GST Bill’s anti-profiteering Clause

GST Bill’s ‘Anti-Profiteering’ Clause: Things You Need to Know

The Goods and Services Tax Council has made several revisions of the Goods and Services Tax model on the basis of the representations provided by the industry stakeholders. These include simplification of work procedures, allocating lower tax slabs to certain goods, elimination of taxes on securities, etc.

One of the most important changes made in the GST model law is the introduction of the “anti-profiteering” clause.  As per Clause 171 businesses are required to pass on the benefits of reduction in taxes and refunds received through input tax credits or otherwise to their customers by lowering the prices of their goods and services appropriately.

Importance of Anti-Profiteering Clause in the GST Regime

Earlier, when Goods and Services tax was introduced in other countries viz. Australia, New Zealand, Canada, etc. they observed a high surge in inflation, albeit for a limited period. This was mainly because of the gaps between the concept and its execution.

GST can only serve its purpose when the entire chain of a business works in sync. So, manufacturers must lower taxes to benefit retailers which must again revise the rates to benefit the consumers.

Even though GST is meant to eliminate the cascading effect of taxes and thus reduce costs of goods and services for the end consumers, the responsibility lies with the manufacturers, traders, and service providers that are a part of the business cycle. The anti-profiteering clause was created to keep this in check and punish those who engage in unfair business practices.

GST Anti-Profiteering Panel

The government has set a five-member anti-profiteering panel with a sunset date of two years. This committee will ensure that the businesses pass on the benefits of tax reduction to their consumers. It will also have the authority to take appropriate action on the non-compliant taxpayers.

The government has released the anti-profiteering rules under the GST regime which will empower the anti-profiteering panel so that they can:

  • Order reduction in prices in accordance with the lowering of taxes under GST.
  • Charge penalties on those found guilty or even cancel their registration on reasonable grounds.
  • Seek return of the undue profits earned from not passing on the benefit of reduced taxes to the consumers along with an 18% interest rate.
  • Recover funds that are not claimed through returns by eligible taxpayers, or in case the taxpayers are unidentifiable. As per Section 57 of SGST and CGST Acts, the recovered amount has to be deposited in the Consumer Welfare Fund.

What Should You Expect?

In the words of India’s revenue secretary Hasmukh Adhia, the government wants the companies to cooperate and hopes that it doesn’t have to use the anti-profiteering “weapon”.

While the government may have noble intentions with its anti-profiteering clause, the end result may be far from the expectations. The authority set for exercising this clause is meant to ensure that businesses don’t generate unfair profits by increasing the prices of goods and commodities arbitrarily. However, it also makes it easier for them to interfere with the businesses unnecessarily. They may force a taxable person to reduce prices at their discretion even if it results in an undeserving loss. Moreover, they can create unnecessary hurdles and affect the flow of business operations with tedious formalities and investigations.

In the past, Malaysia also tried an anti-profiteering and price control law which turned out to be an utter disaster. The initiative backfired and was abandoned shortly as a result. Thus, we can’t rule out the possibility of something similar happening in India too.

Conclusion

For now, the impact of the anti-profiteering clause is open to interpretation and speculation. However, as a business owner, it’s in your best interest to comply with GST regulations and reduce the prices of your goods and/or services in accordance with the provision of input tax credits and reduction in taxes as applicable.

How To Use numberz GST Calculator?

numberz GST Pricing Calculator makes businesses help understand tax estimates under GST. It is for:

  1. Traders
  2. Manufactures
  3. Service Businesses
  4. and Hybrids (both goods & services)

Prerequisite steps for using GST Pricing Calculator –

  • Since numberz GST Pricing Calculator is for understanding your profit and loss, you must know the exact amount of units/quantity of your products (or services) and their respective rates per unit.
  • You will have to manually select all the tax rates.

Step 1: Click here to visit GST pricing calculator. This is your welcome screen. Insert your company/Firm name*, your email – you can use either your business email address or personal email address here, and your phone number to proceed to the next step.

 

Step 2: Once you have submitted your information, you will be prompted to choose your business type. Here are what they mean:

  • Trader – A trader is one who first buys and then sells the product or currency.
  • Manufacturer – A manufacturer is one who manufactures the products or commodity.
  • Service Providers – A commercial enterprise that provides work performed in an expert manner by an individual or team for the benefit of its customers
  • Hybrid – Those who indulge as service providers and trader/manufacturer. 

