9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 1
Goods and Service
Tax (GST)
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 2
Impact on Economy
GST - Impact on Economy
Improve export competitivenes
s
Boost FDI investment in
India
Increase in value of Indian
Rupee
Rate of 18% for Mnf. &
traders could reduce product
cost
Rate of 18% equals present
15% rate (goods credit)
Push GDP growth by 1.5 –
2 %
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 3
Present Tax Structure
[5 Important Constituents]
Excise Duty
Entry No. 84, List I, Schedule
VII
Taxable Event is Manufacture
Service Tax
Residuary Entry No. 97, List I, Schedule VII
Taxable Event is Provision of
Service
Sales Tax / VAT/ CST
Entry No. 54 of List II (VAT) and
92A of List I (CST)
Taxable Event is Sale
Customs Duty
Entry No. 83, List I, Schedule
VII
Taxable Event is Import of goods
Entry Tax/ Entertainme
nt Tax
Entry No. 52 &62 List II,
Schedule VII
Taxable Event is Entertainment & Entry of Goods
Present Indirect Tax Structure of India
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 4
Impact on Existing Taxes
TAXES TO BE SUBSUMED TAXES NOT TO BE SUBSUMED
Central Excise Duty Additional Excise duties Excise duty levied under the Medicinal and
Toiletries Preparation Act Service Tax Additional Customs Duty Special Additional Duty Surcharges and cesses relating to supply of
goods and services
VAT/ Sales Tax Central Sales Tax Entertainment Tax(other than levied by local
bodies) Purchase Tax Luxury Tax Taxes on lottery, betting and gambling State surcharges and cesses relating to supply
of goods and services
Central levies State levies
o Basic Customs Duty
o Excise Duty/VAT on Petroleum Products for initial years(In addition to GST at Nil rate)
o Excise Duty on Tobacco Products(in addition to GST)
o
Entertainment Tax levied by local bodies
o State excise on Alcoholic Beverages(No GST)
o Tolls, passengers and Goods tax on carriage by road/ railway
o Property Tax, stamp duty and taxes on immovable properties
o Royalty on minerals , Environmental/regulatory taxes- e.g. vehicles tax
GST
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 5
Proposed Indirect Tax Structure
Intra State Taxable Supply
Excise and Service Tax will be known as
CGST
Local VAT & Other taxes will be known
as SGST
Inter State Taxable Supply
CST will be replaced by Integrated GST
(IGST)
Sum Total of IGST will be CGST and SGST
Import From Outside
IndiaCustom Duty
In Place of CVD and SAD, IGST will be
charged and basic custom duty will
remain same.
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 6
GST Incidence
CGST + SGST on intra-state supply
Only IGST on inter-state supply
Zero-ratedNo tax on exportFull refund of ITC
IGST on services/BCD+ IGST on goods
Cross Border
State X
State Y
Intra-state supply
Inter state supply
Exports
Imports
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 7
Input & Output Liability Set off Heads
IGST Input Credit
IGST Output Liability
CGST Output Liability
CGST Input Credit
IGST Output Liability
CGST Output Liability
SGST Input Credit
IGST Output Liability
SGST Output Liability
SGST OutputSGSTOutput Liability
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 8
GST Rates
GST Rates
Food Grains
0%
Essential food items/Mass
consumption items
5%
Luxury Items,aerated
drinks
28%
Standard Rate
12%
Maximum Goods/services
18%
Compensation cess
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 9
Components
of
GST
Taxability
Supply
Place of Supply
Registration
Time of Supply
Valuation
Tax Credits
Returns
Critical Components -Model GST Law
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 10
Due dates of Returns
Return Particulars Due dates
GSTR 1 Outward supplies (Sales) 10th
GSTR 2 Inward supplies (Purchases) 15th
GSTR 3 Monthly return 20th
GSTR 4 Quarterly return for compounding Taxpayer
18th after qtr. end
GSTR 5 by Non-Resident Foreign Taxpayer Last day of registration
GSTR 6 Input Service Distributor (ISD) 15th
GSTR 7 Tax Deducted at Source 10th
GSTR 8 Audited Annual Return 31st Dec after year end
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 11
Registration Criteria
• Every person if supplying goods or services more than 20 lakh (Rs.10 lakh
for north east states including Sikkim)
• If you are purchasing or selling goods or services outside the state
irrespective of the limit mentioned in point 1.
• If you are required to pay tax under reverse charge.
• Input Service Distributor
• An aggregator (Ola,Uber) who supplier services under his brand name or
his trade name irrespective of the limit mentioned in point 1.
• Every electronic Commerce operator like Flipkart, Amazon, etc.,
irrespective of the limit mentioned in point 1
• Any person who is required to deduct TDS under GST (not under Income
Tax Act, 1961).
Who is Liable to get registered under GST regime
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 12
State-wise Registration Dates
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 13
Benefits to Assessee
• Reduction in multiplicity of taxes.
• Mitigation of cascading/ double taxation.
