Lectured By: Vivek Dimri Assistant Professor, CSE Dept. SET, Sharda University, Gr. Noida.
All rights reserved | Preliminary & Tentative GOODS AND SERVICE TAX IN INDIA OVERVIEW |...
-
Upload
ferdinand-thompson -
Category
Documents
-
view
212 -
download
0
Transcript of All rights reserved | Preliminary & Tentative GOODS AND SERVICE TAX IN INDIA OVERVIEW |...
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
GOODS AND SERVICE TAX IN INDIAOVERVIEW | IMPLEMENTATION CHALLENGES
Rajeev Dimri | Partner
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
GST – Why so much noise…
GST: IMPLEMENTATION CHALLENGES3 |
• Most significant indirect tax reform in Indian history
• Will impact each commercial / business activity
• Stakeholders - Government, business community as well as common man
• Tax administration system will undergo significant functional change
• Will make indirect tax environment more simple, stable and predictable (hopefully!)
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
3 |
Excise Duties including the additional excise duties
Cesses in the nature of excise duty /customs duty
Additional duties of customs (ie CVD and ACD)
CST to be abolished
Service tax
Cesses and surcharges levied by Union ie education
cess etc
VAT/ Sales tax
Entry tax not in lieu of octroi
Entertainment tax (unless levied by the local bodies)
Luxury tax
Taxes on lottery, betting and gambling
Cesses and surcharges levied by States, related to
supply of goods and services
Central Levies State Levies
Subsumation of taxes
Central GST State GST
Purchase tax to be subsumed
• Municipal levies - likely to be out
• Stamp duty - likely to be out
Taxes to be subsumed under GST
GST: IMPLEMENTATION CHALLENGES
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
Overview of the new landscape
Taxable event to be ‘supply’
States to levy tax on services
Taxable event
Tax rates to change for inputs and outputs
Initially 1% additional tax on inter-state sales
Place of supply Exemptions
Likely to either be withdrawn or be converted into refund mechanism
Multiplicity of taxes
Possible expansion of credit base
Credit pool to be maintained for each state
Credit
GST to subsume most current indirect taxes
To be replaced by CGST and SGST, IGST and additional tax on inter-state supply
Destination based tax
Rules for services?
Rates
Likely to be consistent for all goods and services – MRP valuation may go
Classification
Valuation
KEY GST CONCEPTS
GST: IMPLEMENTATION CHALLENGES6 |
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
GST – KEY IMPLEMENATION CHALLENGES
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
6 |
Paradigm shift
Supply based taxation
Taxability of inter-unit transfers
Job-work / tolling
arrangements
Determining consumption
state
Determining origin state (to levy additional
tax)
Taxing jurisdiction in case of chain transactions
Taxation of imports
GST: IMPLEMENTATION CHALLENGES
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
7 |
Crafting a workable design
Need for a pragmatic and business friendly approach
Place of supply rules – special focus needed for service sector
GST: IMPLEMENTATION CHALLENGES
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
8 |
Crafting a workable design
Need for a pragmatic and business friendly approach
Characterization of borderline transactions (eg works contracts, intangibles, lease, software)
Special regimes – SEZ, EOU’s, Area based exemptions Synchronization with foreign trade benefitsNeed for simplified taxation structures for very small & large tax payersTaxation of key strategic / evolving sectors – eg real estate, ecommerce, telecom
GST: IMPLEMENTATION CHALLENGES
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
9 |
Difference in SGST rates – likely challenges
GST: IMPLEMENTATION CHALLENGES
SGST rate
Jurisdiction disputes
Customer state wise SGST rates for billing
purposes
Tax driven supply chain planning to
continue
May impact port of import decisions
Multitude of audits, investigations
Distortion of trade
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
10 |
Transitional challenges
GST: IMPLEMENTATION CHALLENGES
Phased transition• Some products / sectors (petroleum, liquor) may be kept outside to begin
with
Fate of investment linked incentives• Whether the investment linked indirect tax benefits presently extended by
several states would be continued under the proposed GST regime?
Transition of opening credits• Tax credits pertaining to the present indirect tax regime will require
seamless transition
Additional tax• Credit eligibility• Applicability on imports
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
11 |
Admin and infrastructural preparedness
GST: IMPLEMENTATION CHALLENGES
Personnel
• Training needs
• Defining procedures and processes
Systems
• Alignment with the new levy
• Proper upkeep and maintenance
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
12 |
Likely challenges to enforcement agencies
Key challenges
Managing risk of GST
fraud
Training needs
Robust GSTN and online
compliances
Coordination between state & central
departments
Taxation of services by
States
Role of customs
authorities
GST: IMPLEMENTATION CHALLENGES
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
Likely challenges for tax payers
GST: IMPLEMENTATION CHALLENGES
A new tax law – a whole lot of tax controversies
Transaction restructuring
Transaction structuring to be reviewed
Procurement pattern and trading models to be analysed – No significant difference between local and interstate under GST?
Billing patterns, local vis-à-vis inter state to be reviewed
Records/ Accounting
State-wise sales records
Credit availment and utilization records
Transition
Transition of credits
New registrations
Change in contract clauses
Review of procurement costs
Taxability of transactions spread across regimes
Treatment of tax paid inventory
Re-designing of the entire ERP
Current ERP is aligned as per the current taxes
Change in accounting
Re-defining the logics
Updating masters
Overall pricing of goods – factoring of GST credits
Change in rate of taxes
Costing / Pricing of goods
Compliance
Tax computations
New formats for invoices / records/ returns/ declarations
Validity of statutory form (Form F/Form C)
Manner of payment of taxes
New compliance dates
Documentation for movement of goods13 |
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
BMR’s take
13 |
With current level of preparedness April’16 timeline looks a daunting task
However, with increasing global focus on India as investment base market, no room for postponing this critical indirect tax reform
A well planned and coordinated approach between policy makers, enforcement agencies and industry critical to achieve the timeline
Urgent need to roll out high-level design of the new law for deliberations by stakeholders
GST the need of the hour to combat the globally so perceived ‘tax terrorism’ in India!
GST: IMPLEMENTATION CHALLENGES
All
right
s re
serv
ed |
Pre
limin
ary
& T
enta
tive
15 |
Disclaimer
OVERVIEW & IMPLEMENTATION OF GST
Purpose of this presentation is to give a highlights of the proposed GST regime in India and not render any definitive
opinion on any of the activities of stakeholders under the GST regime
Prior professional advise is advised before implementation of aspects covered under this presentation
Our comments in the preceding slides are based on the GST framework outlined in the First Discussion Paper on
GST (2009) and the Constitution Amendment Bill, 2014
Some of the features highlighted including the IGST model for interstate supplies are understood to be under
reconsideration
It is likely that the final model would differ from our understanding and the implications discussed herein
would accordingly vary and the contents of this presentation would need to be updated basis the revised
GST frame-work in the offing
BMR is under no obligation to update this presentation for future changes