GST-Compliance Issues that Unregistered Dealers have to Face

The introduction of GST has brought a lot many changes in the entire taxation system of India. There are certain rules and regulations in the compliance that everyone needs to follow including the electronic mode of claiming credits and uploading invoices and so on. To gain that benefit, the businesses and dealers need to get registered into the GST-compliance. If in case the person is dealing with the supplies of goods and services without getting registered into GST will make it further disadvantageous. In this post, we discuss the GST compliance issues that the unregistered dealers have to face during their supplies. Take a look.

Reduction in Sales

It was easier for a registered customer to buy products from and unregistered dealer as they didn’t charge the GST for the supplies, on the other hand, registered dealers used to charge 18% GST on every sales or supplies. Now, the Government has recently passes complete GST rules in which it is clearly mentioned that any purchase made by a registered customer from an unregistered dealer, reverse charge will be levied on the registered customer. However, now, whether the dealer is registered or unregistered, the registered customer will not be benefited. That’s the reason, customers will prefer buying products or availing services from the registered dealers.

Compliance Burden

On every purchase that the unregistered dealer make to a registered customer, the former has to determine whether the supply is liable to tax or not.  He might require know the classification of products according to the GST rate of tax. Another consideration is to determine the eligibility for input tax credit. The registered customer need to issue an invoice in respect to the supplies of goods and services availed through unregistered dealer.

Place of Supply

One of the most complicated issues that have taken place for the unregistered dealers is to determine the place of supply. Purchases made within the State will be treated normally which will get covered under CGST and SGST. However, in case of interstate supplies, the situations can get quite complicated.  They might have to pay the IGST for both the locations.

Reimbursement Procedure

Usually, a deal done between unregistered employee unregistered businesses, the expenses are reimbursed. By doing this, both were benefited as they don’t have to pay extra tax on the services the employee availed on behalf of the business. However, after the GST, if the company is registered, the expenses will be charged and paid to the Government in the form of tax. It is because the Government assumes that the services availed by the company’s employee are availed by the company itself.

Therefore, it’s advisable to get registered under GST to avail the benefits and clear out the confusions which almost all the unregistered dealers have to face. Follow the GST rules and provisons to make sure that you’re benefited and can do business fairly.