Analysis of Hindustan Unilever Pre and Post GST

Net Excise Duty Net Input Taxes

Pre GST Excise a cost, Turnover
gross of excise
Post GST Turnover in net of GST
Impact Post GST Reported Turnover: Lower
Absolute EBITDA: No impact
EBITDA Margin: Higher
Input tax credit availed
partially; balance accounted
in costs
-Input taxes subsumed in
GST and netted from
turnover
-Costs lower as full input tax
availed
Reported Turnover: Lower
Absolute EBITDA: No impact
EBITDA Margin: Higher

Accounting Impact of GST on Growth of the company

Impact Post GST

17%

8%

4%

2% 2%

Reported Sales Net Excise Duty Fiscal Excemption/ Net input Taxes Comparable Sales
Growth Refund Growth
Immediate Steps Taken by HUL post GST

Trade action &

New Networks Extensive Visibility
Communication
Modern trade advised Changes in Prices and Visibilty of price
to pass on the price weight happend for change given in
benefit to consumer over 800 SKUs newspapers in almost
with immediate 10 languages
effect- Implemented
Quickly
More than 1 Million
distributors passed on
the price beneift to
consumers even on
existing pre printed
stocks

Changes made by HUL

Ponds white beauty: Clinic Plus Shampoo

Change in Grammage
Change in Pricing

From 79 to 64 Sachet: From 6 Gms to

Surf excel Blue 7 gms
powder: From 56 to Wheel Green powder:
52 From 170 gms to 180
Instant Coffee BRU: gms
From 98 to 85 Vim Bar: From 80 gms
to 90 gms

Data Analysis of Sales Growth (in Crores)

Particulars DQ’17 DQ’16 Growth %
Sales 8323 8124 2%
EBITDA 1680 1355 24%
Other Income 152 83
 Exceptional Items- (21) 153
(Credit/Charge)
Less: (Tax) 359 448
PAT ( before interest) 1198 920 30%
Net Profit 1326 1038 28%

Inferences:
1. Increase in Sales simply because of lower prices
2. Net sales growth of 2% as seen in the Income Statements
3. Tax is lower as a result of decrease in GST
4. Net effect of Net Profit is around 28%
GST history Timeline
Prime Minister atal Bihari Vajpayee introduces the concept, sets up a committee headed by the then West Bengal Finance Minister Asim
2000 Dasgupta

The Vajpayee government forms a task force under Vijay Kelkar to recomment tax reforms
2003

Vijay Kelkar, then advisor to the Finance Ministry, recommends GST to replace existing tax regime
2004

GST appears in the Budget speech for the first time: Finance minister P chidambaram sets an ambitous April 12010 as deadline for GST
2006 implementation

Empowered Committee of State Finance Ministers constituted. April 30,2008: The Empowered Committee submits a report titled ' A
2008 Model and Roadmap'

Finance Minister Pranab Mukherjee announces basic structure of GST as designed by Dasgupta committee: retains 2010 deadline
2009

UPA-II tables 115th Consitution Amendment Bill in the Lok Sabha for bringing GST
2011

Parliamentary Standing committee submits report to Parliament suggesting imporvements on GST. GST bill gets ready for introduction in
2013 parliament

GST Bill cleared by Standing Committee lapses as Lok Sabha dissolves: BJP- led NDA government comes to power
2014 Finance Minister Arun Jaitley introduces the Constitution( 122nd( Amendment Bill in lok Sabha, Congress objects

Jaitley sets April1,2016 as deadline for GST rollout

2015 Lok Sabha passes GST constitutional Amendment Bill on May6,2015

August: Congress,BJP agree to pass the Constition Amendment Bill. Rajya Sabha also passes the Constitution
2016

May 19: GST Council decides on 5.12.18 and 28% as tax slabs
2017 June 20 Midnight- GST Rolled
GST Reverse Charge Mechanism

Normally, the supplier of goods or services pays the tax on supply. In the case of Reverse
Charge, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed.

When is Reverse Charge Applicable

1. Supply from an Unregistered dealer to a Registered
dealer
If a vendor who is not registered under GST, supplies goods to a person who
is registered under GST, then Reverse Charge would apply. This means that the GST
will have to be paid directly by the receiver to the Government instead of the supplier.
The registered dealer who has to pay GST under reverse charge has to do self-
invoicing for the purchases made.
For Inter-state purchases the buyer has to pay IGST. For Intra-state purchased CGST
and SGST has to be paid under RCM by the purchaser.

2. Services through an e-commerce operator

If an e-commerce operator supplies services then reverse charge will be applicable to the e-
commerce operator. He will be liable to pay GST.
For example, UrbanClap provides services of plumbers, electricians, teachers, beauticians
etc. UrbanClap is liable to pay GST and collect it from the customers instead of the registered
service providers.
If the e-commerce operator does not have a physical presence in the taxable territory, then a
person representing such electronic commerce operator for any purpose will be liable to pay
tax. If there is no representative, the operator will appoint a representative who will be held
liable to pay GST.
 3. Supply of certain goods and services specified by
CBEC
CBEC has issued a list of goods and a list of services on which reverse charge is applicable
on products ie Cashew nuts, not shelled or peeled, Bidi wrapper leaves (tendu), Tobacco
leaves , Silk Yarn, Supply of lottery, Used vehicles, seized and confiscated goods, old and
used goods, waste and scrap, etc

Time of Supply under Reverse Charge

1. Time Of Supply in case of Goods

In case of reverse charge, the time of supply shall be the earliest of the following dates:

 the date of receipt of goods

 the date of payment*
 the date immediately after 30 days from the date of issue of an invoice by the supplier

If it is not possible to determine the time of supply, the time of supply shall be the date of
entry in the books of account of the recipient.
Illustration:

1. Date of receipt of goods 15th May 2018

2. Date of invoice 1st June 2018
3. Date of entry in books of receiver 18th May 2018

The Time of supply of service, in this case, will be 15th May 2018

2. Time Of Supply in case of Services

In case of reverse charge, the time of supply shall be the earliest of the following
dates:

 The date of payment

 The date immediately after 60 days from the date of issue of invoice by the supplier

If it is not possible to determine the time of supply, the time of supply shall be
the date of entry in the books of account of the recipient.
Illustration:

1. Date of payment 15th July 2018

2. Date immediately after 60 days from the date of issue of invoice (Suppose the date of
invoice is 15th May 2018, then 60 days from this date will be 14th July 2018)
3. Date of entry in books of receiver 18th July 2018

The Time of supply of service, in this case, will be 14th July 2018
Self Invoicing
Self-invoicing is to be done when you have purchased from an unregistered supplier AND
such purchase of goods or services falls under reverse charge.
This is due to the fact that your supplier cannot issue a GST-compliant invoice to you, and
thus you become liable to pay taxes on their behalf. Hence, self-invoicing, in this case,
becomes necessary