1. Goods and services tax in India

2. What would be the tax rate?
The 3 perennial questions
Will GST be a reality?
If yes, when?
What would be the tax rate?

3. GST History and Roadmap
Government’s Action steps
Industry’s Action steps
Announcement of GST
2006
First Discussion Paper
2009
First Amendment Bill
2011
Second Amendment Bill
Dec-2014
Bill passed by Lok Sabha
May-2015
Select Committee provided report on Bill
Aug-2015
4 reports on Business processes published by CBEC
Oct-2015
Stakeholders to provide comments on 4 reports
Bill to be passed by Rajya Sabha
Majority States to ratify the Bill
Jun-2016
GSTN portal to be made ready
GST Laws and Rules to be made public
Jul-2016
Stakeholders to provide comments on GST law
ERP patches to be made ready by ERP service providers
GST laws to be passed by Parliament and State Legislatures
Sep- 2016
ERP service providers to fine tune patches
GSTN portal to be fine tuned
Nov- 2016
Customization of ERP systems to be done by industry
Introduction of GST
Jan-2017
Implementation of GST
Estimates

4. implementation partner/ MSP
Milestones for GST implementation
June 2016
GST to go live
Constitution Amendment Bill
Lok Sabha
Rajya Sabha
State
approvals
Presidential
assent
GST Law
Drafting of law
Public consultation
Release of final law
GSTN infrastructure
Overall design
Selection of
implementation partner/ MSP
Baseline version
development & rollout
Completed
Pending
In progress
Current status
Salient features
GST will be applicable on all Good and Services*
GST will cover all indirect taxes including Excise, Service tax and VAT
Dual GST applicable for the centre (CGST) and states (SGST)
Integrated GST (IGST) applicable on inter-state transactions
* Except few items like Alcohol and some petroleum products

5. Additional Excise Duties Entertainment/ Luxury Tax
Proposed GST structure
Indirect taxes proposed to be subsumed in GST
CGST
SGST
IGST
Service Tax
CST
CVD/ SAD
Additional Excise Duties
Central Excise
Duty
Central Levies
Entry Tax + Octroi
VAT
Entertainment/ Luxury Tax
GST
State Levies

6. Revenue Neutral Rate of GST
Report of Chief Economic Advisor on RNR
RNR
15%-15.5%
Low rate goods
12%
Standard rate
17 to 18 %
High rate goods
40%
Precious metals
2%-6%
The Report on Revenue Neutral Rate and Structure of Rates for the Goods and Services Tax was released by Chief Economic Advisor on 4 December 2015
Some important recommendations:
Real estate, electricity, power to be subsumed in GST
No or lesser exemptions to continue in GST regime
Concept of rate bands would create complexity
1% additional tax to be eliminated

7. Reports on : Registration process Return process Refund process
Reports on Business processes
Reports on :
Registration process
Return process
Refund process
Payment process

8. Electronic- hence fast and accurate Dual control and review
Common features of the Reports
Electronic- hence fast and accurate
Dual control and review
System dependencies
Lesser interaction with authorities
Objective to increase tax revenue

9. IT System of States and Centre Jurisdictional Officer
Registration report- Procedure for registration of new dealers
Registrant
Fill data, upload scanned documents and submit application on Portal
Send message for confirmation to registrant through and SMS
Confirm application
Acknowledgement generated and intimated to registrant
Sign summary extract of application- either digitally or by hand and send to CPC through Portal
Validation of PAN, Adhaar No, CIN etc.
Forward application to IT system of State/ Centre authorities
Forward application to jurisdictional officer based on location of principal pace of business
Examine application and respond to Portal within 3 working days
If application is fine or in case of any query, communicate to Portal within 3 working days
If any query, respond to Portal within 7 working days
Respond within 7 days to information/ clarification provided
Generate RC, Log in ID and password and send to registrant
GST 1 2 3 4 5
IT System of States and Centre 6 7
Jurisdictional Officer 8 9 10 11 12 13

10. Sales summary Purchase summary Sales summary Tax payment summary
Return report- Key features
Supplier A B
Sales summary
Purchase summary
Sales summary
GSTR -1
GSTR -2
GSTR -1
Tax payment summary
GSTR -3

11. Types of returns
GSTR 1 – Outward Supplies made by Taxpayer (other than compounding and ISD)
GSTR 2 – Inward Supplies received by Taxpayer (other than compounding and ISD)
GSTR 3 – Monthly return by Taxpayer (other than compounding and ISD)
GSTR 4 – Quarterly return by Compounding Taxpayer
GSTR 5 – Periodic return by Non-Resident Taxpayer
GSTR 6 – Monthly return for ISD
GSTR 7 – Monthly return for Tax Deducted at Source
GSTR 8 – Annual return
ITC, Cash and Tax ledger

12. Refund situations in GST regime
Refund report- Situations where refunds would arise
Refund of Pre-deposits for filing an appeal and arising due to Appellate Order
Payment of tax during investigation
Refund on purchases by UN bodies, CSD Canteen
Finalization of Provisional Assessment
Year end / Volume based incentives
Export (including deemed Exports)
Refund of Carry Forward ITC
Refund situations in GST regime
Excess Payment of Tax due to Mistake
Tax Refunds for International Tourists

13. Payment report- Key Features
Key Features of the Payment Process:
Transparent, responsive and simple process for payments;
Payment system should be based on information technology;
All taxpayers to gradually move to internet payment;
Uniform system of banking arrangements;
Electronic reconciliation of all receipts;
All payments to be made through a common portal i.e. GSTN.