• No more state Entry tax payments
• Procurement from non-excise dealers
• Relief from Check posts, Transport documentation and delay in transport
• Eligibility of credit on interstate purchases (Credit for CST paid i.e. IGST)
• Development of common national market.
• Simpler tax regime -
– Fewer rates and exemptions.
– Conceptual clarity (Goods vs. Services).
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 14
• Tax levy on purchases from unregistered dealers ?
Reverse charge
• Procurements from composition dealers to be avoided? Reverse charge
• Non payment of taxes or filing of return within time will be burden for
Manufacturer/Buyer as he will not get credit for the taxes charged by the
supplier while procuring material (Matching Concept)
• Compliance would be an important factor, as GST network will share the
grading of suppliers based on compliances. This would have great impact
on business. So need to pay tax and file return within time to get good
grade from department.
Re-engineering of Vendors
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 15
GST credit Set off Chain
Manufacturer
• Input Credit of Goods+ services
• After taking set off of Input credit, pay the Output Liability on value addition
Wholesaler
• Input Credit of Goods+ services from manufacturer
• After taking set off of Input credit, pay the Output Liability on value addition
Retailer
• Input Credit of Goods+ services from wholesaler
• After taking set off of Input credit, pay the Output Liability on value addition
Consumer • Ultimate Output Liability recovered from consumer
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 16
GST Impact on Price
Purchase 210.2
ITC - (25.8)
Profit 50
Base price 234.4
VAT 14% 32.8
Sale price 267.2
Cash pay out 7
Retail
Purchase 153.2
ITC (18.8)
Profit - 50
Base Price 184.4
VAT 14% 25.8
Sale price 210.2
Cash pay out 7
Cost 100
Profit 20
Base price 120
Cen. Exc. 12% 14.4
VAT 14% 18.8
Sale price 153.2
Cash pay out 33.2
Purchase 204
ITC - (34)
Profit 50
Base price 220
CGST 8% 17.6
SGST 12% 26.4
Sale price 264
Cash pay out 10
Purchase 144
ITC (24)
Profit - 50
Base Price 170
CGST 8% 13.6
SGST 12% 20.4
Sale price 204
Cash pay out 10
Cost 100
Profit 20
Base price 120
CGST 8% 9.6
SGST 12% 14.4
Sale price 144
Cash pay out 24
WholesaleManufacture
Pre GST Total Tax 47.2
Post GST Total Tax 44
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 17
Impact areas - Vendor Management
Review current vendors history to identify non-compliant vendors
GST Compliance rating to identify non-compliant vendors
Identify multiple new vendors, get revised quotes
Conducting vendor education programmes for unorganized vendors
Review price of all related party vendors to avoid disputes in transaction value
Suggest vendors to follow similar exercise - better vendor relationships
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 18
Expectations from Vendors
Registration under GST
Even though time for registration in Gujarat is over there is second or third phase to get registration. Contact your consultant/Advocate.
Inform GST registration number to our Company.
You have to be tech savvy or use computers for your data operation in following ways:- 1)In house model like SAP or 2)Outsource to CA/ consultant
You have to collect knowledge and compliance required from you consultant or CA..
You are also expected to contact your Vendors to get them Registered. So that, they can pass on Credit.
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 19
Our Procurement team will re-look at critical terms of contact that may undergo change.
CST paid and Excise duty paid on your purchases was cost to you in VAT scenario. In GST you will get input tax credit paid on each earlier stage, SGST and CGST or IGST. You need to reduce your price to that much amount.
You have to renegotiate prices with your vendors to reduce prices.
We have to exercise invoice tracing mechanism and you have to issue proper invoice and supplementary invoice if any.
You have to relook at the decision to Move/Shift/Relocate factories/warehouse as Taxation incentives will be no more in GST scenario.
Addition of locations to close to factory as there is no state barriers of supply.
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 20
Shutting down locations, warehousing strategy change in supply chain management as now there is no form F for exemption for Stock transfer. This will avoid blocking of capital.
Discount policy needs to be revisited as many discounts all not allowed to be deducted for taxation under GST.
Advances given to you may be taxable under GST law.
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 21
Benefit of Taxes…But when?
• You must be registered under GST
• You need issue proper invoice as suggested by GST law.
• If you file return in time and pay the taxes as per stipulated date then only
KBL can avail input credit of Taxes collected and paid by you. You all are
requested to do the same.
• All compliances under GST must be in time.
• Sales Shown by you in particular Month against our GST number must
match with purchases shown by us. Otherwise input Tax Credit will be
disallowed.
• You are expected to upload full information as Bill Number, date, Amount of
Tax etc. on GST portal.
• We may need to reconcile our accounts on regular basis, if there is
mismatch report issued by Govt. and ITC disallowed.
• Govt will display Category of suppliers in A,B,C based on compliances under
GST. Our company may take decision to continue transactions with A and B
suppliers only. Please be in A,B category to enhance relations.
9-Mar-17 This is a proprietary document of Kirloskar Brothers Limited 22
CORPORATE GST TEAM
• ATUL GODBOLE
• AMIT SOMANI
• UDAY BHAVE