GST tax is going to impact every sphere of business activity and would change doing business in India.

1. GST tax

2. Goods and Services tax
As the name suggests, Goods and Services tax is a tax levied when a consumer buys a good or service. It is meant
to be a single, comprehensive tax that will subsume all the other smaller indirect taxes on consumption like
service tax, etc. This is how it is done in most developed countries.

3. What is GST
Goods and Services Tax (in short ‘GST’) is by far one of
the most awaited tax reforms in the country. With the
emerging consensus amongst the political parties and the
push voiced by the industry, there is a lot of expectation
that the Constitutional Amendment Bill will be passed in
this Monsoon Session. If this happens, the Government is
likely to push the implementation of GST with effect from
1st April 2017.

4. Implications of GST
With GST rate, it is anticipated that the tax base will be
comprehensive, as virtually all goods and services will be
taxable, with minimum exemptions.
GST will be a game changing reform for the Indian economy by
creating a common Indian market and reducing the cascading
effect of tax on the cost of goods and services. It will impact
the tax structure, tax incidence, tax computation, tax payment,
compliance, credit utilization and reporting, leading to a
complete overhaul of the current indirect tax system.
GST will have a far-reaching impact on almost all the aspects of
the business operations in the country, for instance, pricing of
products and services, supply chain optimization, IT,
accounting, and tax compliance systems.

5. • Inter-state procurement could prove viable
• May open opportunities to consolidate suppliers/vendors
• Additional duty/CVD and Special Additional duty components of customs duty to be replaced
• Changes in tax system could warrant changes in both procurement and distribution arrangements
• Current arrangements for distribution of finished goods may no longer be optimal with the removal of the concept of
excise duty on manufacturing
• Current network structure and product flows may need review and possible alteration
• Tax savings resulting from the GST structure would require repricing of products
• Margins or price mark-ups would also need to be re-examined
• Potential changes to accounting and IT systems in areas of master data, supply chain transactions, system design
• Existing open transactions and balances as on the cut-off date need to be migrated out to ensure smooth transition to
GST
• Changes to supply chain reports (e.g., purchase register, sales register, services register), other tax reports and forms
(e.g., invoices, purchase orders) need review
• Appropriate measures such as training of employees, compliance under GST, customer education, and tracking of
inventory credit are needed to ensure smooth transition to the GST regime
Things need to know about the GST impact

6. Benefits of GST registration
•Wider tax base, necessary for lowering tax rates and eliminating
classification disputes
•Elimination of multiplicity of taxes and their cascading effects
•Rationalization of tax structure and simplification of compliance
procedures
•Harmonization of center and state tax administrations, which would
reduce duplication and compliance costs
•Automation of compliance procedures to reduce errors and increase
efficiency
GST has been envisaged as an efficient tax system, neutral in its application and
distributionally attractive. The advantages of GST are:

7. The GST tax rate is based on the destination based consumption principle. It means that the GST liability
would finally accrue at the point where the goods were supplied to or where the service was consumed. This
means the final customer will pay the GST. The very concept would not find easy acceptance with the people.
A lot of education and learning has to be propagated for the people to understand the implications.
Financial services

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