for sme’s who’s turnover doesn’t excess 5 croress p.a.

  • Government is implementing the gst without considering good for small and tiny businesses.

    It’s like either do a large scale business or do a job, don’t think to do a small business.

  • SME are one man shows , system complication will be detrimental to their growth , who are the largest employment generators , policy makers should make systems easy to understand and adopt .

  • i am following your news and informaiton on GST. It is really helpful and we are one of the users of Tally account since 1998. I am really grateful
    for tally for advice and accounting maters.

  • yes i agree with points raised by tally experts. Government should consider all these points before applying GST otherwise small scale business will face serious problems.

  • Whether it will be the responsibility of the purchaser(GST Registered) to deposit tax on behalf of transporter, If transporter has not collect tax on his services.
    If transporter colloect tax from Registered dealer then how we will get the assurance that transporter has deposited tax any government a/c. and If Transporter has not deposited tax in govt a/c then who will responsible.
    If purchaser(GST Registered) show the unregistered hotel bills in his accounts and Hotel owner has not collect tax from purchaser then tax liability will arise for purchaser or not.

  • Really concur with the illustration of practical difficulties, posed on the small and medium scale businesses, by the proposed enactment on GST. To be seriously thought over by the law-making body with the help of practically experienced secretaries, chambers of commerce, and amended before implementation. Certain impractical proposals such as taxing advances, maintenance of stock, generation of multiple e-way bills are to be sincerely dropped, for true and effective compliance of the law.

  • Unorganised sector like Fabrication of gates, grills, Carpenters doing modular kitchens/interiors for individual house/apartment, POP work interiors are doing business in full scale.each project cost goes in few lakhs which is not coming under the scope of GST. This type of freelance is affecting the SME.

  • Government authorize registered person to collect tax on behalf of government and deposit in government a/c. Purchaser paid the tax on behalf of government to registered person. If registered person does not deposit tax in government a/c then purchaser will responsible. I am unable to understand why you are punishing the purchaser who has no fault. Penalty made when we done the mistake, but here government is punishing without any fault to purchaser. It is against all laws. Punishment without any mistake.

    Second, when supplier sold the material directly to customer/ composition dealer/unregistered dealer and does not deposit tax in government then how you will catch him. Government has given the license, then also it is the responsibility of the government to collect tax from such fellows, who are collecting the tax and not depositing in government account.
    As government is authorising, government is also equally responsible in such type to non deposition of taxes and cannot be run away by making such laws, where defaulters have no punishment and honest has punishment.
    With Regards,
    Dr. Pavitra Roshan Choudhary

  • Yes , it is very much necessary to take corrective action immediately and amend the rules , specially to protect the SME sector.
    Practically not possible to comply 100%
    It will increase the ” Inspector Raj ” again and corruption will increase by many folds.

  • While govt wants to play safe on input tax credit claims and puts the burden on genuine businesses , they also should make sure that chq returns cases are dealt with strictly , especially B2B

  • Eway bill thing will bring us back to the vat regime!
    Why so much hindarance on sale of just Rs.50000 goods? It should be atleast 2 or 3 Lac value then this should come in force that also in a single transaction.
    Again the officers will harass the small traders who have a turn over around say 30-40 lacs pa. They dont have so much of computers or internet access or knowledge regarding usage of internet.
    This is the only law which i found to be total bogus and will ruin the whole system with inspector raj. Lets start bribing again!
    If government is not interested in endong black money and money laundering they may make more 100 laws to make life hell for small traders.

  • i agree completely with the findings suggested by tally experts. government must review all points seriously and should give due concern over it

  • We are doing trading business and we are purchasing goods from all over india. We would like to know the invoice sample under GST on 1-7-2017. Purchase Entry, Stock as on 30-6-2017. Value of Stock. Credit of VAT under GST etc . Invoice formate within sale in State, Invoice formate out of Gujarat Sales. Please send invoice formate under GST

  • This is a very valid and well thought out analysis of the situation. The anomalies explained above should be looked into by the government and resolved well before the implementation date failing which the issues will get entangled in so many knots that they will not be able to resolve them in many years to come. Once a mismatch is created in the tax due and tax paid in the platform, digging it out and matching it will become ever so cumbersome.
    The worst affected in this imbroglio will certainly be the SME sector.

  • GST is to simplify the current tax structure. The rules seems opposite to it’s main objective. The approach and thought that tax payers are tax evader create complications. We should work on rules that we can make our system corruption free.

  • The threshold limit for the generation of e way bill should be increased, otherwise lot of problems would come .

    The e way will should not be mandatory or can be loaded later in a situplated time.

  • Dear sir,
    Electronic Records every area /state/town/ village at nook and corner is not possible but you may favour through e. corners at near by or main places for generation of e. way bill.
    Secondly the Second stage dealer can not perform exact records for stock /commodity. He is forced to exchange the goods in a day twice or multiple times until the end user agrees the quality or brand. Stock return Journals can not be done immediately unless the brand is popularized in the market . Recording Taxation part not confirmed to study or discussed. In the next session formula to be published to comment.

  • GST is basically a hotch-potch of the existing Indirect Tax laws. Excellently detailed article from the point of view of SMEs.

    While on the one hand the Government applauds SMEs for their contribution to GDP and employment, when it comes to action on the ground and not just talk, the SMEs get the short end of the stick as usual.

    While I agree that there are a lot of “SMEs” that have transactions without any account or accountability, and have no doubt that these should be forced into the system, I think that genuine SMEs will have an extremely tough time with GST compliance. The Government is in effect creating a new profession of “GST Sevaks”.

  • As gone through the draft. The language is only for interpretation by law makers.
    No specific procedure for export
    Which is like UT1. ARE1.
    How credit will be refunded.
    Small business will need to spend more time to understand the law than making goods & selling it.

  • i am NOT registered to excise can i get set off of of excise, CVD and SAD paid on my imported stocks in hand available on the date of implementation of GST

  • very exhaustive comments and representations made by tally solutions. it is hoped that govt will definitely give thought to these representations and take remedial measures

  • All of the above rules seems to be impractical and difficult to adher if goverment wants to have a smooth transition into gst; the above comments should be taught over and changes should ammended in law to make a practical gst law and not an law that would mess up an existing business; in the current law it seems tha government has only taught of large business houses who have all facility of I.T but have not taught of small and medium sme ; if the small and medium sme are denied refunds that would lead them to be out of the entire community of gst and literally out of business leading to a larger scale of proteststs and resistance to comply to gst ; Pls note first impression is the last impression; if people find it difficut to comply or receive refund of the input credits this could lead to much larger set back; these comments from tally solututions need to be retaught and corrected

  • Very good compilation. Many more issues are there. I am interested in knowing how Tall is coming up with package to address all these issues in GST including filing of returns.

  • Very serious and good suggestions highlighted. E way bill concept must be removed or simplified otherwise (checkpost Raj) will be there. It will affect the very purpose of the GST. The administrator will take undue benefit of this provision and in result harassment of transporter , delay in movements goods . This E Way Bill concept will work like an obstacles in the way of GST. These interruptions will increase the corruptions.

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