taxing times · gst roadmap slide 3 taxing times november 2016 january to march 2017 •...
TRANSCRIPT
Taxing times
Indirect Tax Forum
www.pwc.co.uk
1 November 2016
PwC
Getting ready for Indian GST
November 2016Taxing times
Slide 2
PwC
GST Roadmap
Slide 3
November 2016Taxing times
January to March 2017
• Notification of GST Rules
• Testing of IT systems for all stakeholders
• Outreach workshops for industry
September 2016
Constitution amended, President’s assent, formation of GST council
Oct-Nov 2016
• Finalisation of GST rates
• Recommendation of Model laws by GST council
• Backend IT systems to be ready
• Change management and trainings
December 2016
• Passage of GST laws
• Development of front end and backend IT processes
• Trainings in IT systems
August 2016 – CAB passed
April 2017
PwC
GST – Proposed regime
Taxing times
Simpler and rational tax structure
Broader base, lower taxes
• Less tax cascading
• Increased investment
• Improved competitive position of Indian producers
Improved administration (simplicity and lower cost of administration)
Improved cash flow position
Slide 4
November 2016
1GST – To bring a fundamental shift in the way business transactions are taxed in India
2Multiple State and Central indirect tax levies to be subsumed under GST
3‘Dual GST model’ – likely to have multiple rates (6, 12, 18 and 26%):
• CGST
4Inter-state transactions proposed to be covered under IGST, to be levied by Central Government (likely tax rate for IGST to be sum of CGST and SGST)
5Input credit mechanism to ensure no cascading effect and minimal blockage of funds
• SGST
PwC
What is changing?
Slide 5
November 2016Taxing times
Destination based consumption tax as compared to current regime of origin based taxation
GST to discourage parallel economy
Business plans would be driven by commercial imperatives rather than by tax
To remove state barriers and make India one common market
Service sector – State
taxation
Service sector to be subject to State level taxes for the first time
Growth of organised
sector
Business plans
One marketConsump-
tion tax
PwC Slide 6
November 2016Taxing times
How will GST impact my bottom-line?
How can I create more value?
1 2
How can I be compliant?
Can I build competitive edge?
3 4
PwC
In our experience companies drive value with potential benefits worth 4-13% across value chain
Slide 7
November 2016Taxing times
Opportunities of 2-4% in sourcing and 2-9% in network across the value chain
Manufacturing PricingSales and distribution
Sourcing
• Remodel cost of supplies
• Fact-based negotiation with the suppliers
• Evaluate Change in Manufacturing locations and strategy
• Re-evaluate contract manufacturing and job work arrangements
• Redesign distribution and sales network
• Remodel warehouse footprint
• Redesign pricing structure
• Margins, discounts, incentives, promotions, return pricing
Indirect/Capex vendors
Plants Sales/Distribution team
Market/Sales leadership
Excisable depots
Integrated Planning – Adapt to redesigned value chain, optimise inventories, working capital and service
PwC
In our experience companies drive value with potential benefits worth 4-13% across value chain
Slide 8
November 2016Taxing times
Pricing decision
Change in tax rate
Savings on procurement
Increased credits
Savings by network restructuring
Transition impact
Impact of area based exemptions
Absorb benefit?
Competitive pricing
Pass through the supply chain?
PwC
Managing compliances under GST – Need for a robust process/technology framework…
Slide 9
November 2016Taxing times
Separate registrations in each state (SGST/ CGST/ IGST)1
Multiple state-level filings 2
Multiple credit pools3
Cumbersome reconciliation requirements4
Need for technology intervention5
PwC
IT readiness
Slide 10
November 2016Taxing times
• Master data amendments
Master data
• Tax configuration and computation
• Document numbering
• Roles and Authorisation
Configuration
• Business process re-alignment
• Reporting and printing requirements
• Impact on interfaces
Developments including reports
• Tax credit migration
• Closure or reversal of partially open transactions
• Migration of Contracts
Roles and authorisations
GST Impact on ERP and associated applications can broadly be classified into the following heads
PwC
IT readinessSome changes to be made to ERP and other transactional systems
Slide 11
November 2016Taxing times
1Controls and compliance
• Tracking of CGST, SGST and IGST
• Utilisation of input tax credit
• Statutory reporting
2
• Procurement schemes
• Tax compliant warehouses
• Vendor master
• Process – domestic and import procurement of goods and services, etc.
• Print layouts and reports
Finance and control
• Tax procedures
• P&L
• Chart of accounts
• Tax codes
• Registration numbers
• Reports
• Pricing procedures
• Customer master
• Pricing master
• Process – domestic and export sale of services, debit and credit notes, etc.
• Print layouts and reports
Procurement 4Sales and distribution3
PwC
GST – Impacting whole business
Slide 12
November 2016Taxing times
GST
impact
1
5
4
2
3
6Business
model
Contract arrangements
Tax impact
Project
management
IT system
Compliances
GST is a multi-function transformation program, impacting the whole organisation – It needs to be managed and reported rigorously to be compliant and capture value
PwC
Preparing for GST requires a ‘whole of business’ approach
Slide 13
November 2016Taxing times
Design ImplementConstructAssessOperate and
review
PMO
Transition plan
Supply chain management
Representation with Government
GST impact analysis
Evaluation of IT systems and processes
Deliver change
Pricing Supply chain
implementationProcess re-engineering
IT re-configuration
Review of SoPCompliance monitoring
Vendor management
Communication and training modules
Compliance review
Intervention
Pre GST Post GST
Thank you
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