Goods and Service Tax (GST) GST Presentation.pdf · 9-Mar-17 This is a proprietary document of...

9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 1

Goods and Service

Tax (GST)


Impact on Economy

GST - Impact on Economy

Improve export competitivenes

s

Boost FDI investment in

India

Increase in value of Indian

Rupee

Rate of 18% for Mnf. &

traders could reduce product

cost

Rate of 18% equals present

15% rate (goods credit)

Push GDP growth by 1.5 –

2 %


Present Tax Structure

[5 Important Constituents]

Excise Duty

Entry No. 84, List I, Schedule

VII

Taxable Event is Manufacture

Service Tax

Residuary Entry No. 97, List I, Schedule VII

Taxable Event is Provision of

Service

Sales Tax / VAT/ CST

Entry No. 54 of List II (VAT) and

92A of List I (CST)

Taxable Event is Sale

Customs Duty

Entry No. 83, List I, Schedule

VII

Taxable Event is Import of goods

Entry Tax/ Entertainme

nt Tax

Entry No. 52 &62 List II,

Schedule VII

Taxable Event is Entertainment & Entry of Goods

Present Indirect Tax Structure of India


Impact on Existing Taxes

TAXES TO BE SUBSUMED TAXES NOT TO BE SUBSUMED

Central Excise Duty Additional Excise duties Excise duty levied under the Medicinal and

Toiletries Preparation Act Service Tax Additional Customs Duty Special Additional Duty Surcharges and cesses relating to supply of

goods and services

VAT/ Sales Tax Central Sales Tax Entertainment Tax(other than levied by local

bodies) Purchase Tax Luxury Tax Taxes on lottery, betting and gambling State surcharges and cesses relating to supply

of goods and services

Central levies State levies

o Basic Customs Duty

o Excise Duty/VAT on Petroleum Products for initial years(In addition to GST at Nil rate)

o Excise Duty on Tobacco Products(in addition to GST)

o

Entertainment Tax levied by local bodies

o State excise on Alcoholic Beverages(No GST)

o Tolls, passengers and Goods tax on carriage by road/ railway

o Property Tax, stamp duty and taxes on immovable properties

o Royalty on minerals , Environmental/regulatory taxes- e.g. vehicles tax

GST


Proposed Indirect Tax Structure

Intra State Taxable Supply

Excise and Service Tax will be known as

CGST

Local VAT & Other taxes will be known

as SGST

Inter State Taxable Supply

CST will be replaced by Integrated GST

(IGST)

Sum Total of IGST will be CGST and SGST

Import From Outside

IndiaCustom Duty

In Place of CVD and SAD, IGST will be

charged and basic custom duty will

remain same.


GST Incidence

CGST + SGST on intra-state supply

Only IGST on inter-state supply

Zero-ratedNo tax on exportFull refund of ITC

IGST on services/BCD+ IGST on goods

Cross Border

State X

State Y

Intra-state supply

Inter state supply

Exports

Imports


Input & Output Liability Set off Heads

IGST Input Credit

IGST Output Liability

CGST Output Liability

CGST Input Credit


CGST Output Liability

SGST Input Credit


SGST Output Liability

SGST OutputSGSTOutput Liability


GST Rates

GST Rates

Food Grains

0%

Essential food items/Mass

consumption items

5%

Luxury Items,aerated

drinks

28%

Standard Rate

12%

Maximum Goods/services

18%

Compensation cess


Components

of

GST

Taxability

Supply

Place of Supply

Registration

Time of Supply

Valuation

Tax Credits

Returns

Critical Components -Model GST Law


Due dates of Returns

Return Particulars Due dates

GSTR 1 Outward supplies (Sales) 10th

GSTR 2 Inward supplies (Purchases) 15th

GSTR 3 Monthly return 20th

GSTR 4 Quarterly return for compounding Taxpayer

18th after qtr. end

GSTR 5 by Non-Resident Foreign Taxpayer Last day of registration

GSTR 6 Input Service Distributor (ISD) 15th

GSTR 7 Tax Deducted at Source 10th

GSTR 8 Audited Annual Return 31st Dec after year end


Registration Criteria

• Every person if supplying goods or services more than 20 lakh (Rs.10 lakh

for north east states including Sikkim)

• If you are purchasing or selling goods or services outside the state

irrespective of the limit mentioned in point 1.

• If you are required to pay tax under reverse charge.

• Input Service Distributor

• An aggregator (Ola,Uber) who supplier services under his brand name or

his trade name irrespective of the limit mentioned in point 1.

• Every electronic Commerce operator like Flipkart, Amazon, etc.,

irrespective of the limit mentioned in point 1

• Any person who is required to deduct TDS under GST (not under Income

Tax Act, 1961).

Who is Liable to get registered under GST regime


State-wise Registration Dates


Benefits to Assessee

• Reduction in multiplicity of taxes.

• Mitigation of cascading/ double taxation.

