GST IN INDIA
WHY GOODS & SERVICES TAX (GST)
The India business landscape faces a host of challenges in the indirect tax structure emanating from:
Multiplicity of taxes at the Centre & State levels
Cascading of taxes
Fixation of situs of sale-Local sale vs Central Sale
Issues regarding double taxation viz. works contract, software, etc.
Lack of uniform structure and processes
Cumbersome compliance mechanism
With the proposed shift to the GST regime, we see a drastic improvement in the business landscape.
WHAT IS GST
WHEN WILL GST BE LEVIED
GST is driven by the ‘supply’ concept. Transactions involving supply of goods and services to be taxed under GST
Central GST (CGST) and State GST (SGST) will be simultaneously levied on every intra-state
transaction of supply of goods or services except on exempted goods and services i.e., goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits
The Centre shall levy and collect Integrated GST on all inter-state supplies of goods and services. IGST would be equal to a combination of CGST and SGST
ON WHAT IS GST LEVIED
GST is to be levied on transaction value of goods and services
Such transaction value to undergo scrutiny incase the value is influenced by related parties
GST shall also be levied on prescribed goods and services supplied without consideration
One Indirect Tax for the entire nation making India one unified common market
Integration of prevailing indirect taxes to ensure uniformity. However, Basic
Customs duty to continue
Levied at ‘each stage’ in the economic chain of supply
Credit available across goods & services; including for inter-state procurements
leading to higher credits
Standardized classification of goods/services should result in reducing litigation
GST leviable on transaction value; MRP based assessment done away with
Harmonization of Centre and State taxes to achieve
WHO IS LIABLE TO DISCHARGE GST?
GST OVERVIEW
Status Taxes to be Subsumed Sectors outside proposed GST
At Central Level
▪ Additional customs duties (CVD and SAD)
▪ Central Excise Duty ▪ Service Tax
▪ Special Excise duty (on medical and toiletries preparation) ▪ Various auxiliary cess & levies
▪ Petroleum, to be covered from future date
▪ Alcohol fit for human consumption
▪ Real Estate, leviable to state stamp duty ▪ Electricity, leviable to
Electricity duty by States At
State Level
▪ State-VAT ▪ Central Sales Tax ▪ Entry Tax ▪ Luxury Tax ▪ Entertainment Tax ▪ Purchase Tax
Procurement of Goods and Services Supply of Goods and Services
Basic Customs Duty + IGST
Integrated GST (IGST)
State GST (SGST) +
Central GST (CGST) rated Zero-Import Inter-state supply Intra-state supply Export
Integrated GST
(IGST) Central GST (CGST)State GST (SGST) +
Inter-state supply Intra-state supply Incase of Imports Importer of Goods Importer of Services Incase of Inter- state/intra-state supplies Supplier of Goods Supplier of Services Incase of stock transfers Supplier of Goods Supplier of Services Incase of certain notified supplies Recipient of goods Recipient of services Indirect Tax
HOW DOES GST AFFECT YOU
Let’s take a closer look to prioritize…before we take a leap!
ASSESSING THE REAL IMPACT ON BUSINESS
OPERATIONS
▪ Potential Savings in Warehousing, Logistics, Procurement and Distribution Costs
▪ Re-alignment of Supply Chain as per Business Dynamics ▪ Transition of Information
Technology (IT) Systems to the New Tax Framework
▪ Greater focus on Flow of Electronic Information under GST ▪ Robust IT Systems a pre-requisite
▪ Impact of GST on End Product Pricing
▪ Impact on Supply Chain ▪ Efficiencies on Product SKUs ▪ Competitive Dynamics: Retain
the efficiencies or pass on to customers
▪ Financial/Working Capital impact of GST on Business ▪ Tax Planning and
Structuring for the future ▪ Transition of Systems and
Processes
Chief
Financial
Officer
Chief
Marketing
Officer
Procurement
& Logistics
Head
Chief
Technology
Officer
Impact on pricing Impact on cashflow Impact on Working capital Legal & Contract Transition Assess industry issues Making team GST ready Prioritize business needs Analyze gaps and risks Achieve business continuity Supply and procurement analysisENSURING BUSINESS CONTINUITY
CLASP THE OPPORTUNITIES
Migration Pricing & Working Capital Compliance Transition Centralisation of process, policies &
systems
Business re-engineering, supply
chains etc.
