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HOW to implement GST?
WHAT is the role of professionals in GST?
WHAT are the important changes in law?
WHY and HOW is India moving towards GST ?
What shall we talk about?
Indirect Tax : Quick Comparison
International Perspective
Single Tax On all SuppliesWith unrestricted
CreditsAnd automated
processes
Current Indian
ScenarioMultiple Taxes
On specifically defined concepts like
manufacture, sale, service,
entertainment, etc.
With frequent breakages in credit
chain
And manual/isolated processes
Proposed GST Regime
DUAL TAX On all SuppliesWith unrestricted but
fragmented creditsAnd automated
processes
Important Taxes subsumed..
CGSTCentral Excise Duty
Service Tax
Additional Excise Duties
Countervailing Duties
Cesses SGSTValue Added Tax / CST
Entertainment Duty
Octroi and Entry Tax
Purchase Tax
Luxury Tax
IGST instead of CGST and SGST for Interstate Transactions – Destination Based
UT-GST
Dual GST : Basics
Situation Supply Tax
Location of Supplier and Place of Supply in same State
Intra State CGST + SGST
Location of Supplier and Place of Supply in different States
Inter State IGST
Import of Goods or Services (different countries) Inter State IGST (CVD/RCM)
Export of Goods or Services (different countries) Inter State Zero Rated
Dual GST : Features
• Two Important Determinants• Place from Where the Supply is made [Service Provider / Warehouse Centric]
– no convergence
• Place to which the Supply is made [Service Recipient / Buyer Centric] –convergence
• Single Locational Establishments vs. Multi Locational Establishments
Single Locational Product Establishments
Seller in Mumbai
Buyer in Mumbai
Buyer in Delhi
Buyer in Chennai
100
100
100
VAT REGIME DUAL GST REGIME
Seller in Mumbai
Buyer in Mumbai
Buyer in Delhi
Buyer in Chennai
100
100
100
VAT
CST
CST
CGST + SGST
IGST
IGST
Single Locational Service Establishments
Mumbai
Mumbai
Delhi
Chennai
100
100
100
Service Provider (India)
Service Recipient
(India)300
SERVICE TAX REGIME DUAL GST REGIME
Single Registration continues
Service Tax
CGST + SGST
IGST
IGST
Multi Locational Service Establishments: Plain Vanilla
Mumbai
Delhi
Chennai
Mumbai
Delhi
Chennai
100
100
100
Service Provider (India)
Service Recipient
(India)300
SERVICE TAX REGIME DUAL GST REGIME
Need State Level Registrations and Compliances
Multi Locational Service Establishments: Joint Services
Mumbai
Delhi
Chennai
Mumbai
Delhi
Chennai
Service Provider (India)
Service Recipient
(India)300
SERVICE TAX REGIME DUAL GST REGIME
?????
Multi Locational Service Establishments: Joint Services : Possible Resolutions
Mumbai
Delhi
Chennai
Mumbai Mumbai
Delhi
Chennai
Mumbai
DECENTRALISED BILLING BRANCH TRANSFER OF INCOME
Multi Locational Service Establishments: Imbalance on State Level Slicing..
Delhi
Mumbai
Delhi
Service Provider (India)
Service Recipient
(India)300
SERVICE TAX REGIME DUAL GST REGIME
Vendor150
Mumbai
Delhi150
300
Branch Transfer of Expense ORInput Service Distributor
HOW to implement GST?
WHAT is the role of SBGCO?
WHAT are the important changes in law?
WHY and HOW is India moving to GST ?
What shall we talk about?
Important Concepts
• GST applicable on all supplies including deemed supplies• Free Supplies to related persons
• Supplies to job workers (exceeding 365 days)
• Interstate branch transfers
• Supplies of goods by Principal to Agents
• Reverse Charge Mechanism to be applicable on• Import of Services (include free / personal imports)
• Notified Goods or Services
• All Procurement from unregistered vendors
Important Concepts (Contd.)
