Snr presentation gst

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GST Private & Confidential 1GST Private & Confidential 1

Goods & Services Tax (GST)Goods & Services Tax (GST)

Contents

2GST Private & Confidential 2

Present Indirect Tax Structure and its shortcomings

Other Issues

GST – Meaning and history

GST – Salient Features

Benefits of GST structure

01 Present Indirect Tax Structure in India

02 Entering into the era of GST

Are you ready for GST?

How SNR can assist?

03 Road Map for GST

Present Indirect Tax Structure in India

GST Private & Confidential

01

3

The present indirect tax structure imposes various taxes on different taxable

events/ transactions which is evident from the various indirect taxes, their

respective laws, regulations and rules.


Present Indirect Tax Structure

CENTRAL

TAXSTATE

TAX

Excise Duty

Service Tax

Addl. Duty of Excise

Surcharge & Cess

CVD & SAD

VAT

CST

Purchase Tax

Luxury Tax

Surcharge & Cess

Entry Tax

4

03

02

01 Cascading Effect

• Levying of VAT on gross assessable value inclusive of excise duty.

Non-availability of credit of Excise Duty to traders

• Central excise is levied on goods manufactured or produced in India

• Cenvat credit of excise duty is not available to traders

Dual taxability under Central & State laws for certain transactions

• Issues in classification of transactions into sale or services

• Duplicity of taxes on various sectors viz IPRs, Work Contract, Installation, etc.


Shortcomings in the present structure

5

• Too many indirect taxes with different rates and provisions

• Present tax structure is highly complicated

• The States have no powers to levy tax on services

• The States have to rely exclusively on compliance improvements or rate increase for their revenues


04 Lack of uniformity in provisions and rates

05 Inability of States to levy tax on services

6


Other issues

Complex tax structure

Lack of uniformity in provisions

Non-harmonization of tax rates

Lack of automation

Lack of procedural manuals

Lack of skilled officials

No system for automated scrutiny of 100% tax returns

Lack of cross verifications with other tax administrations

Lack of efficient mechanisms to control evasion

7

Entering into the Era of GST


02

8

Tax on supply of goods, or services or both.

A progressive tax regime globally

Inbuilt efficiencies to broaden the tax base, decrease cascading effect and reduce

revenue leakages.

Significant shift from origin-based taxation to a destination-based tax structure

Impact on the operating business models and the revenues of the centre/states.

Potential to impact cash flow, pricing, working capital, supply chain and IT systems

An opportunity for transforming the businesses.

Meaning

GST Private & Confidential 11

2004 - Kelkar Task Force suggested National level GST.

July 2009 – Finance Minister formed Empowered Committee of State Finance

Ministers and announced implementation of GST from April 2010

March 2011 – 115th Constitution Amendment Bill introduced in Lok Sabha

December 2014 – 122nd Constitution Amendment Bill again introduced in Lok Sabha

May 2015 – Constitution Amendment Bill passed in Lok Sabha and bill introduced in

Rajya Sabha

August 2016 – Constitution Amendment Bill passed by Rajya Sabha and most of the

state assemblies also ratified the bill

September 2016 – President signed the Bill and GST council was formed

History


In India, the GST model will be “dual GST” having both Central and State GST

component levied on the same base.

All goods and services barring a few exceptions will be brought into the GST base.

No distinction between goods and services for the purpose of the tax with common

legislations applicable to both.

Taxable event in case of goods would be ‘supply’ instead of ‘manufacture’.

Cross - utilization of input of CGST in payment of SGST and vice versa, will not be

allowed, except in the case of inter-state supply of goods & services.

The small business entities whose gross annual turnover is less than prescribed limit

will not be covered by GST law.

Integrated GST will be levied on import of goods & services into India and the

incidence of tax will follow the destination principle.

Salient features


Indirect taxes to be subsumed into GST

CENTRAL

INDIRECT

TAXES

Central Excise Duty

Service Tax

Additional Excise Duty

Excise Duty levied under the Medicinal and Toilet

Preparations (Excise Duties) Act, 1955

Additional Duty and Special Additional Duty of Customs

Central cesses and surcharges in so far as they relate to

supply of goods and services

STATE

INDIRECT

TAXES

VAT / Sales Tax

Entertainment Tax (other than the tax levied

by the local bodies)

Central Sales Tax

Octroi and Entry Tax

Purchase Tax

Luxury Tax, taxes on lottery, betting & gambling along with

state cesses and surcharges


Benefits of GST

01 Reduces transaction costs and unnecessary wastage

A single registration and a single compliance will suffice for both CGST and

SGST provided Government enables effective IT Infrastructure and

integrates states IT systems with the union.

02 Eliminates the multiplicity of transactions

The reduction in the number of taxes applicable in a chain of transactions

will help to reduce the paper work and clean up the current mess that is

brought by existing indirect taxation laws.

03 One point single-tax

This will help the business community to decide their supply chain, pricing

modalities and in the long run will help the consumers to get goods at a

competitive price. Pricing will no longer be the function of tax components

but function of sheer business intelligence and innovation.


04 Reduces average tax burden

The cost of tax that consumers have to bear will be certain and it is

expected that GST would reduce the average tax burden on the

consumers.

05 Reduces corruption

As the number of taxes reduces, so does the number of visits to multiple

departments reduces and further since most of the processes would be

online and automated, there shall be reduction in corruption.


Roadmap for GST03


GST requires business organizations to take a holistic approach rather than

a restricted view .

GST may be introduced at a short notice (currently efforts are being made

by GOI to make it effective from 1st April 2017)

The time available for businesses to analyse the impact of GST and make

changes across business functions will remain a significant challenge.

The business transformation triggered by GST would entail

identifying, addressing and leveraging various tax and

business drivers.

It would also include taxability and rates, exemptions and

concessions, cash flow and refunds, supply chain network,

governing rules and regulations and compliance framework.


Are you ready for GST? - Challenges

Businesses need to adopt a structured approach to prepare for the transition. Broadly, the

approach should encompass the following:

What should be your approach?

Assessment of the impact of GST on different business functions

Drawing up an implementation plan

Zeroing down the target operating model

Implementation and transition

Post-implementation validation and refinement of the operating model selected

Communicate with stakeholders including suppliers/channel partners.

Revising the tax compliance set up, statutory records templates, tax manuals,

compliance calendars, Frequently Asked Questions, etc.


ANALYSE

Analysing the

impact of GST

implementation

on your business

and structuring a

target operating

model which

minimises tax

cost and

maximise

benefits

REALIGNING

TARGETS

01 02 03 04 05

How SNR can assist?

06 07

Deploying and

realigning the

target operating

model post GST

implementation.

TESTING

Testing IT

systems,

updating masters

and handling the

cut-over and

migration-related

issues.

TRAINING

Undertake

training sessions

on the business

related processes

under GST .

Implement

necessary

process changes

to manage the

potential cash

flow impact.

Effectively

navigating

through cut

off/transitional

issues like pre-

GST stock of

goods, pre-GST

credit etc.

Post

implementation,

support in

meeting out the

compliances

under GST

environment.

APPLY PROCESS

CHANGENAVIGATION SUPPORT


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Tel. +91 11 26856421, 41655801, 26855884,

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