Honda Cars India Ltd.

Date : 26 /10 /2016

Goods & Services Tax (GST)

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Honda Cars India Ltd.

Govt. GST implementation Road mapHonda Cars India Ltd.

September 2016

- Bill receives President assent- GST council formed- Draft rules for invoice, payment, registration, refund and returns approved Oct-Nov 2016

- Recommendation of Model laws

- Backend IT systems to be ready (CBEC and States)

- Change management and trainings

December 2016

- GST laws passed- Development of front

end and backend IT processes

- Trainings in IT systemsJanuary to March 2017

- Notification of GST Rules

- Testing of IT systems for all stakeholders

- Updation of development of GST

April 2017

August 2016 – CAB passed

GST in April 2017 seems to be a reality

Change in tax rates

Product/ Service Current Rate GST Rates being discussed

Essential commodities 0 ~ 4% Exempt

Merit rates 6 ~ 18%% 6% / 12 %

Standard Rate 25% 18%

Demerit Rate 40 ~ 50% 26% + Cess ?

Services Service tax 15% ~ 18%

Honda Cars India Ltd.Hot topics- Not yet finalised

Many queries needs to be answered

(1) Rates

(2) Credit on Stock in transit on 1st April 2017(3) Credit on Stock held by Traders(4) Assessing authority- Dual control / Single control(5) Cess on what items / what rate- Cenvatability

Overview of current Indirect taxes

Indirect tax Authority Applicable on General Effective Rate

Customs duty• BCD – 7.5/10%• ACD – 12.5%• Cess – 3%• SAD – 4%

Central Government

Import of goods from outside India

~29.44%.

Excise duty Central Government

Manufacture of goods in India

~ 12.5%.

VAT State Governments

Sale of goods within the State

~ 5% to 15%

CST Central Government

Inter-State sale of goods

2% against Form C.

Service tax Central Government

Provision of services

15%

Entry tax/ Octroi/ Local Body Tax

State Governments/ Local Authorities

Entry of goods into a State/ local area for use, sale or consumption

1% to 14%

Honda Cars India Ltd.

Different types of taxes arising on different taxable events.

Honda Cars India Ltd.Overview of GST

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Comprehensive ‘consumption tax’ on supply of goods and services**

Dual GST Model• CGST – by Central Government • SGST – by State Government

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Inter-State supplies subject to IGST (Integrated GST)**

Cross utilization of credits between goods and services **

Exemptions under GST ???**

Goods and Services Tax (“GST”) is one Indirect tax regime forthe whole nation, which will make India one unified market.What is “GST”

Single taxes arising on one taxable event i.e Supply.

SGST

Current structure Proposed structure

Additional excise duties

CVD/SAD

Excise duty CST

GSTEntry

tax/octroiService

tax

VAT Luxury tax

State leviesIGST

Central levies

Honda Cars India Ltd.Current taxes vs. Proposed GST structures

7Most taxes to be merged in GST.

CGST

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Fiscal Impact-How it will Impact transactionHonda Cars India Ltd.

Issues Pre-GST Post GST Impact

Credit available on out-bound transportation x a

Availability of Credit across Trading –Manufacturing

x a

Storage of Raw material & Finished goods outside factory

Too many procedures

Simple

Labelling & processing in warehouse Litigation prone

Simple

100% credit on capital goods in first year x aNo Cascading effect of taxes x aAbolition of declaration forms (C, H etc.) x a

Many issues under current regime should settle in GST regime

CustomerFactory

CSTExcise Uttar Pradesh

CST

Finished goodsImport of goods

Full Credit

No CreditLocal Raw material

F

Inter-State Raw material

Manufacturing Operations (sale)- Post GST

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Manufacturing Operations (sale)- Pre GST Honda Cars India Ltd.

TamilNadu

Excise VAT

CVD/ SAD

Service Tax

Services

Excise CST

CustomerFactory

IGST Uttar Pradesh

CST

Finished goodsImport of goods

Full Credit

Local Raw material

F

Inter-State Raw material

TamilNadu

CGST SGST

IGST IGST

No cascading effect of tax under GST.

CustomerFactory

CSTExcise Uttar Pradesh

CST

Finished goodsImport of goods

Full Credit

No CreditLocal Raw material

F

Inter-State Raw material

Manufacturing Operations (sale)- Post GST

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Manufacturing Operations (sale)- Pre GST Honda Cars India Ltd.

TamilNadu

Excise VAT

CVD/ SAD

Service Tax

Services

Excise CST

CustomerFactory

IGST Uttar Pradesh

CST

Finished goodsImport of goods

Full Credit

Local Raw material

F

Inter-State Raw material

TamilNadu

CGST SGST

IGST IGST

No cascading effect of tax under GST (CST saving on each inter-state transaction)

GST Network design:Honda Cars India Ltd.