• Value is generally the transaction value• Arms’ Length Pricing in case of Related Parties
• Invoice Value accepted if recipient eligible for full input tax credit• Pre Supply Discounts can be reduced from value, Post Supply Discounts can be
reduced only if the same relate to agreement prior to supply
• Exemptions • Most exemptions to be phased out• Threshold of Rs. 20 lakhs• Optional Composition Scheme upto Rs. 50 lakhs (not for service providers)
• Rate of Tax• 0 – 5 – 12 – 18 – 28 + CESS
• Time of Supply to be earliest of multiple ‘touch points’• Advances for Goods also becomes liable for tax
IGST : Domestic Place of Supply Rules
• PoS Rule for Goods• Termination of Movement for Delivery of Goods == “Ship To” Address
• Exception for Triangular Cases (Different Bill to and Ship To addresses)• “Bill To” Address important
• Deemed Supply from “Bill To” Location to “Ship To” Location
• Location of Goods if movement not required
• PoS Rule for Services • General Rule - Destination Principle – Classification as B2B vs. B2C important
• Exceptions – Source and Hybrid Principles• Impact on Claim of Credit in B2B Cases
International Place of Supply Rules
• Goods• Import – India – Liable at the time of payment of customs duty
• Export – Outside India – Zero Rated
• Supplies to SEZ – Zero Rated
• Penultimate Exports – no longer exempted
• Services• Destination Principle (subj. to various exceptions)
• Import – Liable under RCM
• Export – Zero Rated subject to various conditions
Input Credit – Essential Conditions
You should receive
Goods/ Services
Tax Invoice
Pay the vendor within 180 days
Vendor should
Have Paid the tax
Have uploaded the tax to the customers account
Credit should not be
Blocked
Subject to apportionment
Ineligible Input Credit
Blocked Credits
Motor Vehicles & Rent-a-Cab
Food and Beverages
Club, Life/Health Insurance
Construction Related
Goods lost/written off/ provided free
Apportioned Credits
Partly for Business and Partly for Other Purposes
Partly for taxable and partly for exempted supplies
Banking Service Provider
Matching Concept : Process Flow
Vendor
Company
Approvals and Recording in ERP Systems
ERP
GST PORTAL
Uploads information through GSTR-1
MATCHING PROCESS
Matched Missing in GST PortalMissing in ERP
Immediate 2 month Prov. CreditUpto 30-Sept
Complex Compliance Requirements - (1/2)
GSTR-1: Details of Outward supplies of goods and/or services
GSTR 1: Details of Outward supplies
Step 1
GSTR 2A: Auto-populated in part A of the GSTR-2A of recipients
Step 2
GSTR 2: On the basis of above GSTR-2A, details of inward supplies added, corrected or deleted by recipient to be disclosed under GSTR-2, including RCM details
Step 3
GSTR-1A : The details of inward supplies added, corrected or deleted by the recipient shall be made available to the supplier
Step 410
11
15
16
Supplier will accept or reject the modifications
Step 517
GSTR-1 will be amended to the extent modifications are accepted by supplier.
Step 617
GSTR 3
Step 8
Part A of GSTR 3
Part A of GSTR 3
20
Make Payment
Step 7
20
Part B of GSTR 3
Compliance - Understanding the flow (2/2)
GSTR 3
Step 8(End of the month/ Succeeding month )Matching by GST Portal GST ITC 1
(Mismatch report)
Step 9
Previous periods, ITC mis-match
Current periods, ITC mis-match
Current periods, ITC
matched
Not matched,
reverse and pay tax in
next month
Matched in current
period, avail ITCSucceeding
months GSTR 3
Subsequently when the same
is rectified, recipient will
avail ITC
Returns
Multiple Uploadings ( at least 3 p.m.)
