Tax clearing for Unilever India Supply Partners
The Indian GST Council has announced amendments to the existing GST legislation framework.
- On 1 October 2020, the first mandatory part of the GST plan was rolled out. From this date, companies with a turnover of > INR 500 crore were mandated to comply with these requirements.
- From 1 January 2021, the compliance threshold was reduced to INR 100 crore.
- Starting from 1 April 2021, it has been formally announced that e-invoicing will become mandatory for companies with a turnover of > INR 50 crore (equivalent to around USD 7m) or more.
These introduce the principle that an invoice is only considered valid if it contains an Invoice Reference Number (IRN) and QR code.
The documents in-scope for this mandate are:
- Credit notes
Please note that Unilever Supply Partners with a revenue below INR 50 Crores are not allowed to opt-in for the Indian Clearance solution in the first phase. This is a decision made by the Indian Tax Authorities.
Tradeshift is introducing a solution that will allow sellers to register and clear documents with the IRP before they are transmitted to buyers. Unilever India Supply Partners are free to choose from any of the below two options offered as part of the Tradeshift Solution:
- Use Tradeshift for the clearance with the IRP
- Send documents from the Tradeshift Platform after they have done clearance
In addition to the above, Unilever is mandating the following points for all their eligible Indian Supply Partners:
- Completing the IRN field on their documents:
- Including the QR code as an attachment when sending a document (to make sure all additional documents provided by the IRP are attached);
New - TDS and TCS compliance
- Starting from July 1 2021, buyers need to implement Tax Deducted at Source (TDS) at a specified rate of 0.1% on purchase of goods, at the time of credit to the supplier’s account or payment, whichever is earlier, if the value of purchases in a Financial Year exceeds Rs.50 lakhs.
- Further, Section 206C(1H) of the Income Tax Act 1961 ‘restricts’ sellers to charge tax collected at source (TCS) on sale of goods, if the buyer is liable to deduct tax (TDS) on purchase of such goods under Section 194Q. In other words, if your buyer collects TDS, you may not be required to collect TCS.
- As such, with effect from 1 July 2021, Hindustan Unilever Limited will implement TDS on the purchase of goods and hence you cannot charge TCS on the same. In case any TCS is charged by you, Unilever Payments Team will request you to resubmit a revised invoice.
- If you are submitting your invoices via the Tradeshift platform (Web UI), Tradeshift will auto validate your invoice for TCS. If charged on invoices with ‘Issue date’ on or after 1 July 2021, you will be asked to revise and resubmit.
- If your accounting system is integrated with Tradeshift, it will automatically validate TDS. We recommend that you simply leave the TCS field blank or input ‘’0’’ to this field on invoices with ‘Issue date’ on or after 1 July 2021. Do not enter any other figures or symbols. If you decide you want to delete/remove the TCS field from your invoice integration platform, please contact the Tradeshift Support team.
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