GST

1. India GST- Overview, Challenges, Opportunities and Oracle
Roadmap

2. Agenda
2
GST-Journey and Background
Current State of Taxes
GST as a concept-An Illustration
GST- Future State
GST-Impact areas
Oracle Approach and Roadmap
Opportunities

3. Current State of Indirect Taxes
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4. Current State of Indirect Taxes -Pitfalls
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• While CENVAT (to some extent ) has resolved cascading effect on taxes
• Currently Credit of Input VAT is available against Output VAT
• Currently Credit of Input excise/service tax is available for setoff against
output liability of excise and vice versa
• Credit of VAT is not available against excise and vice versa
• VAT is computed on a value which includes excise duty
• CENVAT credit is allowed only for excise duty paid on inputs and not on
VAT paid on inputs raw material
Tax on Tax scenario is still prevalent
GST attempts to solve this issue in addition to other issues

5. GST- The Journey so far
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6. Understanding GST- What is GST
GST (Goods and services tax) is a value added tax, levied at all points in the supply
chain with credit allowed for any tax paid on inputs acquired for use in making the
supply. It would apply to both goods and services in a comprehensive manner with
exemptions restricted to a minimum.
GST is a destination tax and not origin based (current state)
GST structure would follow destination principle
It is a dual model to be administered by Central and State Governments

7. GST Concept
How GST works
•GST that is charged by a business and paid by its customers is known as output GST (that is, GST on its output supplies)
•GST that is paid by a business to other businesses on the supplies that it receives is known as input GST (that is, GST on its input supplies)
•A business is generally able to recover input GST to the extent that the input GST is attributable to (that is, used to make) its taxable
outputs
•Input GST is recovered by setting it against the output GST for which the business is required to account to the government, or, if there is
an excess, by claiming a repayment from the government
•Exempted goods and Services – Very few items with common list for CGST and SGST
•Goods and Services outside the purview of GST
•Alcohol for Human consumption - will continue with State Excise and VAT
•Electricity – will continue with Electricity Duty
•Petroleum Products – will continue with the current tax structure, likely to be brought under GST regime later
•Tobacco products expected to be taxed under the GST regime along with Excise duty
•Seamless input tax credit through out the value chain for B2B supplies

8. GST Illustration
Total
Government
revenue
Raw-material
supplier
Manufacturer /
Service Provider
e.g. Keysight
Customer e.g.
Sony Ericsson /
Vodafone
Final Consumers
e.g. Mobile Users
Raw materials sold + Invoice for
$100 + $10 GST
Finished Machine sold + Invoice for
$250 + $25 GST
Mobile phones & connections sold +
Invoice for $500 + $50 GST
$10 GST remitted
$15 GST remitted ($25
GST - $10 credit)
$25 GST remitted
($50 GST - $25 credit)
Total GST collected as Govt.
revenue is $50. Whole of it is
borne by “Final Consumer”, but
recovered from others in the
supply chain
GST- a type of
INDIRECT TAX
GST is a
TRANSCTION TAX

9. GST Vs Current Tax Laws

10.  Intra State Supply of Goods and Services
 CGST-Central Tax
 In place of current Central Taxes and levies
 SGST – State Tax
 In place of current State Taxes
 CGST and SGST at applicable rates would be
levied on the same Taxable basis with no tax on
tax computation
Intra State Supply of Goods and
Services
Inter State Supply of Goods and Services
(Including Inter state Stock Transfers)
Proposed GST structure
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IGST-Central Tax
• In place of current Central Taxes and State Taxes
(consuming state to get a share of revenue from
IGST)
• Additional State Tax not exceeding 1% Non
recoverable tax for supply of Goods – revenue for the
selling State
Import of Goods and Services to India
• No impact on Customs duties other than CVD and
SAD
• IGST in place of CVD and SAD
• Exports of Goods and Services from India/Deemed
Exports
•IGST @ 0% with input tax credit

11. Current State of Indirect Taxes and GST coverage
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12. Taxes expected to be subsumed under GST
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• Central Excise Duty (Cenvat)
• Service tax
• Additional duties of Excise
• Excise duty levied under Medicinal & Toiletries preparation Act
• Additional duties of Customs (CVD & SAD)
• Surcharges and Cesses
Central
Taxes (CGST)
• State VAT/Sales Tax
• Entry tax (not in lieu of octroi)
• Purchase tax
• Entertainment tax (not levied by Local bodies)
• Luxury tax
• Taxes on Lottery, betting & gambling
• Surcharge and Cesses
State Taxes
(SGST)

13. GST- Scenario 1-Sale within state
In the example illustrated below, goods are moving
from Mumbai to Pune.
Since it is a sale within a state, CGST and SGST will be
levied. The collection goes to the Central Government
and the State Government as pointed out in the
diagram. Then the goods are resold from Pune to
Nagpur. This is again a sale within a state, so CGST and
SGST will be levied. Sale price is increased so tax
liability will also increase. In the case of resale, the
credit of input CGST and input SGST (Rs. 8) is claimed
as shown; and the remaining taxes go to the respective
governments.

14. GST- Scenario 2-Sale within one state and Resale in another state
In this case, goods are moving from Indore to Bhopal. Since it is
a sale within a state, CGST and SGST will be levied. The
collection goes to the Central Government and the State
Government as pointed out in the diagram. Later the goods are
resold from Bhopal to Lucknow (outside the state). Therefore,
IGST will be levied. Whole IGST goes to the central government.
Against IGST, both the input taxes are taken as credit. But we
see that SGST never went to the central government, still the
credit is claimed. This is the crux of GST. Since this amounts to a
loss to the Central Government, the state government
compensates the central government by transferring the credit
to the central government.