Step 3: Once you have selected your business type, there are different panels for different tax calculation. The path defers, but the end result is same! We are going to take ‘Traders‘ for this tutorial. This estimates your total turnover.

  1. For Traders

Enter the number of units or quantity to be sold. Use to the next panel to input the rates (yes, you can write in decimals as well). Next, enter the tax rates for Goods turnover.

 

Step 4: Under ‘Purchase’ block, enter the number of units for the item your purchase, insert subsequent rates as well. Tab all the rates mentioned in the calculator, this will help you estimate the sales cost. You also need to add the service charges, these are the kind of charges that included because of your non-operating expenses.

Step 5: This is it. You can now calculate net margin, saving and savings%, along with End Customer Price.

 

Happy Calculating.

Send your reviews and suggestion to support@numberz.in

How to use numberz GSTIN Collector Utility?

Prerequisite steps for using GSTIN Collector –

  • You should have GSTIN.
  • You should have email ID’s of your customer/vendors.

Step 1: Click here to visit GSTIN Collector utility. You will have three options here. You can create a new stand-alone account or sign-in with your existing Google account. If you choose to create a new ID, you can sign-in from the upper right corner.

 

Step 2: Once you have logged-in, fill in your details. While entering your email id, make sure you differentiate between register GSTIN email ID and the ID you used to log-in. Click ‘Next’ when you are done entering your information.

 

Step 3: Now comes the next step. This is the place where you can create and send emails to your vendors and customers. Do note that this is the mail that will be sent from your account. We have already created a template for you, however, if you wish to, you can edit it as well.

Step 4: Hit send to start inserting email addresses of your vendors/customers. You can even add Google contacts or upload excel sheet to insert contacts. Click on ‘TRACK’ on the upper slab to move on to next step.

Step 5: In this step, you can track your vendors/customers GSTIN. Your email ID’s are already shown on the panel. Check the contacts you wish to send the reminder and hit ‘Send Reminders’.

Step 6: In your in final step under ‘COLLECT GSTINs’, you can download GSTIN’s you received from your vendors and customers.

 

Voila, you are now all set to send and track invoices! Do send in your reviews and suggestion at support@numberz.in

input service distributor under gst regime

Input Service Distributor Under GST Regime

Businesses usually have their network of head offices and branch offices apart from the manufacturing and distribution units all over the country. Without a doubt, the system is intricate and complex to handle at times. To centralise the entire system, and make it simpler in the process, Input Service Distributor (ISD) was created under the CENVAT regime. This entity was responsible for the management and regulation of input tax credits generated by the businesses. However, with the new Goods and Services Tax regime effective now, the role of ITD will slightly change.

ISD Under the Old Regime

An ISD under the old taxation system was a manufacturer or provider of output services. It received invoices as per rule 4A of the Service Tax Rules, 1994 against the purchase of input services. In return, it would issue invoices or bills for the distribution of the credits paid on the service tax

In other words, ISD would receive the service invoices and then distribute the CENVAT available to it to the other manufacturers under a centralised system.

ISD Under the GST Regime

The role of an Input Service Distributor under the GST regime would be similar to that of the old regime, but with a few minor differences.

GST Model Law defines Input Service Distributor as an office of the supplier of goods and/or services that has received an invoice for input services and is authorised to distribute the tax credit to the supplier.

Under the GST regime, an ISD issues the appropriate documents for the distribution of the credit of CGST, SGST and IGST paid on the services and/or goods to a supplier who has the same PAN as the aforementioned office.

Distribution of Tax Credit by ISD under GST

The following explains the applicability of taxes under the GST regime:

  • CGST and SGST: For transactions within the same state
  • IGST: For imports and transactions between two different states
  • CGST and UGST: For transactions within a union territory

Now, an ISD will distribute credits according to the location of the credit receiver and the location of ISD itself. There are two possibilities with this arrangement. These are:

  1. When ISD and the Receiver of the Tax Credits are Located Within the Same State

In this, the ISD distributes the credit of ISGT, CGST, SGST, and UGST based on the tax invoices provided by the recipient.

Let’s consider an example now- Jayanti Enterprises is an Electronics Dealer and a registered ISD based in Jaipur. It has two other units based in Jodhpur and Rewari.

