r muralidharan senior director in the tax practice of deloitte of gs… · 25/05/2015 · topic:...
TRANSCRIPT
Topic: Impact of GST on Services
Proposed Rules and its Impact
R Muralidharan
Senior Director in the Tax Practice of Deloitte
Soumya R
Product Expert, SAP Labs India
Agenda
• Service Sector – Current State of Play
• Paving way for GST – Improvements in Tax Structure
• GST – Tax structure for Services
• GST – Broad impact on Service Sector
• Potential Implications – Place of Supply Rules
• Proactive Approach for GST
© 2015 Deloitte Touche Tohmatsu India Private Limited 3
Service Sector – Current State of Play
© 2015 Deloitte Touche Tohmatsu India Private Limited 4
• India has the second fastest growing services sector with its compound annual growth rate at 9%*.
• Services constitute major portion of India’s GDP with a 57%per cent share in GDP at factor cost (at current prices) in 2013-14*.
• Service sector primarily subject to service tax and is governed by:
– Finance Act, 1994;
– Service Tax Valuation Rules, 1994;
– Service Tax (Determination of Value) Rules, 2006;
– Point of Taxation Rules, 2011;
– Place of Provision of Services Rules, 2012;
– Service Tax (Settlement of Cases) Rules, 2012
Source: Budget at a Glance 2015-16 issued by Government of India
35%
34%
31%
GROSS INDIRECT TAX REVENUE FY 13-14
Customs Duty Excise Duty Service Tax
*Economic Survey 2014-15
Paving way for GST – Improvements in Tax
Structure
Over the past several years, significant progress has been made to improve the
service tax structure, broaden the base and rationalize the rates to pave way for
GST
© 2015 Deloitte Touché Tohmatsu India Private Limited 5
Substantial expansion of service tax base by introduction of negative list regime of service tax
Introduction of Place of Provision of Services, Rules 2012
Pruning of exemptions available under service tax
Increase in rate of service tax vide Budget 2015
GST – Tax structure for Services
© 2015 Deloitte Touché Tohmatsu India Private Limited 6
GS
T
Intra-State CGST
SGST
Inter-State IGST*
(CGST+SGST)
Imports IGST
Exports Proposed to be
zero rated
*Integrated GST (IGST) on imports and inter-state supplies of services in India
• In the current regime, taxable event is rendition of taxable service but in GST
regime, the taxable event will be supply of taxable services
• The current Place of Provision of Services will be replaced with the proposed
Draft Place of Supply of Goods and Services Rules
• Dual GST comprising Central GST and State GST to operate concurrently on
supply of services for consideration
• GST Tax Structure:
GST – Broad impact on Service Sector
7
Issues Impact
©2015 Deloitte Touche Tohmatsu India Private Limited
Availability of Input Tax Credits (VAT)
Double taxation on certain services – Rates are same
Abatement on value of services with a restriction on
taking of input tax credit in GST regime
Self assessment provisions to be replaced with regular
assessment
GST – Broad impact on Service Sector
8
Issues Impact
©2015 Deloitte Touche Tohmatsu India Private Limited
Increased compliance for service providers having PAN
India operations due to SGST registration requirement in
multiple States – Will have to deal with States for SGST
Impact on working capital due to higher rate on
procurements
Service tax rate on services
Refund (with respect to exports) of credits to be obtained
from multiple states
Taxability of export transactions (current Rule 3 of Place
of Provision of Services Rules, 2012) ) as per Place of
Supply Rules
Costly B2C transactions
Potential Implications
Place of Supply Rules
© 2015 Deloitte Touché Tohmatsu India Private Limited 9
Highlights of the proposed Place of Supply Rules
Export of services under Rule 4 of Place of Supply Rules???
Rule Nature of Service Description Place of Supply
3
Services (other than
specified services)
provided to a
registered person
Service receiver registered in one
State
Location of the
registered service
receiver
Service receiver registered in more
than one States
State where supply
is sought to be
billed
4
Services (other than
specified services)
provided to other
than a registered
person
NIL Location of service
provider
Deloitte Management
service ABC Inc, USA
Delhi USA ABC Inc is
not registered
and has no
BE in India
Proposed POS is Delhi Current POPS is USA
Potential Implications
Place of Supply Rules
© 2015 Deloitte Touché Tohmatsu India Private Limited 9
Proactive Approach for GST
Phases in transitioning to GST regime
© 2015 Deloitte Touché Tohmatsu India Private Limited 11
Overview Assessment:
• Overview assessment of different business functions and operations in order to be better prepared for transition
Impact Analysis:
• Identifying potential impact including quantification of impact, identifying affected business functions
Fine tuning of operations
• Validation & fine-tuning the business process and functions (i.e. finance, commercial, IT, accounting etc.)
Implementation:
• Assistance in transition to new regime to the impacted functions (i.e. finance, commercial, IT, accounting etc.)
R. Muralidharan
Senior Director
Delhi Office
Phone: +91 124 679 3608
Email: [email protected]
Senior Director
Contact Information
12 © 2015 Deloitte Touche Tohmatsu India Private Limited
Deloitte refers to on or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of
which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche
Tohmatsu Limited and its member firms
This material and the information contained herein prepared by Deloitte Touche Tohmatsu India Private Limited (DTTIPL) is intended to provide general
information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of DTTIPL, Deloitte Touche Tohmatsu Limited,
its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this material, rendering professional advice or services. The
information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or
taking any action that might affect your personal finances or business, you should consult a qualified professional adviser.
No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this material.
©2015 Deloitte Touche Tohmatsu India Private Limited
Member of Deloitte Touche Tohmatsu Limited
13
Soumya R / Globalization Services / SAP Labs India
May 18, 2015
GST India Forum, New Delhi
SAP Solution for Services Current Scenario Vs. GST Scenario
Public
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 15 Public
SAP Solution for Services Current Scenario Vs. GST Scenario
Topic Current Scenario GST Scenario
Registration Central Service tax
Registration number
• Central Registration +
• State registration for every
state that the service
provider operates in
• +IGST??
Service
Invoices
Fields as required by
the central
government
• Fields as required by
Center
• Fields specific to Recipient
state and Provider state,
• Rates and exemptions
Interstate &
Import
scenarios
Central tax IGST (Central + State tax)
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 16 Public
SAP Solution for Services Current Scenario Vs. GST Scenario
Topic Current Set-up GST Set-up
Tax incidence • Provision of
service rules
• Point of taxation
rules
• Place of Supply rules
• Point of taxation
rules???
Credit Availment &
refunds
Service Tax <->
Service tax, BED,
SED, AED, NCCD,
CVD, ADC, Ecess,
S&HEcess
• CGST <-> CGST
• SGST<-> SGST
• IGST <-> IGST, CGST,
SGST
Returns Central (ST3) • Central for CGST
• State for SGST
• IGST??
© 2015 SAP SE or an SAP affiliate company. All rights reserved.
Thank you
Contact information:
Soumya R
Product Expert, Globalization Services, SAP Labs