If you aren’t getting your company-branded writing pads or pens, blame those shortage on the Goods and Services Tax (GST). For tax advisers also in-house finance teams, managing vendors that supply pens, writing pads, pencils, staplers, and printing paper-rolls has turned out to be a major challenge after the implementation of the single producer levy.
Tax rates and codes for a large amount of stationery items are different now.
Organisations cannot exactly enter a joined cost of stationery, but will have to look codes of each item and enter them independently for raising invoices. Because of this, various companies have concluded they would prevent or decrease the amount of stationary given to employees, while a couple others are searching to not take credit for these buys. For major organizations with extensive and distributed operations, not profiting input credits would be costly, with such liabilities running into several crores of rupees.
“On items such as stationery purchased from unregistered vendors, businesses are liable to pay GST under reverse charge. For this, they need to do self invoicing and determine HSN code for each item purchased,” said Pratik Jain, National Leader, Indirect Tax at PwC India.
A large number of Indian companies, including some of the country’s biggest, purchase their stationery from unregistered and small vendors. In this case, all the organisations might need to draw up something called self-invoicing for GST. Additionally, this means that companies might need to utilize their assets to put the code online for each and everything purchased throughout the month.
Even where enlisted suppliers are involved, in-house finance groups would be needed to go through each and every merchant entry. Organisations will have to check if the adjacent code for each thing is correct as not completing along these lines may create some accounting difficulties in the future, say experts.
Finance heads at numerous companies say that managing stationery will be a standout amongst those issues that shouldn’t have been there in the first place. “Can you imagine that for the last two days, four of my finance colleagues and some tax experts we have hired are only keying in codes for stationery items!” said the CFO of an automobile company.
“Dual HSN codes have been published for pencil sharpeners, staples, paper or paperboard and other similar items under GST. These have to be entered separately in the systems to avail of accurate tax credits… Worldwide, the input credit system is far simpler and less onerous. One standard rate is the norm internationally” said Vaibhav Manek, partner, KNAV.
Industry trackers say that a number of the biggest manufacturers and suppliers of office stationeries are unbranded and smaller vendors. In majority of cases, these little players are more adaptable with their supplies and work on dainty margins, something that meet expectations well with purchasers.
Many tax experts say that a small changes in the GST regulations can do away with this intricacy. “While an exemption of Rs 5,000 has been provided, it is leading to significant compliance burden for businesses. Since in most cases, it would be a revenue neutral exercise, the government should relook at this provision,” said Jain of PwC.
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Many organisations may only deal with organised stationery sellers currently to decrease complications. Most stationery vendors might keep on going with remain unregistered as they might hint at that their turnover is under Rs 20 lakh – the threshold for GST exemption.
Description; Post GST, corporates are not providing stationery to employees as the tax rates and codes for a large amount of stationery items are different now.
