GST overview

Pankaj S Jain
17 December, 2016

Background

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 Background
• Constitutional framework
• Constitutional amendments – duly approved - brought into force on 16.09.2016
• GST council created on 12.09.2016
• First meeting of GST Council planned for 22.09.2016 and 23.09.2016

• Implementation Date
• Target date - 01 April 2017
• Cannot be delayed beyond 15 Sept 2017

• GST is not just a tax reform but a business reform impacting almost all business functions of HCCB
including Coke One/SAP

Indirect Taxes Landscape

Entertainment Tax

Customs Duty Excise Duty

Luxury Tax

Entry Tax
& Octroi

Central Levies
Central Sales
Tax

VAT
Cess Service Tax
Cess

State Levies

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 GST Rates structure

• Announced on 03.11.2016
• 4 slabs + cess structure

• Final list of goods under each

rate category to be finalized
• Cess rate(s) to be finalised

GST Rates structure – GST Compensation Cess

• Features
• rate to be notified
• on the value of supply
• Period of 5 years

• Applicable on (as specified by government):

• goods and services
• imports of goods and services
• supplies subject to reverse charge on which tax is

• Not applicable on dealers under composition scheme

• Creditable - against GST Compensation Cess

• For Manufacturer - Input GST credit can be used to pay GST Compensation Cess

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 Current Tax vs Proposed GST
(Note 1)
Current GST
Current GST
ED P CGST P Depots ED O CGST P
VAT P SGSTP Current GST Current GST
VAT O SGSTP
ED O CGST P ED O CGST P
VAT P SGSTP VAT P SGSTP
Factory Distributors Retailers Customers
Current GST
ED P CGST P
VAT P SGSTP

Key Take-away:
a) GST will be levied on ‘supply’.
b) Scope of ‘supply’ is very wide
- includes all forms of supply of goods and/or services
- such as sale, transfer, barter, exchange, license, rental, lease or disposal
- made or agreed to be made for a consideration
- by a person in the course or furtherance of business,

Note 1
- Stock transfers will attract IGST (CGST + SGST), unlike current regime where no VAT is levied on stock transfer
- No requirement to reverse input VAT credit on stock transfers
- Additional working capital to the extent of SGST on depot transfers ED = Excise Duty/Manufacturing taxes
VAT = Value Added Tax
CGST = Central Goods & Services Tax
SGST = State Goods & Services Tax
IGST = CGST + SGST

Comprehensive Credit Mechanism

1. GST charged on any supply of goods and/or services

a) which are used, or are intended to be used,
b) in the course or furtherance of his business
2. Subject to certain exceptions

Key Take-away:
Impact Areas 1) Seamless input GST
A. Seamless credit of GST on business expenses credits
B. Credit eligible on inter-state purchases
C. Credit eligible on SGAs

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 GST Transition
“GST is not just a tax reform, it is a business reform impacting all business functions”
Transaction Mapping ► Comprehensiveness: Identifying transactions for GST Contracts & ► Transition Management
& Impact impact Procurement ► Now v/s later: should we postpone Capex?
► Scope of ‘supply’ ► Aligning contracts: Optimizing supplier and logistic
costs
► Center/state incentives

► One national market Information ► System changes: Masters; Transactions; Inventory; Invoicing
Supply Chain ► Configure place of supply + identifying recipient
► Rationalizing warehouses & manufacturing locations Technology
► Invoicing for free supplies

► Transition Management ► Job-worker accounting; records for receipt dates

► Excise/CST/CVD embedded in stock at ► GST on stock transfer; credit register of depots

depot/distributors/importer-trader
► Interaction with GSTN portal - Managing mismatch reports
► Stock lying with job-worker
► Output GST v/s Credit – on advances to suppliers
► Reversal of VAT ITC - Defer stock transfers?
► User discipline: Customer not reporting credit notes?
► Payment of interest & reversal of interest
► Restructure job-work model
► Testing & Implementation

► Pricing model changes ► Ensure entire GST eco-system is compliant

Sales & Pricing People
► Changes in discounts /market schemes ► Internal: trainings to business functions
► Sales Generating Assets (SGAs), marketing materials, ► External: Aligning partners (suppliers and customers)
returnable containers for GST

► Prepare tax team for smooth transition and compliance

THANK YOU

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