GST – “Goods and Service Tax” is a destination based consumption tax. GST Act may be called the Central / State Goods and Service Tax Act 2016 and extends to whole of India including Jammu and Kashmir.


Taxes subsumed under GST are VAT / CST / Purchase Tax /Service Tax / Excise Duty / CVD / SAD / Entry Tax / Entertainment Tax / Luxury Tax / Cesses and Charges on goods and services.

Considering the federal structure of India, GST is proposed to be introduced as a dual tax structure with Central Goods and Service Tax (“CGST”) and State Goods and Service Tax (“SGST”). Further, Integrated Goods and Service Tax (“IGST”) is proposed for inter-sate and Import transactions.

There shall be levied a tax called the Central/State Goods and Services Tax (Goods and Service Tax) on all intra-State supplies of goods and/or services at the rate specified in the Schedule to the Act and collected in such manner as may be prescribed.

“Integrated Goods and Services Tax” (IGST) means tax levied under this Act on the supply of any goods and/or services in the course of inter-State trade or commerce.

Supplies of Goods and Services in the course of inter-state trade or commerce shall include:

1. Supply of goods/services in the course of inter-state trade or commerce means any supply where the location of the supplier and the place of supply are in different states.
2. Supply of the goods in the course of import into the territory of India till they cross the customs frontier of India shall be deemed to be supply of goods in the course of inter-state trade or commerce.
3. Supply of services in the course of import into the territory of India shall be deemed to be supply of services in the course of Inter-state trade or commerce.
4. Supply of goods and/or services, when the supplier is located in India and the place of supply is outside India, shall be deemed to be supply of goods and /or services in the course of Inter-state trade or commerce.
5. Supply of goods and/or services to or by a SEZ developer or an SEZ unit shall be deemed to be a supply of goods and /or services in the course of inter-state trade or commerce.
6. Any supply of goods and/or services in the taxable territory, not being an intra-state supply and not covered elsewhere above, shall be deemed to be supply of goods and /or services in the course of interstate or commerce.


GST A Snapshot

GST Snapshot Taxes to be subsumed
  • Destination Based Tex
  • Tax on "Supply"
  • Local Supply
    • CGST plus SGST(rates may vary)
  • Interstate Supply
    • IGST (single rate)
  • Imports
    • Basic Customs duty (unchanged)
    • IGST (single rate)
  • Stock transfer i.e. on self supplies
    • Self supply of goods and services 'taxable'
    • GST Valuation Rules to apply on such supplies
  • Works contract & software a service
  • Central
    • Central Exciese
    • Countervailing duty of customs in lieu of excise / sales tex (CVD & SAD)
    • Central Sales Tax
    • Service Tax
    • Surcharge & Cess
  • State
    • Vat / Work Contract
    • Entertainment tax
    • Entry Tax/Octroi/LBT
    • Luxury Tax 


It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act.

Basis the latest media reports, the date when the GST shall becomes operational is 01 July 2017.

GST is likely to be implemented from 01 July 2017. Introduction of GST would change the way business is done. Since GST is not only the tax change it but complete Business Transformation in the following ways.


Change in the Sales and Purchase Presently the sales and purchase transaction of the company is being managed according to the present Indirect Tax Regime so the business of the company has to adopt the change according to the GST law.
Change in Supply Chain GST involves the change in the procurement pattern of the company as the inter-state procurement shall be beneficial to the company as compared to earlier regime wherein CST became the cost to the company.
Change in the IT system Since the GST involves not only the tax change but involves changes in the tax system of the company wherein the credit of the goods shall be eligible to the service business assesse and vice versa. Thus it becomes vital to adopt IT changes in order to become GST compliant company.
Profitability Impact on the Company on account of the GST The present Indirect Tax involves huge cascading effect of the taxes which add to the cost to the product/services.
Under GST regime,
– Credit availability
– Increase Credit Pool
– Re- negotiation of the purchase price with the vendors
– Re-negotiation of the sale price with the customers
– Transactions with Related parties at arm length prices
Cash Flow Impact Since GST involves the minimal exemptions and there shall be more payment of the taxes as compared to the present Indirect Tax Structure. So business needs to identify the cash flow impact of the Company in the following ways
– Transaction with related party to be arm length even the same is without consideration
– Higher GST rate
– FOC supplies to be taxable at related parties
– Upfront excise exemptions may go away with
– No deferment of the credit on capital goods
IT system changes/ Accounting/ Training to Management to adapt to the GST compliant Company Below are the changes which are required for the smooth transition to the GST regime and becomes more GST compliant

