Panel 2 - Goods & Services Tax (GST)
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Copyright (c) 2015. Lakshmikumaran & Sridharan / Confidential. Goods and Services Tax TaxSutra Conclave | Issues for Discussion L. Badrinarayanan | Partner
Transcript of Panel 2 - Goods & Services Tax (GST)
Copyright (c) 2015. Lakshmikumaran & Sridharan / Confidential.
Goods and Services Tax
TaxSutra Conclave | Issues for Discussion
L. Badrinarayanan | Partner
Copyright (c) 2015. Lakshmikumaran & Sridharan / Confidential.
Managing GST Transition When GST is likely to be implemented Where are we now?
Government Legislation – Model POT/POPS IT Infrastructure – GSTN
Trade Book Keeping – event based to consumption based Credit Chain Analysis Supply Chain Impact Long Term Contracts, Sales return, Warranty and After sale
Australian approach for smooth transition
Copyright (c) 2015. Lakshmikumaran & Sridharan / Confidential.
Transition Provisions Treatment for opening credit in the books of accounts on the date of
implementation of GST? CENVAT ( ED +ST ) and VAT credit closing balance CST paid goods in-transit :- GST ? Stock in trade, Work in progress, Raw materials Credit of all taxes subsumed in GST Bad debts Apportionment & Adjustments
Special Time of Supply Rules for transition
Deemed Credit Mechanism
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GSTN: How GSTN is going to manage GST for the Centre and the States
Insights on Registration
Insights on Payments & Receipts
Insights on Refund
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Revenue Neutral Rate (RNR) What is RNR? Proposed RNR @ 27% but FM promises lower rate Tax on a Common Base
State gains – tax on services Centre gains – tax on distribution of goods
GST Council Floor Rates, Band rates, Exemption, Threshold
Implications for MRPSupply Chain analysis to take care of MRP
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Price: Supply Chain Innovation Supply & Procurement Costing Impact
CST VAT on ED 1 % origin based additional tax Contract re-negotiation to pass on benefit
Price Rationalization: International Approach Free Market (Canada) Regulatory (Australia - ACCC) VAT- benefits not passed on by manufactures: CAG -2010
Streamlining of warehouses MRP and distribution margin Sale by Transfer of Document of Title whether Interstate Sale
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E-Commerce Treatment of Trade Promotion Schemes – Vouchers, Discounts, etc
Treatment for Place of Supply
Insights from BEPS
Managing Inverted Duty Structures – Credit Implications
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IGST: How it Operates How IGST will operate?
Impact of 1% additional Tax
Credit for IGST
Issues with IGST
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Input Service Distributor Need for robust ISD Rules
Managing Common Inputs and Input services
Transfer of Credit from one unit to another
Refund of excess credit if no transfer?
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Area Based Exemption Factory
Excise Exempt Units
BuyerCurrent ScenarioCost : X (No ED)No credit on inputs
Post GST Cost : Y (X-input credit) + 27 +1 (IGST + 1%)Customer
Tax refund from Govt.(27 – IGST)• GST: input credits available and output taxable• Refund scheme for existing units• Working capital increase for buyer• Contract re-negotiation to pass on benefit• Anti-forestalling measures in Transition
Copyright (c) 2015. Lakshmikumaran & Sridharan / Confidential.
Credit Issues Credit is sacrosanct for GST System to work Accumulated / unutilized credit :- EU Approach (Refund) Apportionment & adjustments Credit on equipment or inputs lying in stock on which no credit has been taken VAT /Carousel Fraud: collected but not deposited
Who should suffer – the innocent customer or the duped Government?
Mahalaxmi Cotton 2012 (51) VST 1 (Bom)
International Approach – ECJ : Optigen, Fulcrum & Bond C-354/03
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