INDIA CFO SUMMIT 2015 - SKP Group · CBEC has created a GST Directorate (DGGST) in Delhi with effect from 1 August 2015 Infosys to finish GST network before April 2016 Infosys CEO

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INDIA CFOSUMMIT 2015

GOODS AND SERVICES TAX (GST) FOR BUSINESS

– A CFO’S PERSPECTIVE

© 2015 SKP Business Consulting LLP. All rights reserved.

INDIRECT TAX IN INDIA

VATCUSTOMS

SERVICE TAX

OTHERS

EXCISE


SHORTCOMINGS IN CURRENT STRUCTURE

Assessee

INDIAN INDIRECT TAXES

Too many taxes – multiple levy of taxes on same transactions

Cascading effect of taxes – credit of one Indirect tax not available against another

Conflict between Centre and State for few levies

Non Assessee friendly approach of the authorities – different revenue authorities for different levies

Multiple compliances – huge compliance burden on assesses under different Indirect tax levy


Defining Goods and Services Tax (GST)

‘GST’ is defined in Article 366 (12A) ‘Any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for

human consumption’

‘Services’ is defined in Article 366 (26A) Services means “anything other than goods” 115 Constitutional Amendment Bill did not provide for definition of ‘service’

‘Goods’ is defined in Article 366 (12) Goods includes all materials, commodities and articles

Alcoholic Liquor Alcoholic liquor for human consumption would be out of Goods and Services Tax (GST) purview

Exemption of Petroleum Products Exemption of Goods and Services Tax (GST) on petroleum products However, Goods and Services Tax (GST) Council may decide to levy the same in future

122 CONSTITUTIONAL AMENDMENT BILL


Points to Note

Taxable Event Existing taxable events such as ‘manufacture’, ‘sale’, ‘provision of services’ etc. will lose their

relevance

‘Services’ Definition Services definition is very wide and vague It may include the real-state because it is, ‘anything other than goods’

Consideration Whether required or not?

Supply to Self ‘Supply’ is not defined or elaborated or qualified

Goods and Services Tax (GST) Legislation Single CGST law May be multiple SGST laws, one for each State (including Union Territories)

122 CONSTITUTIONAL AMENDMENT BILL


TAXES THAT MAY CEASE

CENTRAL LEVIES

CENTRAL EXCISE

SERVICE TAX

CVD & SAD

CENTRAL CESSES

ADDN. EXCISE

STATE LEVIES

VAT &

LOTTERY TAX,

STATE CESS

& CST

LUXURY TAX

CGST, SGST AND IGST

ALL AFORESAID TAXES TO BE SUBSUMED IN PROPOSED GST

ENTRTMNT.TAX

PURCHASETAX

ENTRY TAX


A Brief Introduction

Biggest tax reform since independence Proposed to replace most of indirect taxes Not just a tax change but a business change Simple Unified Indirect Tax Structure Easy compliance – increased number of tax payers Competitive tax rates Boost to exports – complimentary to Make in India

GOODS AND SERVICES TAX (GST)


Structural Changes

Source-based to Destination-based Taxation System Dismantling fiscal barriers between States

Taxation Point Sales to Supply (supply without consideration and inter-branch transfers)

Full Credit of Input Taxes

Upfront Exemption to Refund Mechanism Block funds in taxes and then claim

GSTN – Online Platform Credits as reported by vendors

Unified Tax Rates Increase/Decrease in tax burden

Removal of Cascading Effect of Taxes No tax on tax



Recent Developments

Draft Business Process Reports in public domainRegistration – Refund Payments – Returns

Stakeholder views on GST process reports – Finance Ministry has invited stakeholder comments and views by the end of October

Draft Law Ready – Centre and States have completed the drafting of model GST law and IGST law, which will be put up in public domain by November

Rollout anytime next fiscal – Finance Minister said it was not necessary to implement the new regime from 1 April 2016, it can come into effect from the first date of any other month as it is a transaction tax



Latest News

Prime Minister Narendra ModiPrime Minister Narendra Modi said in the first week of October that the Government is hopeful of introducing GST from the next financial year

Finance Minister Arun JaitleyFinance Minister Arun Jaitley has said that Goods and Services Tax (GST) will be a "top priority“ in the coming months

DGGST and HeadquartersCBEC has created a GST Directorate (DGGST) in Delhi with effect from 1 August 2015