Jayanti Enterprises received an invoice of Rs. 2 lakh on which a GST of Rs. 36,000 was paid (Rs. 18,000 CGST and Rs. 18,000 SGST) from its Jodhpur unit. So, it will distribute the credit of Rs. 18,000 as CGST and Rs. 18,000 as SGST.

  1. When ISD and the Receiver of the Tax Credits are Located in Two Different States

In this, the ISD distributes the credit in the form of IGST. So, considering the same example of Jayanti Enterprises explained above, if it receives the same invoice of Rs. 2 lakh on which a GST of Rs. 36,000 was paid (Rs. 18,000 CGST and Rs. 18,000 SGST) but from its Rewari unit (which is another state i.e. Haryana) then it will distribute the credit of CGST Rs. 18,000 and SGST Rs. 18,000 to the Rewari unit as IGST Rs. 36,000.

To sum it up, the role of ISD is not much changed from that of the old regime to the new GST regime. However, apart from the few major changes given above, one other change is that the ISD under the GST regime will have to file monthly returns by 13th of the following month unlike earlier when they had to file half-yearly returns.

Understanding place of supply

From Editor’s Desk: Understanding Place of Supply

About the Author
Swapnil Gorde
Domain Expert, GST
Swapnil is a tax expert having expertise in direct and indirect taxation for over 15 years. He has been speaking at ICAI conferences on E-governance and has post qualification expertise of more than 20 years. Currently, he is working with
numberz as GST consultant.

To understand the Place of Supply under GST, let us first understand Taxable Event of tax. It is important to know the taxable event under any law because it is the activity which attracts the tax levy. This enables the reader to know when he is liable to pay tax under various law concerned.

So, let us first understand various taxable events in the present tax structure.

Taxable events under current structure

 

From above, you can make out that, for different, laws there are different taxable events and that makes it complicated for the user to understand the law and their implication on his business.

Now under proposed GST structure, there is only one taxable event i.e. Supply of Goods or Services. It is very important, therefore, to understand the place of supply in determining the right charge of tax on supply. The model GST Law lays down the criteria to determine the place of supply. Based on these criteria, you can treat the supply of goods or services as either Intra-State (within the State) or Inter-State (Outside the State).

The location of Goods supplied or Service provider will decide which tax to levy. Based on place of supply, one will able to determine whether to charge CGST & SGST or IGST. So, it is very important for dealers to identify the place of supply.

There are two important components which determine the which tax to be charged for.

  1. Location of Supplier: Registered Place of Business
  2. Place of Supply: It is registered place of business of recipient.

Let’s now understand how a place of supply will change the taxability under GST with some examples.

M/s Alert Car Accessories & Components Pvt. Ltd., having registered office in Mumbai, Maharashtra, had supplied spare parts to M/s True Value Car Services Pvt. Ltd. has registered place of business in, Pune, Maharashtra.

 

Let’s now consider another Scenario. M/s Alert Car Accessories & Components Pvt. Ltd., having registered office in Mumbai, Maharashtra, had supplied spare parts to M/s True Value Car Services Pvt. Ltd. Having registered place of business in, Hyderabad, Telangana State.

 

Apart from the above example following are also treated as Inter State Supply under GST

  1. Import of goods or services
  2. Export of goods or services
  3. Supply of goods or services to or by a SEZ developer or SEZ unit, even if the supply is within the state.

Section 70 under Model GST Act, make it necessary for the Taxpayer to collect the right amount of Tax. If assessee fails to deduct correct tax, then there will be the penalty which needs to be paid by dealers. The dealer must prove that the place of delivery mentioned is correct, so considering this, a dealer needs to maintain such records of the place of delivery which enables the GST officer to verify the place of supply. Failing which dealer will be liable to pay tax as determined by the GST officer.

E-Way Bills Rules Under GST

All You Need To Know About The E-Way Bill Under GST

Movement of goods in India, especially from one state to another has been a problem since years. The reason? Waybill compliance that’s riddled with all kinds of complexities. However, the Goods and Services Tax is expected to mark a significant improvement with the e-way bills.

Movement of Goods Now

Let’s first understand what happens when goods are transported from one place to another within the same state and when to a different state.

Under the current regime, the state government is responsible for imposing taxes on the intrastate transportation of the goods and the central government is responsible for imposing taxes on interstate transportation of the goods.

