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Taxing times Indirect Tax Forum www.pwc.co.uk 1 November 2016
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Page 1: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

Taxing times

Indirect Tax Forum

www.pwc.co.uk

1 November 2016

Page 2: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

Getting ready for Indian GST

November 2016Taxing times

Slide 2

Page 3: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

GST Roadmap

Slide 3

November 2016Taxing times

January to March 2017

• Notification of GST Rules

• Testing of IT systems for all stakeholders

• Outreach workshops for industry

September 2016

Constitution amended, President’s assent, formation of GST council

Oct-Nov 2016

• Finalisation of GST rates

• Recommendation of Model laws by GST council

• Backend IT systems to be ready

• Change management and trainings

December 2016

• Passage of GST laws

• Development of front end and backend IT processes

• Trainings in IT systems

August 2016 – CAB passed

April 2017

Page 4: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

GST – Proposed regime

Taxing times

Simpler and rational tax structure

Broader base, lower taxes

• Less tax cascading

• Increased investment

• Improved competitive position of Indian producers

Improved administration (simplicity and lower cost of administration)

Improved cash flow position

Slide 4

November 2016

1GST – To bring a fundamental shift in the way business transactions are taxed in India

2Multiple State and Central indirect tax levies to be subsumed under GST

3‘Dual GST model’ – likely to have multiple rates (6, 12, 18 and 26%):

• CGST

4Inter-state transactions proposed to be covered under IGST, to be levied by Central Government (likely tax rate for IGST to be sum of CGST and SGST)

5Input credit mechanism to ensure no cascading effect and minimal blockage of funds

• SGST

Page 5: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

What is changing?

Slide 5

November 2016Taxing times

Destination based consumption tax as compared to current regime of origin based taxation

GST to discourage parallel economy

Business plans would be driven by commercial imperatives rather than by tax

To remove state barriers and make India one common market

Service sector – State

taxation

Service sector to be subject to State level taxes for the first time

Growth of organised

sector

Business plans

One marketConsump-

tion tax

Page 6: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC Slide 6

November 2016Taxing times

How will GST impact my bottom-line?

How can I create more value?

1 2

How can I be compliant?

Can I build competitive edge?

3 4

Page 7: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

In our experience companies drive value with potential benefits worth 4-13% across value chain

Slide 7

November 2016Taxing times

Opportunities of 2-4% in sourcing and 2-9% in network across the value chain

Manufacturing PricingSales and distribution

Sourcing

• Remodel cost of supplies

• Fact-based negotiation with the suppliers

• Evaluate Change in Manufacturing locations and strategy

• Re-evaluate contract manufacturing and job work arrangements

• Redesign distribution and sales network

• Remodel warehouse footprint

• Redesign pricing structure

• Margins, discounts, incentives, promotions, return pricing

Indirect/Capex vendors

Plants Sales/Distribution team

Market/Sales leadership

Excisable depots

Integrated Planning – Adapt to redesigned value chain, optimise inventories, working capital and service

Page 8: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

In our experience companies drive value with potential benefits worth 4-13% across value chain

Slide 8

November 2016Taxing times

Pricing decision

Change in tax rate

Savings on procurement

Increased credits

Savings by network restructuring

Transition impact

Impact of area based exemptions

Absorb benefit?

Competitive pricing

Pass through the supply chain?

Page 9: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

Managing compliances under GST – Need for a robust process/technology framework…

Slide 9

November 2016Taxing times

Separate registrations in each state (SGST/ CGST/ IGST)1

Multiple state-level filings 2

Multiple credit pools3

Cumbersome reconciliation requirements4

Need for technology intervention5

Page 10: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

IT readiness

Slide 10

November 2016Taxing times

• Master data amendments

Master data

• Tax configuration and computation

• Document numbering

• Roles and Authorisation

Configuration

• Business process re-alignment

• Reporting and printing requirements

• Impact on interfaces

Developments including reports

• Tax credit migration

• Closure or reversal of partially open transactions

• Migration of Contracts

Roles and authorisations

GST Impact on ERP and associated applications can broadly be classified into the following heads

Page 11: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

IT readinessSome changes to be made to ERP and other transactional systems

Slide 11

November 2016Taxing times

1Controls and compliance

• Tracking of CGST, SGST and IGST

• Utilisation of input tax credit

• Statutory reporting

2

• Procurement schemes

• Tax compliant warehouses

• Vendor master

• Process – domestic and import procurement of goods and services, etc.

• Print layouts and reports

Finance and control

• Tax procedures

• P&L

• Chart of accounts

• Tax codes

• Registration numbers

• Reports

• Pricing procedures

• Customer master

• Pricing master

• Process – domestic and export sale of services, debit and credit notes, etc.

• Print layouts and reports

Procurement 4Sales and distribution3

Page 12: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

GST – Impacting whole business

Slide 12

November 2016Taxing times

GST

impact

1

5

4

2

3

6Business

model

Contract arrangements

Tax impact

Project

management

IT system

Compliances

GST is a multi-function transformation program, impacting the whole organisation – It needs to be managed and reported rigorously to be compliant and capture value

Page 13: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

PwC

Preparing for GST requires a ‘whole of business’ approach

Slide 13

November 2016Taxing times

Design ImplementConstructAssessOperate and

review

PMO

Transition plan

Supply chain management

Representation with Government

GST impact analysis

Evaluation of IT systems and processes

Deliver change

Pricing Supply chain

implementationProcess re-engineering

IT re-configuration

Review of SoPCompliance monitoring

Vendor management

Communication and training modules

Compliance review

Intervention

Pre GST Post GST

Page 14: Taxing times · GST Roadmap Slide 3 Taxing times November 2016 January to March 2017 • Notification of GST Rules • Testing of IT systems for all stakeholders • Outreach workshops

Thank you

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the

information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the

accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members,

employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to

act, in reliance on the information contained in this publication or for any decision based on it.

© 2016 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC

network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

161025-122027-CR-OS


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