Distinction between B2B and B2C Customers
No Revision permissible
Annual Return with Reconciliation and Audit Report
Can’t skip intermediary returns
Cross linkage of Data and Audit Trail
Invoices
Numbering Format
Generation and Cancellation Related Issues
Digital Signature
Way Bill E-Invoice
HSN / SAC Mentioning
Debit/Credit Note – Scope and Linkage
Registrations
Multiple Registrations as Supplier/ ISD
All activities through common portal
Definition of Authorised Signatory
Mentioning of Registration Details
Documents to be submitted
Transition Strategy
“On behalf of”…
Tax Deduction at Source
Tax Collection at Source
Aggregator
Reverse Charge Mechanism
Agent dealing on behalf of Principal
Compliances – A quick Snapshot
Way Bills
• Every movement of goods above Rs. 50000 to be compulsorily accompanied by Way Bill• Part A to be filled by the person causing movement
• Part B to be filled by the transporter
• To be accepted by registered recipient
• Way Bill valid for a limited time frame
• All way bills to be populated on GST Network
HOW to implement GST?
WHAT is the role of SBGCO?
WHAT are the important changes in law?
WHY and HOW is India moving to GST ?
What shall we talk about?
Key Elements of Impact Study…
Law
VAT – CST Service Tax - Central Excise Duty
Works Contract TaxOctroi / Entry Tax / LBT
KKC - SBC
CGST + SGST
IGST
Cess
Business Processes & Structures
Contracts
Systems & Documentation
Impact Study : Current vs. New Law
• Understanding Nature of Supply including deemed supplies• Phasing out of Exemptions & Concessions
• Understanding Location of Supplier
• Understanding Place of Supply• Examine exceptions
• Fungibility of Credits & Neutrality of Procurements
• Revisit Concept of Deemed Supplies based on geographical slicing
Commercial Aspect of Indirect Taxes
Input Tax Output Tax
Non-CreditableCreditable ExclusiveInclusive
• Float• Inverted Rate Structure• Non-Aligned Payment Schedule
Non-Creditable Taxes
Taxes Manufacturer Trader Service Provider Contractors
Excise Duty
VAT
Octroi
CST
SAD Refund
Service Tax (General)
Service Tax on Outward
Luxury Tax
Commercial Realignment
A B C
Supplier 1 Receiver 1
Cost 100
NCT 10 Supplier 2 Receiver 2
Margin 10
SP 120 Cost 120
NCT 5
Margin 5
SP 130 Cost 130
-5
-10115
B - C
A - B
NCT=Non-Creditable Taxes
Legal Realignment - Contract Review
• Subsequent Legislation Clauses
• Tax Clauses
• Consideration and Payment Schedules
• Change in Law
• Anti Profiteering Law
Important Implementation Points
Sales and Services
Inventory and Logistics
Procurement
Procurement
• Pre-GST • Exchange of TIN in case of domestic procurement• Renegotiation of Pricing with the vendors• Renegotiation of Terms and Conditions for flow of credit
• Transition• Ensuring Transit Inventories to be minimum • Clearing all pending GRs through invoices• Foreclosure of PO and issue of decentralized PO
• Post GST • Mention of correct applicable TIN• Enforcing timely clearance from GR to Invoice Stage• Alignment of transactions and data entry
Inventory and Logistics
• Pre-GST• HSN / SAC Mapping
• Alignment of low moving inventories
• Transition • Low levels of inventories
• Identification of embedded CVD and SAD
• Setting up processes for taxation of branch transfers
• Post GST• Closely monitoring branch transfers and way bills
• Price Reduction – Anti Profiteering Measure
Sales and Services
• Pre-GST • Exchange of TIN
• Specific Discussions in case of triangular cases of BILL TO / SHIP TO
• Transition• Foreclosure of Sale Order and issue of decentralized Sale Order
• Invoices to be decentralized
• Post GST • Mention of correct applicable TIN
• Credit Note Realignment
Setting Digital Strategies
Front EndInvoicing or POS
Financial Systems
ASP GSTNGSP
Needs to be GST CompliantHSN/GST Calculations
Is the flow at aggregate or transaction level? If aggregate, may not be able to generate GSTR1
Do you need one? What are the value added services offered by him?