To prevent tax evasion and compliant transportation of goods, most states have established multiple check-posts on the national highways and borders. When a transporter arrives at a check-post, they have to furnish certain documents such as waybill, invoices, challan, etc. to receive clearance.

Some states have made compliance easier for the suppliers through digitised procedures. For instance, in Karnataka, e-Sugam is an electronic system that allows the registered dealers to upload the details of the shipments and receive unique IDs in return. The transporters can use these IDs at the check posts for verification and clearance.

Movement of Goods Under GST: Enter e-way Bill

Once GST is implemented, the current waybill will be replaced by the e-way bills which is an electronic waybill.  Taxpayers moving goods worth more than Rs. 50,000 are required to generate e-way bills under the GST regime.

The following are some of the key aspects of the e-way bill:

  1. An e-way bills must be generated when there is a movement of goods of value above Rs. 50,000 by a registered person. However, they or the transporter can carry an e-way bills even if the value of the goods is less than Rs. 50,000.
  2. The following are some of the ways an e-way bills can be generated:
  • A registered person can generate an e-way bills by filling part A of Form GSTINS-1.
  • A recipient of the goods can generate an e-way bills by filling part B of Form GSTINS-1.
  • A registered person who is also a consignor or consignee and goods are handed over to a transporter can generate an e-way bills by filling both part A and part B of Form GSTINS-1.
  • A transporter can generate an e-way bills by filling form GSTINS-1 himself, in case the consignor hasn’t.
  1. Each e-way bills will have a certain validity will be based on the distance travelled by the goods. The following can be referred for the relation between the distance and validity:
  • Less than 100 km: 1 day
  • 100km to 300km: 3 days
  • 300km to 500km: 5 days
  • 500km to 1000km: 10 days
  • 1000km or more: 15 days
  1. While e-way bills are to be generated and cancellated through GSN Network portal, registered taxpayers can also do that through SMS.

An Example of e-way Bills Under GST

  • Trader A hands over goods to transporter T to deliver them to another Trader
  • Trader A enters the details of the stock and the transporter in Part A and Part B of Form GST INS 01 respectively.
  • Transporter T generates an e-way bill using the details from Part A of Form GST INS 01.
  • As the e-way bill is generated, a unique e-way bill number (EBN) is shared with A, T, and B.
  • B can now accept or reject the goods mentioned in the e-way bill. If no response is given in 72 hours, the consignment is considered accepted.

E-way bill is designed to make compliance of transportation of goods easier and to prevent tax evasion. So, for a smoother transition to GST, it is best that you get around the e-way bill system as soon as possible.

Impact of GST on service providers

GST Impact on Service Providers

The Goods and Services Tax is all set to be rolled out on July 1. Needless to say, both manufacturers and service providers are anxiously waiting for the same.

On one side, there are concerns about increased compliance burden, and on the other side, there are expectations of simplicity and excellent features such as input tax credits.  But how exactly will GST impact the service providers? Let’s find out.

The Good:

The following are some of the positive changes that GST will bring for the service providers:

Credits of CENVAT, Repairs, and Maintenance

In the current regime, VAT and CST paid on the inputs are added to the costs of the service provider and thus increase the cost of services for the end customers. However, under the GST regime, a service provider will be able to claim input tax credits as IGST and SGST/CGST. This will allow them to offer lower service rates to their customers.

Similarly, under the current regime, services providers can claim credits for only the input services. However, under GST they will be able to claim credits for the repair and maintenance costs of machinery and equipment as well.

Elimination of Double Taxation in Works Contract

A works contract is already complex in the current taxation system. In this, there is a transfer of goods as a part of the service contract, which means the invoice contains both the value of the services provided and the value of goods/materials used.

As a works contract involve both goods and services, it attracts VAT and Service Tax both which are levied on 70% of each (total becomes 140%). However, GST will consider both as just a supply of service, and thus a single tax will be levied.

Composition Scheme

Service providers that have a small annual turnover (less than 50 lakhs) will be able to enjoy small tax rates in the form of composition levy. This is to promote the growth of small businesses and services providers in the country.