Infosys to finish GST network before April 2016Infosys CEO Vishal Sikka said that the company will complete the prestigious Goods and Services Tax Network project before April 2016

Finance Ministry seeks India Inc. viewsWith regard to Place of Supply (PoS) rules in five sectors, including eCommerce and banking

Indian Delegation visited AustraliaVisited Australia to study GST as it had been implemented in a better way there



BUSINESS IMPACT

Operations

Warehousing

Supply Chain

Legal

IT

HR

Strategy

Sales &Marketing

Accounting

Compliance

Finance• Vendor Management• Location Planning• Inventory Management

Audit

• GST Compliant IT System• Contract Amendments • Training• Resource Planning

• Reconciliations• Reporting• Submissions• Modifications to SOPs

• Business Model Realignment• Working Capital Management• Pricing Strategies • Capital Budgeting

Business

Impact


Challenges

Managing the change within limited time Internal teams may not have sufficient experience

of transition management Internal teams may not have sufficient bandwidth

TRANSITION MANAGEMENT

Different Processes

Different Skills

Different Challenges

Different Mindset

Need for quick, coherent, unbiased reports enabling informed decision-making Lack of focus towards transition can impact timelines Need of an interface between consultants and various business teams Varying work pressure during the transition Disconnect between management vision and execution plan Knowledge gaps of internal teams might cause delay and important issues could fall through

these gaps Lack of collaborative efforts may impact ultimate output


End-To-End Solution

BEING COMPLIANT

Industry Experience

Domain Knowledge( IT / Tax)

Project Management

Capabilities

Business Advisory

Common Program Management

Clear Roadmap Templated Solution

Collaborative Working

Well-defined Roles and Responsibilities


BROAD SCOPE

Oct’15 – Dec’15 Jan’16 – Jun’16 Jul’16 – Oct’16

Be pro-active and start planning at early stage

Pre-prepare to adapt

Take right steps

Pre-legislation Post-legislation

Pre Preparatory Phase Preparatory Phase Go Live Phase

Gear up for the upcoming change

Be ready with your game plan to triumph

You are system ready & resource ready from Day 1

Zero lag in operations on go-live day

Current Indirect tax health check

Track and be updated on GST

Prepare a plan to tackle and implement GST

Carry out pre-legislation impact analysis

Review business processes to study GST impact and re-structure tax efficient processes

Review impact on long term contracts and standard GST clauses

Prepare IT and accounting system to tackle GST (SOPs, IT updates)

Comply with GST legislation with assistance from SKP:

GST Registrations Tax Payments Transaction recording Return Filing Requisite Documentation


OUR SERVICE EDGE

Over five decades of experience in Indian taxation Diversified team members including CAs, MBAs, ICWAs, lawyers, engineers Listed among leading tax firms in India in International Tax Review’s World Tax

directory (A Euromoney publication) in 2009, 2010, 2011, 2012, 2013, 2014, 2015 and2016

Nominated for the Asia Tax Awards 2010 for Case of the Year and India Tax Disputes Firm of the Year

Trained over 2000 government employees to prepare for Goods and Services Tax


OUR SERVICE EDGE

“The process of “Simplification” is never Simple”

“But once you transform, it looks beautiful”

CONTACT US

19 Adi Marzban Path Ballard Estate FortMumbai 400 001Indiat: +91 22 6730 9000

Mumbai

VEN Business CentreBaner-Pashan Link RoadPashanPune 411 021Indiat: +91 20 6720 3800

Pune

6-3-249/3/1 SSK BuildingRanga Raju Lane Road 1, Banjara Hills Hyderabad 500 034Indiat: +91 40 2338 6912

Hyderabad

B-376Nirman ViharNew Delhi 110 092Indiat: + 91 11 2242 8454

New Delhi

3 Crown Court128 Cathedral RoadChennai 600 086Indiat: +91 44 4208 0337

Chennai

312/313 Barton CentreMahatma Gandhi RoadBengaluru 560 001Indiat: +91 80 4140 0131

Bengaluru

269 The East MallToronto ONM9B 3Z1Canadat: +1 647 707 5066

Toronto

www.skpgroup.com

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INDIA CFO SUMMIT 2015 - SKP Group · CBEC has created a GST Directorate (DGGST) in Delhi with effect from 1 August 2015 Infosys to finish GST network before April 2016 Infosys CEO