You definitely need one. What are the SLA? Will he have bandwidth?
Understand the niceties of the system
GST Implementation – Summary of Broad Steps
Quick Need Assessment
Macro Qualitative Impact
Registration Requirements
Taxation of Free Supplies
Financial Impact Analysis
Business Process Analysis
AS IS Analysis
Impact Analysis
Transactional Analysis
Vendor
Customer
Inventory
Process Realignment
Organisation
Technology
Accounting
Vendor
Tax
HR
Documentation & User Training
Invoices
Debit/Credit Notes
Inventory
Tax
SOPs
Training
Transition
Credits
Inventory
Litigation
Registration
HOW to implement GST?
WHAT is the role of professionals in GST?
WHAT are the important changes in law?
WHY and HOW is India moving to GST ?
What shall we talk about?
Professional Services
Advisory Services
• Balancing of 3R’s.
• Use of Technology
• Less Department Interface
• No Documents
• Very Elaborate• Understand
Risks• Fee Structure• Conflict of
Interest
• Onerous to keep track
• Niche Area• Limitation of
Practice• Competition
from Legal Fraternity
• Huge One Time Need
• Multi-locational Service Set ups complex
• Less Frequent Changes in Law
• Knowledge vs. Advise
Compliance Outsourcing Audit Litigation
• Technology • Volume• People Skills
Compliance – 3R’s Roles, Responsibilities and Rewards
Sr. Activity Role Responsibility Reward
1. Preparation of Basic Data
2. Determination of Turnover
3. Stratification of Data for GSTR1
4. Summary of HSN Data
5. Three Way Reconciliation
6. Handling Taxation of Advances
7. Filing of GSTR1 and Uploading
8. Expense Credit Reconciliation
9. Decision on Reconciliation Items
10. Uploading of RCM Line Level Details
Compliance – 3R’s Roles, Responsibilities and Rewards
Sr. Activity Role Responsibility Reward
11. Decision on Claim of Credits
12. Uploading of GSTR 2
13. Income Reconciliation based on GSTR1
14. Decision on Reconciliation Items
15. Uploading of GSTR 1A
16. Finalisation of GSTR 3
17. ITC Mismatch Report and Action Points thereon
18. Reconciliation of Provisional Credits and Reversals and Re-credits
19. Primary Data Analytics
20. Final Upload and Logistics
Some points to ponder…
• ABC Limited has currently appointed separate excise consultant, VAT consultant and service tax consultant. • Will he need three different consultants in GST?
• Can he keep three different consultants in GST? How will 3R Matrix work?
• Will there be a need for state level consultants?• Common Law across the country
• Most activities on common portal
• Law being State level, local nuances may still play a role
• What are the relevant skill sets in GST Regime?
GST Professionals : Skill Sets required
Network Approach
Domain Knowledge
Solutions Approach
Systems Approach
Very Important, the differentiator
between professionals and large businesses
May otherwise lead to burn-out and
eventual transition of clients
Ability to understand business dynamics and upgrade to a business advisor
May provide last leg execution support.
May be critical in GST Regime
Implementation Support
Advisory Services
Compliance & Retainer-ship
Audit & Assurance
Training & Helpdesk
Litigation & Representation
Full Day Paid Workshops
Complimentary GST Fest
Simple Publications
Implementation Checklists
YoutubeChannel
Website
Android AppComplimentary Acclimitisation
MeetingsMailing Lists
WhatsappGroups
Email Helpdesk
GST World ®One Nation One Tax One Advisor
Gurgaon (HA)
New DelhiVaranasi(UP)
Jaipur/ Kota (RJ)
Rajkot (GJ)
Ahmedabad (GJ)
Mumbai (MH)
Panjim (GA)
Bangalore (KA)Chennai (TN)
Hyderabad (AP/TE)
Indore (MP)
Kolkata (WB)
All-India Network
One-Stop Destination
Industry Specific Expertise
Experience of 3 decades
Extensive Knowledge Pool
Vibrant Professionals
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