This article is addressed towards brands who had started working with eshopbox prior to implementation of GST.  It will try to address steps to be taken for seamless transition to GST by clients who are working on billing model with eshopbox.


Implementation of GST has following major impact :

  • Change in flow of input tax credits to eshopbox.  In case of intra state billing (CST billing), no input tax credits was available to eshopbox.  In case of interstate billing (VAT billing) as well, due to changes in tax slabs, amount of input tax credits doesn't match with input tax credits available earlier. 
  • Also the billing value (unit price) in GST regime has changed as compared to VAT/CST regime (Refer Billing value calculation in GST regime)


Please see table below which compares differences in billing value and input tax credits available in GST regime and VAT/CST regime. 

Table 1 does it for interstate billing (CST billing) and Table 2 does the same for interstate billing (VAT billing)


Table 1: Comparison of billing value in case of interstate billing during GST regime and CST Regime



  GST Regime 
 CST Billing 
 Action to be taken


Value
Value
MRP
1,200.0
1,200.0

GST
 12%
 128.6
5%

Net sale value (excluding tax)
1,071.4
1,142.9

Billing Margin
 50%
 600.0
 50%
 600.0

Unit Price excluding tax
471.4
560.2

GST*
 5%
 22.4
 2%
 11.2
 22.4
  difference in input tax
Unit price (including tax)
493.9
571.4
 77.5 Difference in billing value



Table 2: Comparison of billing value in case of intra-state billing during GST regime and VAT Regime



 GST Regime
 VAT Billing
 Action to be taken


Value
Value
MRP
800.0
800.0

GST
 5%
 38.1
5%

Net sale value (excluding tax)
761.9
761.9

Billing Margin
 50%
 400.0
 50%
 381.0

Unit Price excluding tax
361.9
381.0

GST*
 5%
 17.2
 5%
 19.0
 -1.8
 difference in input tax
Unit price (including tax)
379.1
400
 20.9 difference in billing value



Stock adjustment credit note :  

  • Though the billing value doesn't directly impact the monthly settlement value but it will change the debit note / credit note adjustment amount.  

  • It will create confusion and complications to differentiate between the type of purchase while calculating settlement amount every month and therefore it is in best interest that difference in billing value in GST regime and VAT/ CST regime of the closing stock should be settled off by issuing a one time stock correction credit / debit note.


Advance payment to settle differences in input tax credits :

  • Also, note amount of input tax credit available with eshopbox will be different in GST regime as compared to VAT/CST regime. 

    • For brands raising CST billing earlier , no input tax credits was available to Eshopbox

    • For brands raising VAT invoices as well, amount of input tax credits during VAT/CST regime will be different than in GST regime because of different tax rates in GST. 

  • Again, In order to avoid complications of differentiating the type of purchase (pre GST or post GST) at the time of calculating monthly settlement value, Brand needs to make an advance payment for difference in input tax credits in GST regime and VAT /CST regime of the closing stock as of 30th June. 

  •  This advance payment will be recovered by brand in due course

    • If the goods are sold, input tax credits will be added back in the settlement value. 

    • If the goods are returned back to brands, eshopbox will deposit GSTand same can be utilized by brands as input tax credits. 


An email will be shared with each brand with detailed calculation in the above method for Brand's closing stock with eshopbox on 30th June.