GST is a complete change in the existing tax system and it’s a different at many levels, Retailers, in particular, can expect quite a few changes in the accounting for GST .This can extend well up to keeping track of the different components of GST, separate entities for inter and intrastate sales, and even some additional accounts in your Chart of Accounts.
More often than not, new laws mean new paperwork for you to deal with. Transitioning from your traditional accounting method to the GST system can be a bit hard, especially, since you’ve been using ledger books to keep your books. You’ll have to move online. Since retail business has a lot of book keeping required and daily transactions this is the best time to switch from Offline to Online and come on to software like Giddh.com which is a ready to use.
Listed below are some changes that the retails will have make for being GST READY .
Retailers will need to re-categorize the goods you sell into the five GST rates (0%, 5%, 12%, 18%, and 28%).
The invoice format might need a few changes to accommodate GST requirements like GSTIN, and the place of the consumption for retailers for GST. Since inter and intra state sales and purchases are taxed differently, you’ll need to keep track of them separately. This extends to tax components as well; you need to keep track of the CGST, SGST, and IGST components separately. When transitioning to GST, it’s likely to bring significant tax benefits by the way of input tax credits. Now, refundable taxes are not to be considered a part of your actual cost of acquisition of goods or services. It should be accounted under assets rather than an expense. You need to re-configure your inventory valuation, and your expense recording rules based on this to ensure that your tax credits are kept track of properly.
In addition to this, you might have to update your chart of accounts to keep track of all this. The obsolete tax accounts will need to be replaced with new ones based on the type of business, credit availment rules, and place of purchase and sales.