The Bad:

Although GST is designed to provide as many benefits as possible to the service providers, there are potential drawbacks of the same as well:

High Rate of Taxes

The service tax in the current regime is 15%. However, in GST there will be four tax slabs- 5%, 12%, 18%, and 28% which is applicable to high-end restaurants, hotels, race club service providers etc. Thus, these service providers will have to pay a high rate of tax.

Returns Burden

Service providers will need to file as many as 37 returns every year from each of their service locations. This is a far cry from the current regime under which most providers have to file only 2 returns per year.

No Centralized Registration

There is no concept of centralized registration for business locations in different states. Thus, a service provider will need to get his business registered for every state they have a business facility in.

Anti-Profiteering Risks

GST comes with an “anti-profiteering” clause which empowers the tax inspectors to take measures against businesses who don’t pass on the benefit of input tax credits to their customers. However, it’s possible that the officers misuse the same and create a hindrance for the businesses instead.

Conclusion

GST is expected to make some things simpler, and some things complicated. However, it will certainly improve the system by eliminating the cascading effect, and several types of taxes (luxury tax, service tax, VAT) that create complications. If you are a service provider yourself, then you can certainly make the transition smoother by doing your homework in advance and start the preparations.

Records maintained by MSME under GST

What Are the Records That a MSME Needs to Maintain Under GST?

The GST Council has heavily emphasized on keeping an accurate record of all the accounts, invoices, and transactions for all the businesses that come under the GST regime.
The section 53 and 54 of the GST Model Law cover all the details of keeping accounts and records under the new regime. The important details regarding these that the MSMEs must be aware of are as follows:

Accounts and Other Records

1. A person who is registered under the GST regime must maintain the correct account of the following:

  •  Manufacture or production of the goods.
  • Outward and/or inward supply of goods and/or services.
  • The stock of the goods.
  • Output tax payable and paid.
  • Input Tax Credit availed.
  • Any other relevant records.

The records mentioned above must be kept at the business place concerned with them. However, in case the registered taxpayer has multiple places of business then each one will keep the account of the records that pertain to them individually. So, if a seller has one shop in Delhi and another in Bangalore, then he will need to make two separate accounts for these two places, the records of which will also be kept at the respective locations.

Note: All the records have to be created and maintained in the electronic form. Thus, the businesses must ensure they have required software and programs for the same.

Note: Under certain circumstances, a taxpayer may be exempted from keeping the records in electronic form. However, it is based on the Commissioner/ Chief Commissioner discretion. The reasons for such provision granted he approves in the first place, have also to be recorded in written form.

2. A Commissioner/Chief Commissioner may ask an MSME to maintain additional records other than the ones mentioned above.

3. If the annual turnover of a taxpayer exceeds the GST threshold of Rs. 1 crore then they have to get their accounts audited by a registered chartered accountant or a cost accountant and submit the copy of the audited statement of the accounts to the appropriate officer.

Note: A copy of audited annual accounts have to be submitted with a reconciliation statement via form GSTR-9B when filing the annual return via form GSTR-9.
Note: It is required that a chartered accountant or cost accountant certifies that the value of the supplies mentioned in the annual return reconciles with the annual financial statement that’s being audited. This is to be put in the reconciliation statement.

Retention of Accounts

The records and accounts that are specified above have to be kept by the taxpayer for a period of 60 months, i.e. 5 years, from the last date of filing their annual return.
For instance, the accounts and records of the financial year 2018-19 should be filed by 31 December 2019. However, the taxpayer must keep these accounts and records with them until 31 December 2019.

Conclusion

It is natural for the MSMEs that have been doing business for many years to face difficulties adapting to the changes in records maintenance, a major one of which is electronic format mandating. However, the transition can be made a lot easier and simpler through the use of appropriate GST support software and GST online services.
It is worth noting that given the benefits the GST regime is expected to give, the efforts made by you will certainly be worth it.

Goods and service tax impact on IT sector

Impact of GST on the IT Sector in India

The GST tax regime is to be implemented soon and will affect almost every industry in India.

Although the IT sector is quite different that other retail and manufacturing businesses, it will also be impacted by the GST bill.

The following are some of the ways how GST will have an impact on the IT sector:

Compliance

Compliance will become a major issue under the GST system, as the IT companies will have to file compliance reports at as many as 111 points. This is because you will need to get registration in as many as 37 jurisdictions- 29 states, 7 union territories, and the Centre itself.