IT system Changes
– Making the changes in the vendor creation field items
– Change in the Customer creation field items
– Change in the invoicing pattern
– Change in the Purchase and the payment to the vendor system
Accounting Changes
– Change in the accounting tax codes for the booking of the expense or revenue
– Booking of the Credit Pool
– Change in the tax reports
Training to the employees
– Training to the Tax Team
– Training to the Sales/purchase team
– Training to the Top Management

GSTExpertise Team has been closely involved with the GST initiative through its specialized team of experienced professionals, including former government officials who advise businesses as well as governments. AT GSTExpertise we are focused to provide the GST transitional solutions in identifying the impact of GST on their operations, and engage in a constructive dialog with relevant authorities for remedial measures to address any concerns. The team has extensive knowledge has diverse Indirect tax and GST experience through extensive interactions with both the Centre and the State Governments authorities in India.

We GSTExpertise.com Team with its past experience in handling the GST migration work for companies from small companies & mid size companies to large Multinationals. Through our past experience, we have identified the following action plan which the Company should do for migration to the GST regime.

  • Identify the possible Impact Areas of its business basis the GST Law
  • In case any change in the business structuring is required then do the same basis the above report
  • Identify the possible saving in the Cost under the GST regime so that future pricing can be forecasted by the company
  • Identify the possible Cash Flow Impact under the GST regime so that change in the credit period terms with the vendors and customers can be done in advance
  • Identify the Possible change in the vendors basis the ABC analysis so that vendors who are less compliant with the Indirect Tax Laws should be changed
  • Identify the possible areas wherein there is lack of clarity in the GST regime so that the same can be represented before the Finance Ministry at such nascent stages of the Law development
  • Make the changes in the present structure basis the above impact areas

  • All the above can be managed through the GSTExpertise team which runs the project with average period from 15 days to 1.5 months and extend up to 3 months for the pre implementation phase.

    We at GSTExpertise specializes in giving end to end solutions in pre implementation phase and even at post implementation when the GST law becomes live i.e 01 July 2017 so that the company won’t even loose penny of credit under the GST regime.

  • For the Trading Companies
  • Impact of the E-commerce Companies
  • Impact Of the GST on the Hospitality Industry
  • Impact of GST on multinational companies/ Service industry
  • Impact of the GST for Start ups and Small Business
  • Impact on the Warehousing Companies
GST in India is likely to implemented from 1 July 2017. Introduction of GST would change the `way business is done. It would throw host of opportunities and challenges for the business and it becomes imperative for them to gear up themselves for adapting the change.

The changes which we have discussed above would certainly takes sufficient time period for the implementation in your business and though process of the people. So it has now become Vital to start thinking of doing the migration of the business activity as per the GST.

At GSTExpertise, we have dedicated team of professional who have worked in the big four consulting firms including the Advocates who are associated with the GST committee of various trade bodies including ex government officials.
  • Removal of the cascading effect of the taxes as common base for the levy of the GST
  • Better Tax Credit Mechanism
    • Non Creditable Central Sales tax Act to be done away with
    • Reduction in the cost i.e Traders of goods not eligible for Cenvat Credit of Excise duty/ Service Tax
  • Ease of administration with Updated and enhanced technical framework
  • Increased supply chain efficiencies
  • Improvement in international cost competitiveness of indigenous goods and services
  • Unified tax implications : Compliances under one unified law i.e GST
  • Proposed consistency in classification of Goods & Service across the States.
  • To keep GST 'pro poor', as per the GSTN council report, zero rate GST will be applicable for the 50% of the goods falling under Consumer price index.
  • GST rates have been finalized in the GST council meeting held on 03 November 2016

Particulars
Essential Food items and goods
Standard Slab Rate
Not Covered under Standard Slab rate
Luxury Goods (Include cars, Washing machine, air conditioner etc)
GST Rates
5%
12%
18%
28%*

  • Cess would be levied on the same.
  • Under GST, the exemption thresold is fixed at INR 20 Lakhs. With the north-eastern states, the exemption threshold is INR 10 Lakhs.