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BUSINESS
FEBRUARY 12 2015
Bill receives
assent and
becomes Act
GST legislations
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April 2016
Service tax
Subsumation
of taxes
Entry tax
Excise duty
Goods and Services Tax (GST) - Largest indirect tax reforms in India
Taxpayers (in the long run), in terms of simplified taxation and compliance,
uniformity across states and minimal cascading of taxes
State GST
Every State likely to have its own SGST law; CGST law to be implemented
by the Centre
GST - A SNAPSHOT
GST - A SNAPSHOT
GST
l PROPOSED
CREDIT
STRUCTURE
GST
PROPOSED
CREDIT
STRUCTURE
IGST
SCGST
CGST
IGST
CGST
IGST
SGST
Taxpayer to track the input credits separately for IGST, CGST and SGST and the
utilization of such credits
Credit pool to be maintained State-wise!
IMPACT l MANUFACTURING
Product pricing
Depends on GST rates, additional GST credits in the supply chain
IMPACT l TRADING
Pricing on the sales side and actual impact on margins depends on the GST rates
IMPACT l IMPORTS
Imports to attract basic customs duty and IGST
Whether payable at the port of import or basis destination of goods in the bill of
entry filed?
Customs and tax functions of companies would need integration/ co Levy of 1 percent additional tax on imports?
ordination
IMPACT l SERVICES
Services sector to be significantly impacted by GST
Financial impact
Potential increase in rate of tax (from 12% to ???)
More credit available
Likely increase in working capital impact
Services to be taxed at a State level (in addition to CGST) challenges for PAN
India contracts, involving service delivery at State level
Likely increase in output GST rates from the present tax rates
End customer price to be dearer unless increased taxes are absorbed by the
developer on account of increased credits / reduction in construction cost
OVERALL
IMPACT
l BUSINESS
OVERALL
IMPACT
l BUSINESS
Financial impact
Ascertain impact on
cash flow, working
capital
Relook into
procurement/sourcing
pattern
Possible changes in
costing and pricing on
account of change in
tax rate, enhanced
credits
Transition of
accumulated credits
especially CVD / ED
credits in trading stock
Infrastructure impact
IT infrastructure has to
be geared up to
support GST
framework
Support decentralized
compliance/accounting
Capturing and
maintenance of statewise credit data
Appraising vendors,
customers &
employees of the GST
scheme
Operational impact
GST RATE
Expected rate(s) of GST
Whether there would be a standard rate as well as merit rate under GST?
TRANSITIONAL ISSUES
INTERSTATE SUPPLIES
Has the potential to be a source of dispute for revenue between the States
resulting in litigation in the hands of taxpayers
ANNEXURE
THANK YOU
A goods a d services ta
Issues
The tax is proposed to be on supply of goods or services or both and it does not seem necessary
whether such supply should be between separate legal entity or for consideration. In such scenario,
there would be tax on
Stock transfer leading to huge cash flow impact
Supply of goods on demo, job works, testing etc
Supply of spares for warranty, Goods return
Valuation
Recommendation: The taxable event should be supply for consideration
SUGGESTIONS
Time of 9 months for dealers to implement GST supply chain, pricing, contracts, IT etc
A clear guidance note may be issued with illustrations to determine place of supply of services to be
issued at earliest
There should not be any negative list of either goods or services restricting the availability of GST
credit
Continuance of tax benefits to SEZ, STP and EOU units
Single authority (State or Centre) for administration, assessment, enforcement, scrutiny and audit for
CGST, SGST & IGST.
Abolition of road permits, way bills and other statutory forms
Minimal instance of refund by providing upfront exemption or provision to be drafted in law for
giving automatic time bound refund
Transition process allow credit of VAT & Service Tax as well as CVD / ED built into GST opening stock
Uniform GST rate to be applied on goods and services
There should not be any domestic reverse charge taxes on goods and services