GST IN INDIA Dawn of a New Indirect Tax Era
WHY GOODS & SERVICES TAX (GST) The India business landscape faces a host of challenges in the indirect tax structure emanating from: Multiplicity of taxes at the Centre & State levels Cascading of taxes Fixation of situs of sale-Local sale vs Central Sale Issues regarding double taxation viz. works contract, software, etc. Lack of uniform structure and processes Cumbersome compliance mechanism With the proposed shift to the GST regime, we see a drastic improvement in the business landscape.
WHAT IS GST One Indirect Tax for the entire nation making India one unified common market
Integration of prevailing indirect taxes to ensure uniformity. However, Basic Customs duty to continue
Standardized classification of goods/services should result in reducing litigation
Levied at ‘each stage’ in the economic chain of supply
GST leviable on transaction value; MRP based assessment done away with
WHEN WILL GST BE LEVIED GST is driven by the ‘supply’ concept. Transactions involving supply of goods and services to be taxed under GST Central GST (CGST) and State GST (SGST) will be simultaneously levied on every intra-state transaction of supply of goods or services except on exempted goods and services i.e., goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits The Centre shall levy and collect Integrated GST on all inter-state supplies of goods and services. IGST would be equal to a combination of CGST and SGST
ON WHAT IS GST LEVIED GST is to be levied on transaction value of goods and services Such transaction value to undergo scrutiny incase the value is influenced by related parties GST shall also be levied on prescribed goods and services supplied without consideration
Credit available across goods & services; including for inter-state procurements leading to higher credits
Harmonization of Centre and State taxes to achieve common market
WHO IS LIABLE TO DISCHARGE GST? Importer of Goods
Incase of Imports
Incase of stock transfers
Importer of Services
Incase of Interstate/intrastate supplies
Supplier of Goods
Incase of certain notified supplies
Supplier of Services
Supplier of Goods Supplier of Services Recipient of goods Recipient of services
GST OVERVIEW Indirect Tax
Procurement of Goods and Services
Supply of Goods and Services
Basic Customs Duty + IGST
Integrated GST (IGST)
State GST (SGST) + Central GST (CGST)
Import
Inter-state supply
Intra-state supply
Status
At Central Level
At State Level
Taxes to be Subsumed ▪ Additional customs duties (CVD and SAD) ▪ Central Excise Duty ▪ Service Tax ▪ Special Excise duty (on medical and toiletries preparation) ▪ Various auxiliary cess & levies
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State-VAT Central Sales Tax Entry Tax Luxury Tax Entertainment Tax Purchase Tax
Zerorated Export
Sectors outside proposed GST
▪ Petroleum, to be covered from future date ▪ Alcohol fit for human consumption ▪ Real Estate, leviable to state stamp duty ▪ Electricity, leviable to Electricity duty by States
Integrated GST (IGST)
State GST (SGST) + Central GST (CGST)
Inter-state supply
Intra-state supply
HOW DOES GST AFFECT YOU ▪ ▪ ▪
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Financial/Working Capital impact of GST on Business Tax Planning and Structuring for the future Transition of Systems and Processes
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Chief Financial Officer
Chief Marketing Officer
Chief Technology Officer
Procurement & Logistics Head
Transition of Information Technology (IT) Systems to the New Tax Framework Greater focus on Flow of Electronic Information under GST Robust IT Systems a pre-requisite
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Impact of GST on End Product Pricing Impact on Supply Chain Efficiencies on Product SKUs Competitive Dynamics: Retain the efficiencies or pass on to customers
Potential Savings in Warehousing, Logistics, Procurement and Distribution Costs Re-alignment of Supply Chain as per Business Dynamics
Let’s take a closer look to prioritize…before we take a leap! ASSESSING THE REAL IMPACT ON BUSINESS OPERATIONS
Impact on cashflow
Prioritize business needs
Impact on pricing
Impact on Working capital
Supply and procurement analysis
Making team GST ready
Legal & Contract Transition
Assess industry issues
Achieve business continuity
Analyze gaps and risks
ENSURING BUSINESS CONTINUITY
Migration
Pricing & Working Capital
Compliance
Transition
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Existing Registrations Changes in ERP, Internal controls Internal team readiness
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Impact on cash flow of the business Impact on working capital/cash flow Pricing of goods/services
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GST compliant invoices Ensuring GST returns are filed on time
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Eligibility and transferability of credits On-going contracts Changes in documentation, processes and policies to meet GST requirements
CLASP THE OPPORTUNITIES
Centralisation of process, policies & systems
Business reengineering, supply chains etc.
