gst - transition issues for indian companies
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Pro Hats Consulting LLP
www.Prohatsconsulting.com
GST
GST Roadmap
Constitutional Amendment Bill (CAB) passed in on 3 Aug 2016
Lok Sabha has approved the amendments and cleared the CAB
Ratification of the CAB by > 50% State Assemblies
Formation of GST Council and Publication of GST rates
Adoption of GST legislation by Centre & State
Features of GST
Destination and Supply based Taxation
GST having two concurrent components (SGST & CGST)
IGST (Integrated GST) on inter-State supplies of goods or services in India
Online returns and information to be submitted
Each taxpayer would be allotted a PAN-linked taxpayer identification number
Target implement from 1 April, 2017.
Benefits
Free from multiple taxes
Uniformity in taxes across the country
Eliminates cascading of taxes
Eliminates dual taxation (Vat and
Service tax) on same transaction
Development of common national
market.
Simpler tax regime
Which taxes are Subsumed
CGST
• Central Excise Duty
• Additional Excise Duties
• Excise Duty-Medicinal and Toiletries Preparation Act
• Service Tax
• Additional CVD
• Special Additional Duty of Customs - 4% (SAD)
• Surcharges
• Ceses
SGST
• VAT / Sales tax
• Entertainment tax (unless it is levied by the local bodies).
• Luxury tax
• Taxes on lottery, betting and gambling.
• State Cesses and Surcharges (supply of goods and services)
• Entry tax not in lieu of Octroi
There are few other indirect taxes that may or may not be subsumed under the GST regime as there is no consensus among Statesand Centre & States –• Purchase tax | Stamp Duty | Vehicle Tax | Electricity Duty | Other Entry taxes and Octroi
GST - Registration
• If you are already registered, need to submit required
documents within 6 months (provisional registration
given when the law is enforced)
• Service tax registration has to be reapplied in all the
applicable states
• Place of Registration
o Every state in which you have operations
o In case of multiple verticals in each State, separate registrations may
be obtained for each vertical
GST – Compliance Requirements
Monthly statementof outward supply
•10th of Each Month
• Submitted Electronically
Monthly statementof inward supply
•15th of Each Month
• Submitted Electronically
Returns
• Monthly
• Annual
• Input Service Distributor Return
• TDS / TCS Return
• Submitted Electronically
Refunds
• State-wise for IGST/ CGST/ SGST
•2 years from therelevant date
•Provisional refund of80%in case of exports
• Submitted Electronically
GST - Input Credit
• Input tax credit is available to registered taxable person with reference to supply of goods and services
• Credit not available for goods / services for private or personal consumption
• Electronic matching critical for credit eligibility, coupled with payment of tax by the supplier a criteria and the same to be recovered along with interest
• Distribution of input tax credit for input service distributor for all the states where located, based on turnover
Tax ITC Adjusted Against (in specific order)
CGST 1. CGST2. IGST
SGST 1. SGST2. IGST
IGST 1. IGST2. CGST3. SGST
GST - ValuationValue shall be ‘transaction value’where supplier and recipient are unrelated &price is the sole consideration
Transaction value will include:• Any amount paid by recipient instead of supplier• Value of goods / services supplied by the recipient free of charge or at
reduced cost• Taxes and duties other than GST• Incidental costs/ expenses (such as commission, packing, royalties etc.)• Subsidies linked to the supply• Reimbursable expenses incurred on behalf of the supplier• Discount or incentive allowed after the supply
• Carry forward of CENVAT credit/ input tax credit as disclosed in
the last return furnished - Credit would have to be eligible input
tax credit under the earlier law and also under the new GST law
• Un-availed CENVAT credit on capital goods, not carried forward in a
return to be allowed in certain situations
• Pending proceeding of appeal, revision, review initiated in
relation to the CENVAT credit/ output duty liability before the
appointed day to be disposed of in accordance with the
provisions of the earlier law and any amount of credit found to be
admissible to the claimant shall be refunded in cash
• Stock held at Depot / held by dealer on transition date would
suffer full rate of GST, as against present VAT/CST rate. Also,
credit of excise duty paid at the time of manufacture may not
be available
GST - Transition Provisions
GST - Transition Provisions
Carry forward of CENVAT credit/input tax credit as disclosed in thelast return furnished - Credit wouldhave to be eligible input tax credit
under the earlier law and also underthe new GST law
Unavailed CENVAT credit on capitalgoods, not carried forward in areturn to be allowed in certain
situations
Pending proceeding of appeal,revision, review initiated in relation to
the CENVAT credit/ output dutyliability before the appointed day tobe disposed of in accordance withthe provisions of the earlier law andany amount of credit found to beadmissible to the claimant shall be
refunded in cash
Stock held at Depot / held by dealeron transition date would suffer full
rate of GST, as against present VAT/CST rate. Also, credit of excise
duty paid at the time ofmanufacture may not be available
Key Aspects to Consider
Impact on cost to Customer – Changes
in tax rates and credits
Restructuring of Supply
Chain to bring efficiencies
Compliance and control – Credit
matching of vendor filings, changes to IT
system
Key Transition Challenges – Working Capital and ITC
Problems
- Current supply chain may tie up excess working capital
- Supply Chain reduces the amount of ITC available
What we offer
- Optimise Supply Chain
- Processes to enable future decision making
Input Tax Credit & Working Capital
Key Transition Challenges
Pricing, Costing, Margins
Problems
- Impact on pricing due to
subsumed taxes
- Product pricing as per GST
Law
- Change in margins for
each product
What we offer
- Pricing Simulation
Key Transition Challenges
ERP and other IT Systems
Problems
- Identify changes required
in IT systems with respect
to transaction capture,
reporting and return filing
What we offer
- Integrated approach to
define changes and
managing the change
program
Key Transition Challenges
Internal Compliance Management Processes
Problems
- Staff awareness
What we offer
- Training
Key Transition Challenges
Registration
Problems
- Where to register?
What we offer
- Integrated approach to
define changes and
managing the change
program
Key Transition Challenges
Vendor Base
Problems
- Non-compliant vendors
will impact ITC
What we offer
- Vendor Review
Our GST Transition Methodology
GAP Assessment
•Assess the Impact
•Identify areas of change
Design Future Process
•Design the future process
•Define the impact due to change on P&L, Cash flow
•Changes to IT Systems
•Supply Chain
Management Sign-off
•Key Stakeholders Sign-off on the future process
•Changes to pricing & margins is approved
Implement
• Project Manage Implementation
ProHats Consulting LLP
Head Office: Plot no.944, LGF,Sector 40, Near Community Centre,Gurgaon – 122002,Haryana, INDIAPhone: +91-124-4303590
Regional offices: Indore & Bangalore
For any general query, please mail across to:[email protected]
For Specific query, pls get in touch with the Assignment manager
Contact Us
Thank you…
…and we look forward to working with you.