1. GST Impact
- Sectors
CA Madhukar N.Hiregange,

2. Need for GST
5. High cost of tax collection leads to lower tax yield to the Government
1. Multiple taxes lead to double taxation & cascading effects
2. Structure involving multiple taxes not in sync with global practices
4. Lack of uniformity in provisions and rates
3. High cost of tax compliance and double taxation leads to higher prices of goods & services

3. Impact of GST on Economy
Improve competitiveness – export – 5-7%
Boost FDI investment in India
Increase in Value of Indian Rupee – higher ROI for investor
Rate of 18% for Manufacturer and Traders could reduce costs
Rate of 18% equals present 15% rates (services credit)
Push GDP growth by 1.5% - 2%

4. Critical Components -Model GST Lawof
GST
Supply
Taxability
Valuation
Place of Supply
Tax Credits
Registration
Returns

5. Rates- Probable ? Rates – Zero, Nil, 5%, 12%, 18%, 28%
Half of items in CPI to be Nil rated
Earlier declared good- 12%
Most goods/ services – 18%
Soft drinks / Luxury cars – 28%
Tobacco – higher than 60%
Coal and luxury cars – cess in addition to GST
Real estate – 18% [present – VAT 10% + ST 6%]
Rate of gold and precious metals & cess rates – not announced

6. IT Systems
Master Data
Updating vendor/ customer details invoice structure etc.
Transaction Data
Realign open transactions, inventory & credit balances
GSTN Interface
Provision for interface with GST network for filing returns & reconciliation
GST Note Implement
Implement system’s notes for changes to price & tax related configures
Registers/Reports
Maintenance of records such as CGST, SGST/IGST registers. Maintain state wise CGST & SGST

7. Impact of GST – General
Lower transaction cost due to reduced corruption
Increased tax revenue - DT + IDT
Adoption of IT resources - better
Tax neutrality – to some extent
More transparency + accountability?

8. Impact on Service Sector
Rate – 18 %;
No of assessees- 20 Lakhs ( 40 by Nov-17?)
Present contribution – Rs. 280,000 Crores; Fastest growing

9. Service Sector
Service provider have to register separately in all the States in respect of SGST - if he has the multiple place of businesses in multiple states. Verticals addl.
Service provider have to file separate returns with each State Government in respect of SGST
Separate assessments, audits and demands
International competitiveness only if swift/ prompt refund- time limit put from when is ?

10. Service Sector….
Supply of service is also taxable in GST regime hitherto was not taxable. (Ex. Supply of insurance cover by bike dealer to customer from the insurance company)
Service provider eligible for credit of VAT portion on his purchases hitherto not eligible.
Service provider has to pay the IGST on interstate supplies

11. Service Sector….
Identification
NOT Eligible for composition scheme - tax rate 2%? - 50 lakhs - conditions
Two levies on same service - SGST and CGST, hitherto only one tax i.e. service tax
Dispute as to value of goods/identification of goods may not go

12. Service Sector…. Free services will also become taxable Taxable
Free supply of goods and services by service receiver to service provider will be taxable since it is tax on supply
All reimbursable expenditure collected by service provider will be taxable as it is nothing but supply.
Taxable

13. Service Sector….
No segregation between manufacture, services and trading for utilization of credit.
Pure services – more expensive- rich consume more services
Works contracts – Huge impact if not under merit rate

14. Impact on Manufacturers
Rate – 18%
Nos – 3 Lakhs [ 30 Lakhs by June 2017?]
Rs.2,50,000 Crores
Huge Employment Potential

15. Impact on Manufacturers
SSI exemption may be reduced up to 20 lakhs instead of 1.5 Cr.
Eligible for VAT Credit
Exemptions will be minimum
Cost of goods will reduce for RNR goods
Supply chain has to be restructured
Area based exemptions- doubtful
Full credit of tax on interstate sale
Himachal Pradesh-doubtful??

16. Manufacturers….
Faster movement of goods with elimination of check post & entry tax barriers
No retention/disallowance of credit on stock transfer
Stock transfers will be taxable under GST regime, hitherto not taxable
Excise tariff disputes may go
Branch
Factory

17. Manufacturers… Cost of production would decrease - tax neutrality
Faster movement of goods – lower cycle time
Transaction cost of compliance more or less?
Reduction in exemption/ confusion would lead to less- evasion/ corruption / disputes
Transparency for consumer

18. Manufacturers…. All normal products (70%) – Reduction
All luxury products (15%) – Significant reduction
All presently exempted products (15%) – Increase
Tax distortion for decision less ;
international competitiveness; transaction cost reduced.

19. Rs. 400,000 crores across States
Impact on Traders
Sell
Buy
Rate – 18%
No of Active Assessees: 75 Lakhs [ 1.50 Crores by Nov -17]
Rs. 400,000 crores across States

20. Traders - Presently
No credit of excise duty (CVD/ SAD if imported) – other than regd. dealers under CE
No credit of CED on capital goods
No credit of Service Tax
No credit of CST
Direct transaction cost of refund other than delay.
Consumer does not know what is tax cost

21. Impact on Traders
Traders can avail the credit of service tax and excise duty
Credit of import duties will make imports cheaper for retailers
Traders have to register with the Central Government for payment of CGST and IGST
No form-F, such transactions are taxable
Refund of VAT credit in case of Supply of goods to SEZ under GST regime
Supply

22. Impact on Exporters
Lakh Crores ( decreasing trend along with imports) – Balance of Trade improved!
Goods Export – Cascading would reduce by about 5-7% the cost of goods exported.
Services Export – Faster refund + cascading may reduce costs by 3-4% of cost of services.
Maybe 5-7% increase in exports due to competitiveness.

23. Impact on WCT WCT is service – maybe at 18% No composition
Credit Restriction – major challenge
For builders – deduction for immovable property part- Only liable for construction pending??
If unsold constructed part liable then credit on inputs + services in finished part?

24. IDTC- Report: idtc@icai.org
Assisting Govt:
a. Background Material on Model GST- July 2016
b. Transitional Challenges – 2015
c. Suggestions made on Model GST – 300+
d. Video lectures on Entire Model GST law.
Awareness in GST till date- 5k per month in Oct – Jan.
Join IDT net for updates
Empowered State wise Study Groups
New Faculty Identification & GST Trainers Training ( )
Plans-> FAQs + Updated BGM + Certificate Course (Jan?)

25. GST Resources idtc@icai.org cbec.gov.in caclubindia.com gstclub.com
Linked in
hiregange.com
hiregangeacademy.com
…many more

26. Questions?