• No more state Entry tax payments

• Procurement from non-excise dealers

• Relief from Check posts, Transport documentation and delay in transport

• Eligibility of credit on interstate purchases (Credit for CST paid i.e. IGST)

• Development of common national market.

• Simpler tax regime -

– Fewer rates and exemptions.

– Conceptual clarity (Goods vs. Services).


• Tax levy on purchases from unregistered dealers ?

Reverse charge

• Procurements from composition dealers to be avoided? Reverse charge

• Non payment of taxes or filing of return within time will be burden for

Manufacturer/Buyer as he will not get credit for the taxes charged by the

supplier while procuring material (Matching Concept)

• Compliance would be an important factor, as GST network will share the

grading of suppliers based on compliances. This would have great impact

on business. So need to pay tax and file return within time to get good

grade from department.

Re-engineering of Vendors


GST credit Set off Chain

Manufacturer

• Input Credit of Goods+ services

• After taking set off of Input credit, pay the Output Liability on value addition

Wholesaler

• Input Credit of Goods+ services from manufacturer


Retailer

• Input Credit of Goods+ services from wholesaler


Consumer • Ultimate Output Liability recovered from consumer


GST Impact on Price

Purchase 210.2

ITC - (25.8)

Profit 50

Base price 234.4

VAT 14% 32.8

Sale price 267.2

Cash pay out 7

Retail

Purchase 153.2

ITC (18.8)

Profit - 50

Base Price 184.4

VAT 14% 25.8

Sale price 210.2

Cash pay out 7

Cost 100

Profit 20

Base price 120

Cen. Exc. 12% 14.4

VAT 14% 18.8

Sale price 153.2

Cash pay out 33.2

Purchase 204

ITC - (34)

Profit 50

Base price 220

CGST 8% 17.6

SGST 12% 26.4

Sale price 264

Cash pay out 10

Purchase 144

ITC (24)

Profit - 50

Base Price 170

CGST 8% 13.6

SGST 12% 20.4

Sale price 204

Cash pay out 10

Cost 100

Profit 20

Base price 120

CGST 8% 9.6

SGST 12% 14.4

Sale price 144

Cash pay out 24

WholesaleManufacture

Pre GST Total Tax 47.2

Post GST Total Tax 44


Impact areas - Vendor Management

Review current vendors history to identify non-compliant vendors

GST Compliance rating to identify non-compliant vendors

Identify multiple new vendors, get revised quotes

Conducting vendor education programmes for unorganized vendors

Review price of all related party vendors to avoid disputes in transaction value

Suggest vendors to follow similar exercise - better vendor relationships


Expectations from Vendors

Registration under GST

Even though time for registration in Gujarat is over there is second or third phase to get registration. Contact your consultant/Advocate.

Inform GST registration number to our Company.

You have to be tech savvy or use computers for your data operation in following ways:- 1)In house model like SAP or 2)Outsource to CA/ consultant

You have to collect knowledge and compliance required from you consultant or CA..

You are also expected to contact your Vendors to get them Registered. So that, they can pass on Credit.


Our Procurement team will re-look at critical terms of contact that may undergo change.

CST paid and Excise duty paid on your purchases was cost to you in VAT scenario. In GST you will get input tax credit paid on each earlier stage, SGST and CGST or IGST. You need to reduce your price to that much amount.

You have to renegotiate prices with your vendors to reduce prices.

We have to exercise invoice tracing mechanism and you have to issue proper invoice and supplementary invoice if any.

You have to relook at the decision to Move/Shift/Relocate factories/warehouse as Taxation incentives will be no more in GST scenario.

Addition of locations to close to factory as there is no state barriers of supply.


Shutting down locations, warehousing strategy change in supply chain management as now there is no form F for exemption for Stock transfer. This will avoid blocking of capital.

Discount policy needs to be revisited as many discounts all not allowed to be deducted for taxation under GST.

Advances given to you may be taxable under GST law.


Benefit of Taxes…But when?

• You must be registered under GST

• You need issue proper invoice as suggested by GST law.

• If you file return in time and pay the taxes as per stipulated date then only

KBL can avail input credit of Taxes collected and paid by you. You all are

requested to do the same.

• All compliances under GST must be in time.

• Sales Shown by you in particular Month against our GST number must

match with purchases shown by us. Otherwise input Tax Credit will be

disallowed.

• You are expected to upload full information as Bill Number, date, Amount of

Tax etc. on GST portal.

• We may need to reconcile our accounts on regular basis, if there is

mismatch report issued by Govt. and ITC disallowed.

• Govt will display Category of suppliers in A,B,C based on compliances under

GST. Our company may take decision to continue transactions with A and B

suppliers only. Please be in A,B category to enhance relations.


CORPORATE GST TEAM

• ATUL GODBOLE

• AMIT SOMANI

• UDAY BHAVE

Date post:	10-Feb-2018
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Goods and Service Tax (GST) GST Presentation.pdf · 9-Mar-17 This is a proprietary document of...

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