14. Thank you Mr. Dilip Dixit 9892117117 kpmg.com/in
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15. Manufacturing operations (Sale) – Current scenario
Maharashtra
Tamil Nadu
Pre GST
Illustration
Exports are tax free
Excise
CST
Inter-State Raw material
CVD/SAD
Excise
Customer*
Factory
Finished goods
Import of goods
CST
Excise
VAT
For OEM customers Excise Credit could be available and CST could be at reduced rate
Local Raw material
Full Credit
Service Tax
No Credit
Services

16. Exports would remain tax free
Manufacturing operations (Sale) – GST scenario
Maharashtra
Tamil Nadu
Post GST
Illustration
Exports would remain tax free
IGST
Inter State Raw material
IGST
IGST
Customer
Factory
Finished goods
Import of goods
CGST
SGST
Local Raw material
Full Credit
*GST
Services
Additional tax of 1 percent on inter-State sale of goods is proposed
* On services, IGST would be levied on import and inter-State services where as CGST and SGST would be levied on intra-state services

17. Manufacturing operations (Stock Transfer) – Current scenario
Pre GST
Illustration
Maharashtra
Tamil Nadu
Exports are tax free
Excise
CST
Distributor
Inter State Raw material
VAT
CVD/SAD
Excise
Warehouse
Stock transfer
Factory
Finished goods
Import of goods
No VAT
Excise
VAT
For OEM customers Excise Credit could be available
Local Raw material
Full Credit
Service Tax
Partial Credit ( After Retention)
Services
No Credit

18. Exports would remain tax free
Manufacturing operations (Stock Transfer) – GST scenario
Post GST
Illustration
Maharashtra
Tamil Nadu
Exports would remain tax free
IGST
Distributor
CGST
Inter State Raw material
IGST
IGST
SGST
Stock transfer
Warehouse
Factory
Import of goods
Finished goods
CGST
SGST
Local Raw material
Full Credit
*GST
Services
GST rate is assumed to be 20%
Additional tax of 1 percent on inter-State sale of goods is proposed
* On services, IGST would be levied on import and inter-State services where as CGST and SGST would be levied on intra-state services

19. Impact on company's finance
Impact on cash flow that can effect working capital requirements
Other probable impact areas
Tax costs reduced
Gross sales realization
Increase in tax on import
CST abolished
Octroi/entry tax to be ceased
Customs education cess to be ceased
May go up in case of goods
May go down in case of services
Tax on stock transfer
Increase in tax on services
On compliances
Others
Reduction in tax on goods
Simplified IT based compliances
Two governments for service sector
No centralized registration
SEZ/EOU/EHTP/STPI benefits
State incentive schemes
Simplified valuations methodology
No need for statutory declaration forms
Change in tax payment due dates
Exemptions likely to convert into refunds
Reduced refund situations

20. Indicative Impact for different businesses1 2 3
Management Philosophy
Manufacturer 1
Service provider
Trader
Possible reduction in tax outflows due to change in tax rate [Excise + VAT vs GST]
Increase in cash outflow due to change in tax rates
Decrease in tax cost due to credit on services
Reduction in tax cost on account of VAT credit
Increase in cash outflow due to taxability of inter-State stock transfers
No retention of input tax credit on stock transfers
Increased compliances due to compulsory State specific registrations
Conversion of area - based exemptions into cash refund
Increase in cash outflow due to taxability of branch transfers
Cash flow issues for STP/SEZ units
Discontinuation of existing concessions and exemptions such as sale in the course of import, sale in-transit, etc.
Option to operate from multiple depots since CST no longer a cost
Centralized registration?
Manufacture/assembly/repacking without any change in the business model
Complex methods of valuation may be done away with
Discontinuation/change in disbursement of State incentives
Possibility of ease in classification

21. Other probable impact areas
Impact on value chain
Impact on IT
Other impacts
Revisiting sourcing mix viz. local/interstate/imports
Vendor/Customer price renegotiation
Choice of location for setting up factories
Manufacturing arrangement (i.e. own/job-work/contract manufacturing)
Warehousing strategy
Logistics
Pricing decisions
ERP version check and need to determine if the vendor can support the current version of ERP [ Eg. TAX INJ to Tax INN version of SAP]
Relevant business scenarios to be mapped in the system for broad GST coverage
Need for addition/modification /omission of certain data fields
Changes in the in-built logic for computation of some data fields
MRP based levy likely to be discontinued
Diverse taxable events simplified under GST; however could lead to cash flow and commercial impact
Place of supply rules; change on basis for determining taxability and identifying the State to deposit tax