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Flow of Goods & Services

GST Network (GSTN)

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Supplier HCIL Dealer4

Customer

Tier 1

Tier 2

Flow of data for Credit passing

Suppliers to ensure compliance for their Tier 1 & 2 supplies

Details of outward supplies and tax payable

Details of inward supplies and tax credit

Data upload in GSTN- Must for GST credit

GST Network design:Honda Cars India Ltd.

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Flow of Goods & Services

GST Network (GSTN)

2 3

Supplier HCIL Dealer4

Customer

Tier 1

Tier 2

Flow of data for Credit passing

Suppliers to ensure compliance for their Tier 1 & 2 supplies

Details of outward supplies and tax payable

Details of inward supplies and tax credit

Data upload in GSTN- Must for GST credit

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Compliances

Registration- Single registration for IGST/ SGST/ CGST per State- Registration required in each State from where supplies made

Returns- 3 returns per month per State - Matching of returns- Annual return – Reconciliation with financials

TDS provision- Enabling TDS provision at 1% on payments for

works contract above 10 lakh - Separate TDS returns - TDS requirement on AMC?

Documentation- Waybill - Power to prescribe documents for consignment of

goods exceeding INR 50 thousand in value - Records to be maintained at State level for each registered

premises

Compliances under GSTHonda Cars India Ltd.

Simplified but voluminous compliances in GST e.g. detail of each outward supply

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Successful implementation of GST in the OrganizationHonda Cars India Ltd.

To understand about GST at every level in the Organization

Maximise credit – pass on GST benefit in the pricing of the product

Furnish GST return on time by paying proper taxes

Timely compliance – to ensure credit at supply chain

Reconsider strategic decision taken in earlier regime e.g. Warehouse in different states

Identify transition issues e.g. Credit on stock in transit & minimize impact

Need to Identify key steps to be taken for effective implementation in the Organisation

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Changes in HSCP to be done by HCILHonda Cars India Ltd.

Identify the changes to be made in HSCP

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Changes in HSCP: Designing by HCIL, data by SupplierHonda Cars India Ltd.

Identify the changes to be made in HSCP

GST Project Organization - HCILHonda Cars India Ltd.

Directors

Core Core TeamTeam

BMD Purchase Marketing Mfg(GNU)

Mfg(TKR)

IT PSF CS GA HGID SCM

Gaurav Gaurav AgrawalAgrawal

Praveen Praveen KatyayanKatyayan

Rahul Rahul PrasharPrashar

Abhishek Abhishek SahiSahi

AbhishekAbhishekGirdharGirdhar

AbhinavAbhinav KumarKumar

ShashiShashi BhushanBhushan

GurusharanGurusharan DhillonDhillon

GurmeetGurmeet SinghSingh

KunalKunal BehlBehl

Sandeep Sandeep MadanMadan

RavishRavish GadhokGadhok

VireshViresh KantKant

UditUdit Kumar Kumar

Vinod KumarVinod Kumar

BinuBinu

NishithNishith

Deepak Deepak

VikasVikas

SmitaSmita

TusharTushar

HiteshHitesh

PiyushPiyush MittalMittal

Praveen Praveen NautiyalNautiyal

Rakesh MishraRakesh Mishra

Ajay AgarwalAjay Agarwal

HemantHemant TanejaTaneja

Sanjeev BansalSanjeev Bansal

J J TekTekchandanichandani

M. C. Aggarwal

UditUdit GuptaGupta

PR PR RamakrishanRamakrishan

RavinderRavinder RustagiRustagi

Kamal KumarKamal Kumar

Project Evaluator

S Takahashi(BMD)

R K Sharma Y Jikuya(MFG)

H Shimizu(Sales)

M Honda

(IT)P Paranjape

(GA)

SteeringSteeringcommitteecommittee

R Wasan(MFG)

J Sen(Marketing)

P. Chakravarty(CS)

Hilal Khan(IT)

Sameer Jain(BMD)

Ashok Sharma(Purchase)

Advisors Y. Nakayama(BMD)

H Takahashi(Purchase)

Rajeev Gupta (Mktg.)

ArunSharma(MFG)

R Sidana(Sales)

N S Talib(NM)

T. Nakaya(SCM)

KS Malik(PT)-TKR

Project Management

K L Gupta(LPL)

Maninder Jain(APL)

Manish Agarwal(APL)

Directors

Functional Heads

IT SupportTax Head

Operational Team Members

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Honda Cars India Ltd.

Thank you Happy GST journey

Support us in GST implementation in HCIL