2. Contents
2GST Private & Confidential 2
Present Indirect Tax Structure and its shortcomings
Other Issues
GST – Meaning and history
GST – Salient Features
Benefits of GST structure
01 Present Indirect Tax Structure in India
02 Entering into the era of GST
Are you ready for GST?
How SNR can assist?
03 Road Map for GST
4. The present indirect tax structure imposes various taxes on different taxable
events/ transactions which is evident from the various indirect taxes, their
respective laws, regulations and rules.
GST Private & Confidential
Present Indirect Tax Structure
CENTRAL
TAX
STATE
TAX
Excise Duty
Service Tax
Addl. Duty of Excise
Surcharge & Cess
CVD & SAD
VAT
CST
Purchase Tax
Luxury Tax
Surcharge & Cess
Entry Tax
4
5. 03
02
01 Cascading Effect
• Levying of VAT on gross assessable value inclusive of excise duty.
Non-availability of credit of Excise Duty to traders
• Central excise is levied on goods manufactured or produced in India
• Cenvat credit of excise duty is not available to traders
Dual taxability under Central & State laws for certain transactions
• Issues in classification of transactions into sale or services
• Duplicity of taxes on various sectors viz IPRs, Work Contract, Installation, etc.
GST Private & Confidential
Shortcomings in the present structure
5
6. • Too many indirect taxes with different rates and provisions
• Present tax structure is highly complicated
• The States have no powers to levy tax on services
• The States have to rely exclusively on compliance improvements
or rate increase for their revenues
GST Private & Confidential
04 Lack of uniformity in provisions and rates
05 Inability of States to levy tax on services
6
7. GST Private & Confidential
Other issues
Complex tax structure
Lack of uniformity in provisions
Non-harmonization of tax rates
Lack of automation
Lack of procedural manuals
Lack of skilled officials
No system for automated scrutiny of 100% tax returns
Lack of cross verifications with other tax administrations
Lack of efficient mechanisms to control evasion
7
9. Tax on supply of goods, or services or both.
A progressive tax regime globally
Inbuilt efficiencies to broaden the tax base, decrease cascading effect and reduce
revenue leakages.
Significant shift from origin-based taxation to a destination-based tax structure
Impact on the operating business models and the revenues of the centre/states.
Potential to impact cash flow, pricing, working capital, supply chain and IT systems
An opportunity for transforming the businesses.
Meaning
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10. 2004 - Kelkar Task Force suggested National level GST.
July 2009 – Finance Minister formed Empowered Committee of State Finance
Ministers and announced implementation of GST from April 2010
March 2011 – 115th Constitution Amendment Bill introduced in Lok Sabha
December 2014 – 122nd Constitution Amendment Bill again introduced in Lok Sabha
May 2015 – Constitution Amendment Bill passed in Lok Sabha and bill introduced in
Rajya Sabha
August 2016 – Constitution Amendment Bill passed by Rajya Sabha and most of the
state assemblies also ratified the bill
September 2016 – President signed the Bill and GST council was formed
History
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11. In India, the GST model will be “dual GST” having both Central and State GST
component levied on the same base.
All goods and services barring a few exceptions will be brought into the GST base.
No distinction between goods and services for the purpose of the tax with common
legislations applicable to both.
Taxable event in case of goods would be ‘supply’ instead of ‘manufacture’.
Cross - utilization of input of CGST in payment of SGST and vice versa, will not be
allowed, except in the case of inter-state supply of goods & services.
The small business entities whose gross annual turnover is less than prescribed limit
will not be covered by GST law.
Integrated GST will be levied on import of goods & services into India and the
incidence of tax will follow the destination principle.
Salient features
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12. Indirect taxes to be subsumed into GST
CENTRAL
INDIRECT
TAXES
Central Excise Duty
Service Tax
Additional Excise Duty
Excise Duty levied under the Medicinal and Toilet
Preparations (Excise Duties) Act, 1955
Additional Duty and Special Additional Duty of Customs
Central cesses and surcharges in so far as they relate to
supply of goods and services
STATE
INDIRECT
TAXES
VAT / Sales Tax
Entertainment Tax (other than the tax levied
by the local bodies)
Central Sales Tax
Octroi and Entry Tax
Purchase Tax
Luxury Tax, taxes on lottery, betting & gambling along with
state cesses and surcharges
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13. Benefits of GST
01 Reduces transaction costs and unnecessary wastage
A single registration and a single compliance will suffice for both CGST and
SGST provided Government enables effective IT Infrastructure and
integrates states IT systems with the union.
02 Eliminates the multiplicity of transactions
The reduction in the number of taxes applicable in a chain of transactions
will help to reduce the paper work and clean up the current mess that is
brought by existing indirect taxation laws.
03 One point single-tax
This will help the business community to decide their supply chain, pricing
modalities and in the long run will help the consumers to get goods at a
competitive price. Pricing will no longer be the function of tax components
but function of sheer business intelligence and innovation.
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14. 04 Reduces average tax burden
The cost of tax that consumers have to bear will be certain and it is
expected that GST would reduce the average tax burden on the
consumers.
05 Reduces corruption
As the number of taxes reduces, so does the number of visits to multiple
departments reduces and further since most of the processes would be
online and automated, there shall be reduction in corruption.
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16. GST requires business organizations to take a holistic approach rather than
a restricted view .
GST may be introduced at a short notice (currently efforts are being made
by GOI to make it effective from 1st April 2017)
The time available for businesses to analyse the impact of GST and make
changes across business functions will remain a significant challenge.
The business transformation triggered by GST would entail
identifying, addressing and leveraging various tax and
business drivers.
It would also include taxability and rates, exemptions and
concessions, cash flow and refunds, supply chain network,
governing rules and regulations and compliance framework.
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Are you ready for GST? - Challenges
17. Businesses need to adopt a structured approach to prepare for the transition. Broadly, the
approach should encompass the following:
What should be your approach?
Assessment of the impact of GST on different business functions
Drawing up an implementation plan
Zeroing down the target operating model
Implementation and transition
Post-implementation validation and refinement of the operating model selected
Communicate with stakeholders including suppliers/channel partners.
Revising the tax compliance set up, statutory records templates, tax manuals,
compliance calendars, Frequently Asked Questions, etc.
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18. ANALYSE
Analysing the
impact of GST
implementation
on your business
and structuring a
target operating
model which
minimises tax
cost and
maximise
benefits
REALIGNING
TARGETS
01 02 03 04 05
How SNR can assist?
06 07
Deploying and
realigning the
target operating
model post GST
implementation.
TESTING
Testing IT
systems,
updating masters
and handling the
cut-over and
migration-related
issues.
TRAINING
Undertake
training sessions
on the business
related processes
under GST .
Implement
necessary
process changes
to manage the
potential cash
flow impact.
Effectively
navigating
through cut
off/transitional
issues like pre-
GST stock of
goods, pre-GST
credit etc.
Post
implementation,
support in
meeting out the
compliances
under GST
environment.
APPLY PROCESS
CHANGE
NAVIGATION SUPPORT
GST Private & Confidential 18
