Implementation of Goods Implementation of Goods Implementation of Goods Implementation of Goods and Service Tax (GSTand Service Tax (GSTand Service Tax (GSTand Service Tax (GST))))
in India in India in India in India
Opportunities and Opportunities and Opportunities and Opportunities and Challenges for CMAChallenges for CMAChallenges for CMAChallenges for CMA
CMA Rajesh ShuklaCMA Rajesh ShuklaCMA Rajesh ShuklaCMA Rajesh Shukla
At ICWA Chapter meet At ICWA Chapter meet At ICWA Chapter meet At ICWA Chapter meet
14141414thththth August 2015August 2015August 2015August 2015
AurangabadAurangabadAurangabadAurangabad
Present Indirect Taxation StructurePresent Indirect Taxation StructurePresent Indirect Taxation StructurePresent Indirect Taxation Structure
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Background of GSTBackground of GSTBackground of GSTBackground of GST
Goods and Services
tax (‘GST’)
Broad based consumption tax
Unified tax on both on goods and
services
Levied at each stage
On value added to goods/ services at
each stage
Introduced with the objective to
‘eliminate tax cascades’
Integration of prevailing indirect taxes
to ensure uniformity
Preventing cascading effect of taxes
Simplified compliances
Credit available across goods and
services
Availability of credit even for inter-state
procurements
What is GST Why GST
Expectations from GSTExpectations from GSTExpectations from GSTExpectations from GST
� Single ‘National Market’ through harmonisation of laws
� Removal of cascading of taxes
� Simple, transparent tax administration through IT interface
� Plugging of revenue leakages through automation
� Subsuming of multiple taxes
� Reduction in compliance cost
� Expanding tax base to cover larger economic activities
� Improve competitiveness of domestic industry
Framework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in India
FrameworkDual GST
IGST + AT*
CGST and SGST Intra-State transactions
IGST +AT*Inter-State Sales and
Branch Transfers
*Additional Tax only on goods
CoverageIndirect taxes to be subsumed
Indirect taxes to be continued
Basic Duty of Customs ����
Additional Duty of Customs and Cess on such duty ����
Central Excise ����
Service tax ����
VAT/ CST* ����
Entry tax not in lieu of Octroi ����
Octroi, LBT and Cesses ����
Municipal/ Property tax ����
State Excise on Liquor ����
Stamp duty ����
Motor Vehicles tax ����
Entertainment tax and Luxury tax ����
Entry tax in lieu of Octroi ����
Framework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in India
Rate of taxGoods
Services
YearGoods
Standard Concessional
Year II
Year I
Year III
onwards
20 percent 12 percent
18 percent 12 percent
16 percent 16 percent
Services
16 percent
16 percent
16 percent
YearGoods
Standard Concessional
Year II
Year I
Year III
onwards
~27 percent?
Services
Framework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in India
Cross Credits
Central GST (‘CGST’)
State GST (‘SGST’)
Inter-State GST (‘IGST’)
Credit Output Liability
IGST IGST, CGST, SGST
CGST CGST, IGST
SGST SGST, IGST
Framework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in IndiaFramework of Goods and Services tax in India
ThresholdThresholdThresholdThreshold
Following limits are under discussion. (lower limits for some states.)
Annual Financial Turnover Remarks
Up to Rs. 25 lakhs Exempt from GST
From Rs. 25 lakhs to Rs. 75 lakhs Composition option maybe given without ITC
Rs. 75 lakhs to Rs. 100 lakhsEntire GST including CGST, IGST to be monitored by State – No involvement of
Central Government
Above Rs. 100 lakhsUnits will be under dual authorities – CGST and IGST will be monitored by Central
Govt. and SGST to be monitored by State Govt.
GST : Summary of Business Impact
Current and Future
Investments
Human Resource
Procurement / Sourcing
Accounting
Sales & Marketing
Logistics ProfitabilityProduct Pricing
Distribution
Working Capital
GST
GST : Snap shot of Impacted Business Areas GST : Snap shot of Impacted Business Areas GST : Snap shot of Impacted Business Areas GST : Snap shot of Impacted Business Areas
GST : Summary of Business Impact
Sr.No. Business Area Impact
1 Procurement � Higher Tax Rate, But - Lower Cost of Tax
� Saving of CST, But incidence of 1% Additional Tax� Credit of all Taxes paid on procurement – Goods + Services
� Increase in Working Capital requirements
2 Distribution / Logistics � Rationalization of Tax Rate – Multiple to Single / Two rates� Saving of CST, But incidence of 1% Additional Tax� Sales from factory / through RSO will be at par� Logistics function will need relook
� Working Capital need of Channel Partners will increase.� After Sales Services – Increase in Tax Rates
3 Manufacturing � Area based exemption from excise duty is not likely to continue under GST.
� Need to get converted into “Refund” schemes – Hard Negotiations with Government required.
� Inter unit transfers to cost 1% additional non-vatable tax
4 Finance(Profitability ,Working Capital ,
Tax compliance, accounting, investment decisions)
� Product Cost / Pricing will go under change � Future Products / Investment decisions needs to be revisited.