15. GST- Scenario 3-Sale outside the state and Resale within state
In this case, goods are moving from Delhi to Jaipur. Since it is an
interstate sale, IGST will be levied. The collection goes to the
Central Government. Later the goods are resold from Jaipur to
Jodhpur (within the state). Therefore, CGST and SGST will be
levied.
Against CGST and SGST, 50% of the IGST, that is Rs. 8 is taken as
a credit. But we see that IGST never went to the state
government, still the credit is claimed against SGST. Since this
amounts to a loss to the State Government, the Central
government compensates the State government by transferring
the credit to the State government.

16. GST- Bodies
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Goods and service tax council (GSTC)
Responsible for recommendations on
GST rates, Band of GST rates, GST Law and
procedure, GST exemptions and thresholds,
modalities for dispute resolution etc
Multiple Statutes
–One for Central Government and one for Every State Government
•Model GST Law consists of Rules and Procedures to be
recommended by the GST Council
–Model law is expected to be available in the public domain soon
–Some of the State administered GST requirements are expected to
be common between statutes where as some requirements could
vary from state to state to allow flexibility to the Center and State
Governments
–Common law across India for Central GST (CGST and IGST)
–Place of supply Rules to determine whether the supply is intra
state or inter state
•Initial draft of the Place of supply Rules published
Goods and Service Tax Network (GSTN)
GSTN is responsible for building and maintaining the IT systems
required for GST administration by building a common portal, act as
the national agency responsible for delivering integrated tax related
services
–Functions includes processing the applications for GST
registrations, facilitating e-payments and filing of returns, input tax
credit, Tax settlement, manage back end modules to enable tax
authorities to perform tax assessment, refunds, audits etc.
Tax Registration and Jurisdiction

17. India GST expectations-Input Tax Credit
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• Input Tax Credit on IGST allowed for payment of IGST, CGST and SGST in that order
• Input Tax Credit on CGST allowed for payment of CGST and IGST in that order
• Input Tax Credit on SGST allowed for payment of SGST and IGST in that order
• No cross utilization of input tax credit between CGST and SGST
• No input tax credit for Additional tax
• Input tax credit will be allowed only based on supplier invoices uploaded to GSTN for the supply
• Electronic Upload of invoices/relevant supply documents will be mandatory under GST
• Data download, verification and validation and upload of input tax credit data for effective management of
input tax credit
• Recovery management procedure spans to multiple periods

18. India GST expectations-Tax Settlement Reporting and Expectations
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• Recommends 8 reports – GSTR1 – GSTR8; makes their recommendations on reporting process and reporting time to be managed by GSTN through the
common GST portal
• GSTN to validate accurate tax settlement and utilization of input tax credit
• One Tax settlement for all business units sharing the same GST registration
• Tax liability under different categories to be computed separately as different line items in one Challan (Payment document)
• Option for payment through internet banking or conventional payment at specified banks
• GSTN will track the receipt of payment and issues acknowledgement
• Infrastructure for Electronic Data exchange
• Issue of supply of goods and services for a tax period (Outward) : Mandatory
• Electronic reporting of all transactions relevant under GST including debit/credit notes, supplementary invoices etc
• Electronic data exchange/reporting infrastructure for verification and validation of input tax credit
• Includes download of purchase records from GSTN, Matching and confirmation, and submission of omissions if any
• Tax reporting through Electronic Media
• Periodic tax returns through electronic reporting with a defined process for reporting and reporting timelines

19. GST Transtiton- Impact
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Business and IT
Impact areas- ITImpact areas- Business
• GST Jurisdiction and Organization Structure
• Master Data Management- Vendor and sites
• HSN Codes
• EDI/Electronic Data Interchange
• Invoice Uploads to GST Portal /GSTN
• Tax configuration and Tax Transactions
• Matching, Settlement and Reporting
• Reconciliation
• Register and Current Reports
Supply Chain Model
Network Design
Vendor Management-
Categories and
Capabilities
Manufacturing- Impact
on Subcontracting and
Extended
Manufacturing
Impact areas- Business Processes
Q2C P2P IC

20. Oracle Solution Approach and Readiness (Oracle financials for India based)
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 Re-engineered the EBS Oracle Financials for India (India Localization) solution
 Major changes on system configuration making the solution much more scalable to address complex tax requirements
 Unified procedure for “Regime to Rate” Configuration
 Option for user to configure Tax type, Tax behavior, Taxable event and Tax document sequencing
 Option for defining tax jurisdiction based on the registration number
 Improved features for input tax credit management (multi phase recovery process) and tax settlement/Tax offsets
 Unified Tax repository with traceability to every tax transaction
 Improved user experience
 The new solution scalable to map the basic solution infrastructure for GST as well as the existing tax regimes; any gaps to
enable compliance on Proposed GST regime will be built only on top of the new solution. E.g. Infrastructure for Electronic
data exchange. The new solution will be released as a part of GST release on all supported versions under Premier
Support.
 With the improved solution infrastructure OFI development team is well equipped to release solutions to enable
compliance to GST quickly once Government notifies the requirements and based on final go live mandate
 The new solution under advanced stage of Development
 Evaluating the feasibility of EAP engagement prior to final release with customers which will provide insights to customers
on the new architecture
 Release plans depended on Government finalizing the GST go live plans
 To be decided and communicated later

21. Configuration process flow
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22. Opportunities
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Customer base having
manufacturing/service
with applicable
scenarios under GST in
India
GST
Roadmaps
and
Advisory *
Understand the
Financials in India
Localisation
Network
design and
model
processes
and tools
Development of custom
solutions for
reporting/settlement
Build
Capabilities
around
Configuration,
Processes and
overall GST
processes

23. Thank You
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