Now, since there are three different tax points under the GST regime- central GST, state GST, and inter-state GST, so multiplying 37 by 3 becomes 111. That’s 111 total points you might need to file compliance reports at.

Tax Rate

At present, the service tax rate applicable on IT services is 15%. However, after GST implementation the neutral rate is expected to rise to 17% to 18%. Thus, IT services are likely to become more expensive, especially for the end-customers who won’t be claiming input tax credit like other businesses.

Another major impact of GST will be on VAT and service tax. Under the current taxation system, both VAT and service tax are levied on the sale of software at circa 5% and 15% respectively.  The former is directed to the state government, while the latter to the central government. However, sometimes excise duty is also levied, which is why the cumulative tax can be quite high.

GST will combine multiple taxes, and as a consequence, the total average tax rate will drop to 18% to 25% from the existing 25% to 35%.

Business Process

Since GST is a destination-based tax, which is collected at the final point where the goods are consumed by the end consumer, it will change how an IT business operates today.

Today, most IT companies are registered only with the Central State Tax authorities, and all the billing and accounting work is centralized. However, to be GST compliant these companies will need to get themselves registered with all the states they are operating in. They will also need to charge their customers based on their location of usage. So, a separate bill will be created for a user of your IT service who is based in Mumbai, and another bill for another user of the same service who is based in Surat.

Taxation Process

Under the current taxation system, selling software may attract VAT, Customs Duty, Service Tax, Excise Duty, etc. depending on nature of the transaction. It is also difficult to determine which taxes are applicable due to the complex nature of “software” as it could be treated as “goods” or “services” or both.

GST will eliminate the need for bifurcation as only two types of taxes will be levied on every sale of software- one by the state government and one by the central government.

The GST law holds a lot of promise for the consumers and businesses alike. Given the fact that the government is working hard towards creating a digital India, the IT industry can certainly expect a slew of welcoming reforms.

How goods and services can be supplied under GST

Supply of Goods and Services in GST Explained

There are many differences between the current taxation system and the new GST taxation system. One of these is the taxable events which call for tax imposing.

In the current tax regime, there are three main types of taxable events, which are:

Sale of Goods– on which VAT is levied.

Removal of Excisable Goods– on which Central Excise is levied.

Provision of Taxable Services– on which Service Tax is levied.

In GST, however, there is just one taxable event, which is the “Supply of Goods and Services”, and the current taxes, viz. VAT, Central Excise, and Service Tax are all subsumed under one single GST tax.

However, the “supply” can be further divided into sub-categories, some of which are:

Deemed Supply

Deemed supply is when no consideration is received for the supply of goods and/or services. Some examples of this are as follows:

  • Putting services to a non-business use
  • Transferring or disposing of business assets
  • Giving away free merchandise to customers
  • Dispensing shopping coupons to employees

Mixed Supply

Mixed supply is the supply of multiple goods, multiple services, or both of these. When multiple items are supplied as one item, then as per GST it will be considered as the supply of that item which has the highest tax rate.  For instance, if a package containing chips and aerated drinks is supplied, then since the tax on the latter is higher it will be considered a supply of aerated drinks.

Exempt Supply

Exempt supply is the supply of those goods and/or services that are not taxable under the GST regime. These could be either exempt from the payment of tax under section 10 of the GST Act or are specified in the Act otherwise.

Continuous Supply

Continuous supply is the supply of goods on a continuous or a recurrent basis for a period exceeding three months. Also, in this situation, an invoice has to be created within 30 days from the date when each event that requires the receiver to make a payment is completed.

To bring more clarity to the system, the Model GST Law has given a proper definition to what constitutes as a supply under the clause (a) to section 3(1). According to this, a supply must have the following aspects:

  • It should be made in the course or for the growth of a business
  • It should be made for consideration
  • It can be in any form- sale, exchange, barter, lease, rental, transfer, or disposal.

Time of “Supply”

The current regime levies tax at the point of taxation, which is the point in time when the deemed goods or services are supplied. However, GST will replace that with the time of “supply” of goods or services. The time of supply of goods/services is determined by either of the following (whichever is earlier):

  • The date when the invoice is issued or the last date by which it should have been issued
  • The date when payment is received

By eliminating the redundant elements from the current taxation system GST will certainly improve the efficiency of the business industry. However, the businesses must prepare accordingly and get a clear idea how the changes will be implemented.