Industry/sector impacts
Policy advocacy
The Final Lap has begun HOW WE CAN HELP GST Policy Advocacy Identify shortcomings in the GST Act that can have a negative impact on the Company Assist in making representations to the GST Council for overcoming them Impact Analysis Study Perform simulated calculations of potential GST impact on business and highlight changes in tax costs Identify areas of opportunity and threats and determine impact on business operations Review of Impact Analysis Study Review the impact assessment study undertaken by the company/consultants on business operations Suggest changes for improved management of processes, positions and compliances Transition & Implementation Assistance Preparation of change management plan Custom-design changes that need to occur in ERP, Internal Controls, Accounting Evaluating readiness of the company’s internal team to handle GST compliances and formulation of risk/responsibility matrix Assistance in Compliance and support services
Migration to GST registrations Assistance in GST compliances (filing returns, monthly GST payments etc.) Review of sample GST compliant invoices and other documents as per the prescribed formats Resolve routine on call queries on a need basis
PREPARING FOR GST Positions
Processes
Identify impact of GST on various business supplies Analyse transaction rules on credits, taxability of transactions, migration into GST, etc Identify possible areas where GST could be accumulated Impact of rate change on margins, cash flows, etc Unbundling “mixed” supplies of goods and services
Need for re-negotiations with certain vendors/ clients based on GST impact study Invoicing norms likely to change under GST Manner of claiming and utilizing VAT and CENVAT credits may be an amalgam Valuation norms to identify taxable value likely to change Mapping multi-locational services
Compliances
Systems
Registrations, online payments & returns of CGST, IGST and respective State-SGST Gearing up for periodic Audits, reviews and other assessment procedures at Central and State level Dual-reporting likely for certain transactions Transition compliances
Map transaction lines into dual-GST charges Data fields to be identified and captured for return preparation, credit claims, liability computations, etc Reconciliation of GST credits & liabilities with Statutory books Auto-matching of SGST/ CGST credits and IGST credits to perform real-time calculations of GST liabilities
WHY BDO INDIA LLP
How are we different?
Profound understanding of various operations and revenue streams of the client Regular discussion with the client Deep understanding of domestic and international business environment
National integrated team Bespoke solutions Scalable service offerings
Our goal is not to be the biggest or the best service provider, but to ensure that our clients are the best in their business
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INDIRECT TAX LEADERSHIP TEAM NATIONAL LEADER AMIT KUMAR SARKAR Partner & Head M: +91 98 2050 5683 e:
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MUMBAI
BENGALURU
DR. SHRIKANT KAMAT Partner M: +91 98 2078 4418 e:
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RAMAN NV Partner M: +91 97 0380 3250 e:
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NEW DELHI - GURGAON MANISH MISHRA Partner M: +91 98 1877 6660 e:
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CHENNAI SMITA ROY Partner M: +91 99 1017 4794 e:
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PUNE ABHISHEK ANAND Associate Partner M: +91 99 2353 0421 e:
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NAVEEN RAJPUROHIT Partner M: + 91 99 0086 0960 e:
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ASHISH ATHAVALE Director M: +91 98 2007 7089 e:
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RAHUL AGGARWAL Partner M: +91 98 7188 7534 e:
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GUNJAN KHARE Associate Partner M: +91 91 7665 6755 e:
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KOLKATA
HYDERABAD
SOHRAB BARARIA Director M: +91 90 5106 4031 e:
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RAMAN NV Partner M: +91 97 0380 3250 e:
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