Since its launch on July 1st 2017, GST (Goods and Services Tax) has been a subject of discussion on various TV channels and print media. It is speculated to be India’s biggest piece of economic reform since the time of independence and one that will set India on a growth path (GDP set to rise by 2%).
So what is GST? (source of information: cleartax.in)
Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition. A product goes through multiple stages till it reaches the consumer (Buying of raw material, production, warehousing, sale). GST will be levied on each of these stages, which makes it a multi-stage tax. It is also a destination based tax since it is levied at the point of consumption.
Why is GST important?
Currently, the Indian tax structure is divided into two – Direct and Indirect Taxes. Direct Taxes are levies where the liability cannot be passed on to someone else. In the case of Indirect Taxes, the liability of the tax can be passed on to someone else. This means that the customer must pay not just the price of the product, but he also pays the tax liability, and therefore, he has a higher outlay when he buys an item. GST addresses this issue through a system of Input Tax Credit which will allow sellers to claim the tax already paid, so that the final liability on the end consumer is decreased.
How does GST work?
GST has three types of taxes:
- CGST: where the revenue will be collected by the central government
- SGST: where the revenue will be collected by the state governments for intra-state sales
- IGST: where the revenue will be collected by the central government for inter-state sales
When the transaction involves sale within the state, the revenue gets shared between the centre and the state government. When the transaction involves sale to another state, there is only one type of tax (IGST) that is levied.
GST implications on IVF clinics/hospitals
Although, it was communicated before that GST will not be applicable on healthcare services, a few services are expected to be implemented by 15th of July. GST will be levied on the pharmacy items. HSN (Harmonized System of Nomenclature) codes have been defined for every molecule. One item can have only one HSN code, but one HSN code can be applicable to multiple items. The purpose of using the HSN codes is to ensure that GST invoicing practices are in tune with international standards of product nomenclature. Services will be classified as per the Services Accounting Code (SAC).
These changes have implications on the software that is being used at IVF clinic/hospitals. The purchase order operation needs to be redefined. The forms and the print documents have to reflect the GST taxation (PO, Invoice should contain the GSTN number). We at Palash IVF have completed these changes successfully and made our product GST ready. Our clients are already live with the GST version of our product. Auditors like PWC have reviewed our software and approved our GST changes.
GST is probably one of the most positive and transformational change in the tax structure of India. It is expected to trigger our economy to a great growth. We at Palash IVF feel very happy and proud to be a part of this transformation change through our GST ready product!