Industry/sector
impacts Policy advocacy
▪ Existing Registrations
▪ Changes in ERP, Internal controls ▪ Internal team readiness
▪ Impact on cash flow of the business ▪ Impact on working capital/cash flow ▪ Pricing of goods/services
▪ GST compliant invoices
▪ Ensuring GST returns are filed on time
▪ Eligibility and transferability of credits ▪ On-going contracts
The Final Lap has begun
HOW WE CAN HELP
GST Policy Advocacy
Identify shortcomings in the GST Act that can have a negative impact on the Company
Assist in making representations to the GST Council for overcoming them Impact Analysis Study
Perform simulated calculations of potential GST impact on business and highlight changes in tax costs
Identify areas of opportunity and threats and determine impact on business operations Review of Impact Analysis Study
Review the impact assessment study undertaken by the company/consultants on business operations
Suggest changes for improved management of processes, positions and compliances Transition & Implementation Assistance
Preparation of change management plan
Custom-design changes that need to occur in ERP, Internal Controls, Accounting
Evaluating readiness of the company’s internal team to handle GST compliances and formulation of risk/responsibility matrix
Assistance in Compliance and support services
Migration to GST registrations
Assistance in GST compliances (filing returns, monthly GST payments etc.)
Review of sample GST compliant invoices and other documents as per the prescribed formats
Resolve routine on call queries on a need basis
PREPARING FOR GST
Positions
Identify impact of GST on various business supplies
Analyse transaction rules on credits, taxability of transactions, migration into GST, etc
Identify possible areas where GST could be accumulated
Impact of rate change on margins, cash flows, etc
Unbundling “mixed” supplies of goods and services Compliances
Registrations, online payments & returns of CGST, IGST and respective State-SGST
Gearing up for periodic Audits, reviews and other assessment procedures at Central and State level
Dual-reporting likely for certain transactions
Transition compliances
Processes
Need for re-negotiations with certain vendors/ clients based on GST impact study
Invoicing norms likely to change under GST
Manner of claiming and utilizing VAT and CENVAT credits may be an amalgam
Valuation norms to identify taxable value likely to change
Mapping multi-locational services Systems
Map transaction lines into dual-GST charges
Data fields to be identified and captured for return preparation, credit claims, liability computations, etc
Reconciliation of GST credits & liabilities with Statutory books
Auto-matching of SGST/ CGST credits and IGST credits to perform real-time calculations of GST liabilities
WHY BDO INDIA LLP
Profound understanding of various operations and revenue streams of the client
Regular discussion with the client
Deep understanding of domestic and international business environment
Our goal is not to be the biggest or the best service provider, but to ensure that our clients are the best in their business
National integratedteam Bespoke solutions Scalable service offerings
How are we different?
ABOUT BDO
BDO India offers Strategic, Operational, Accounting and Tax & Regulatory advisory & assistance for both domestic and international organisations across a range of industries. We work cohesively, partnering with our clients to render continued expertise driven advisory. With a deep cultural understanding of business geography, our Functional Heads offer knowledge and expertise in establishing, structuring and operating business in India.
BDO is an international accounting network that provides advisory services and is comprised of a number of independently managed firms operating under the BDO brand. BDO member firms offer an international network for organizations looking to operate beyond their domestic boundaries. The firms specialize in combining their local knowledge and experience with an understanding of the international context to provide global service.
Tailored solutions aligned to global best practices One stop solution window Partner led approach
5th largest accountancy network Seamless servicing Global footprint
PUNE KOLKATA HYDERABAD
NATIONAL LEADER MUMBAI BENGALURU
Note: The information contained herein has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The information cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO India LLP to discuss these matters in the context of your particular circumstances. BDO India LLP and each BDO member firm in India, their partners and/or directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
BDO India LLP, a limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.
BDO is the brand name for the international BDO network and for each of the BDO Member Firms. Copyright ©2017 BDO India LLP. All rights reserved.
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AMIT KUMAR SARKAR
Partner & Head M: +91 98 2050 5683 e: [email protected] RAMAN NV Partner M: +91 97 0380 3250 e: [email protected] NAVEEN RAJPUROHIT Partner M: + 91 99 0086 0960 e: [email protected] MANISH MISHRA Partner M: +91 98 1877 6660 e: [email protected] SMITA ROY Partner M: +91 99 1017 4794 e: [email protected] RAHUL AGGARWAL Partner M: +91 98 7188 7534 e: [email protected] GUNJAN KHARE Associate Partner M: +91 91 7665 6755 e: [email protected] ABHISHEK ANAND Associate Partner M: +91 99 2353 0421 e: [email protected] ASHISH ATHAVALE Director M: +91 98 2007 7089 e: [email protected] SOHRAB BARARIA Director M: +91 90 5106 4031 e: [email protected]
INDIRECT TAX LEADERSHIP TEAM
RAMAN NV
Partner
M: +91 97 0380 3250 e: [email protected]