� Working Capital requirement will increase� Change in Accounting and reporting
� Indirect Tax compliance.
5 Information Technology � ERP System will need revamp / re-implementation.
GST : Snap shot of Impacted Business Areas GST : Snap shot of Impacted Business Areas GST : Snap shot of Impacted Business Areas GST : Snap shot of Impacted Business Areas
Invoicing under GSTInvoicing under GSTInvoicing under GSTInvoicing under GST
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Impact on Supply Chain Impact on Supply Chain Impact on Supply Chain Impact on Supply Chain –––– Manufacture & Sale / ExportManufacture & Sale / ExportManufacture & Sale / ExportManufacture & Sale / Export
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GST RegistrationGST RegistrationGST RegistrationGST Registration
Salient Features
►Separate registration for each State
►15-digit (alpha-numeric) PAN-based GSTIN
►Fully online registration process with no
physical documentation / inspection of
business premises involved
►Flexibility to use existing registration data in
one State as template for further registrations
►Option to authorize representative during
Registration
►Amendments of non-core fields of registration
data on self-service basis
► Migration of existing dealers
► Dual Jurisdiction mechanism
► Single vs Multiple registration within a State
► No clarity on how Input Service
Distribution (ISD) mechanism will work
► Extent of State specific fields in the
Registration Form
Open Points
GST Return
Salient Features
►Monthly return filing for all Regular
taxpayers
►Self-assessment of tax liability (for one
tax period only)
►Common e-Return for CGST, SGST,
IGST and Additional Tax (for each
registration)
► Upload of B2B supply invoice
information is must before filing of return;
Procurement list (B2B) to be generated
automatically by GSTN
►Annual Return to include reconciliation
statement with the audited financial
statements of the taxpayers
► Place of Supply rules and its implications on Return filing
► Destination State wise aggregation of B2C inter-State supply details
► Capturing and processing of
information pertaining to non-eligibility / partial eligibility of credit
(including capital goods)
► Mechanism for auto reversal of credit; revision of submitted invoice
information and its impact on counter-party
Open Points
GST PaymentsGST PaymentsGST PaymentsGST Payments
Salient Features
►Common challan for CGST, SGST, IGST
and Additional Tax
►Filling up of electronic challan is must for
payment (irrespective of payment
method)
►Both Online (including Credit Card, Debit
Card) and offline modes of payment will
be available
►Offline payment modes have certain
restrictions in terms total amount that can
be paid
► Payment can be made anytime
► Date of realization vs date of deposit as date of payment
► Whether tax payment to be linked to tax period or a personalized ledger
will be maintained
► Dispute resolution
Open Points
Illustrative Return filing stepsIllustrative Return filing stepsIllustrative Return filing stepsIllustrative Return filing steps
► Upload of B2B supply invoice level details
► Auto-drafting of counter-party purchase register based on such uploaded supply invoice details
► Acceptance of auto-drafted purchase register by counter-party dealer
► Generation of draft return
► Payment of due tax
► Submission of Return
Key
Stake-
holders
Framework and key
decisionsState Finance
Ministry / VAT
Departments
CBECMinistry of
Commerce
State Industries
DepartmentGST Council
Empowered
Committee
State level levies and
procedures
GST implementation
Central incentives Central levies and procedures
State incentives
GST : Government Departments involved in implementation
Consensus between Centre & State on
power sharing
Agreement on the
Constitutional
Amendment Bill
(CAB)
Agreement on Taxing framework, more
specifically Place of Supply Rules
Industry feedback & finalization of Act &
Rules
Formation of GST Council
and Issue of draft
regulations & GSTN
framework
State fears on
loss of revenue &
compensation framework
Passing of the CAB
Roll - out
GST : GST : GST : GST : Progress and Roadmap from Government sideProgress and Roadmap from Government sideProgress and Roadmap from Government sideProgress and Roadmap from Government side
POWERS OF GST COUNCILPOWERS OF GST COUNCILPOWERS OF GST COUNCILPOWERS OF GST COUNCIL
�Taxes to be subsumed.
�Rate Structure
�Exemptions
�Threshold limits
�Model GST Law
�Principles of levy
�Apportionment of IGST
�Place of supply
�Special schemes for NE & Developing States
�Dispute Resolution Mechanism.
Open Issues Open Issues Open Issues Open Issues
► Fiscal Autonomy Vs Harmonization
► Tax Rates
► Tax Base
► Taxes to be subsumed
► Compensation to States
► Consensus in GST Council
► Dispute Resolution
Opportunities and challenges for CMA Opportunities and challenges for CMA Opportunities and challenges for CMA Opportunities and challenges for CMA
► Opportunities
► Expansion of scope – increase in number of assesse
► Equal opportunity – evolving tax law
► Supporting business for cost effective business model
► Participation in development of Systems, process and controls
► Tax Credit reconciliations
► Challenges
► Enhancement of Skills – Subject Knowledge / Presentation
► Gain visibility in organization - demonstrate passion / ownership of issue
► Build Reputation in Government - to get statutory recognition
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THANK YOU