GST may be implemented by 2017. Industry and professionals would have to be ready at least 6-9 months in advance. Few possibilities examined.

1. Gearing Up for GST
C A Madhukar N Hiregange
Status as on June 2015

2. Todays Covergae
Why GST?
Milestones reached- Status Today
Features in Brief
Impact Analysis
Link to IDT
Transitional Issues
Opportunities

3. • GDP Growth Go Up by 1%*
• International Competitiveness by 5%*
• Increased FDI- Already seen
• Common Market- Tax distorted locations – No
• All those who gain to be part of tax payment
• Lower transaction cost – reduced corruption
• Increased IDT + Direct Tax Revenue
* NCAER Report

4. 122nd Constitution Bill passed in Lok Sabha on 06.05.15
73rd Report of Standing Committee on Finance
August 2013
115th Constitutional Amendment Bill - March 2011
FDP - November 2009
Budget Speech (2006-07)
1978 – Jha + Chelliah

5. • Bill referred to select committee on 12.05.15
• Committee to give report on last of first week of
Monsoon session
• Passing of Bill in 15 States
• GST council Put In place – Draft law for Centre +
Model for States
• Information Technology Infrastructure in all States
• Change management for Revenue Officers

6. • Public Awareness and Training
• Debate and amendment for removing rough edges +
gaps in Transition Period plugged : Trade Bodies,
Professional Bodies; Acamedicians
• Earliest appears to be April 2017 as it cannot be
bought in the middle of the year.
• Hopefully by March 2016 law in full would be open.
By that time we need to have decided whether we are
in or Out.

7. Taxes likely to be subsumed in GST
Central Taxes
 Central Excise Duty
 Additional Duties of Excise
 Excise Duty under Medicinal &
Toiletries Preparation Act
 Additional Duties of Customs
 Service Tax
 Surcharges & Cesses
State Taxes
 State VAT / Sales Tax / CST
 Purchase Tax
 Entertainment Tax
 Luxury Tax
 Entry Tax (not levied by local
bodies)
 Taxes on Lottery, Betting &
Gambling
 Surcharges & Cesses

8.  Origin to Destination based consumption tax
 Apply to all stages of the value chain
 Apply to all supplies of goods or services made for a
consideration except:
 Exempted goods or services – common list for CGST
& SGST [Small ]
 Goods or Services outside the purview of GST
 Transactions below threshold limits- 25 Lakhs
 CGST & SGST on intra-State supplies of goods or services
in India. SGST rate bit higher rate.

9. Goods not Covered
• Alcohol for human consumption - State Excise.
• Electricity.
• Real Estate - Stamp Duty plus Property Taxes payable.
• Petroleum Products – some products to continue sales tax -
Others under GST
• Tobacco products – under GST as well as Central Excise

10.  GST Rates –based on Revenue Neutral Rates (RNR) – [ VAT
Principal followed] Four rates:
 Merit rate for necessary goods- 10-15%
 Standard rate for goods or services in general- 22 -27%
 Nil rate for exempted goods or services
 Special rate for precious metals -1%
 Optional Exemption & Composition scheme – 25l – 75L
 SGST - Floor rate with a small band of rates for standard rated
goods or services [ 1-3%]

11. Type of Tax Paid Tax can be adjusted against
SGST Adjusted against SGST
CGST or IGST Adjusted against CGST or IGST interchangeably
- no cross utilization b/n SGST & CGST
IGST for IGST, CGST & SGST in that order
CGST for CGST & IGST in that order
SGST for SGST & IGST in that order

12. 1. On traders:
• Limited to the value addition
• Tax payable small – compliance cost effective than
evasion
• Cost of products reduce
• Can grow into large entities

13. 2. On manufacturers:
• Reduce COGS
• Exports cheaper – taxes refunded
• Difference b/w large & small mfrer will reduce
• Harassments & bribe reduces
• Transaction cost of compliance reduce (over
proactive law goes away)

14. 3. On service providers:
• Rate of ST (14% w.e.f 01.06.2015) – high in GST
• Unviable for those with low margins
• Net tax payment – substantial
• Goods used in providing service – credit available
• Refunds – prompt
• Taxed at place of consumption
• States also empowered to tax services
• Taxes received by consuming state

15. 1. Excise duty
- Cenvat credit,
- dispute resolution,
- removal & valuation on intrinsic value - may find a place in GST
- Self assessing principle would hopefully be adopted.
2. Import Duties
- BCD-continue
- Addn duty of customs-CVS & SAD- subsumed by GST- IGST.
- Classification- harmonised System of Nomenclature in GST.

16. Knowledge of present IDT-importance
• Value Added Tax (VAT)
- Supplies of goods & imp services -now available to States as SGST.
- Also get apportioned part of the IGST.
• CST:
- Principles of inter state sales, sales in the course of export/ import- with
changes for supplies-part of GST
- Valuation aspects in some parts.
• Service Tax
- Place of Supply Rules –[ draft available- akin to POPS]
 To determine Place of Supply of goods or services
 To determine whether supplies are intra-State or inter-State
- POT is also viable option

17. Transitional Issues
• Anteriority – 1 year period – Understand,
amend, train officers, tax payer and
professionals
• Analysis of Impact on Business
• C/f of credit
• Unclaimed Credit – Earlier ( missed – not
eligible); VAT for SP, CED/ ADC for Trader
• Stock Declaration

18. Transitional Issues
• Overlapping Contract
• TDS/ Tax Holiday
• Pre GST Tax Compliance
• Pre GST Audits
• Preparing for post GST Audits
• Initial Disclosure
• Change in Method of doing business

19.  Production and Distribution - Optimising
 ERP systems – changes mandatory
 Analysis of impact- in house/ outsourced
 Credits in hand?
 System design- SOP
 Consultancy/ trouble shooting
 Dispute resolutions
 Transition issues ? – VAT, ST, CE, Customs?

20. How to Start Practice in GST?
• Start practice in VAT, Central Excise or Service
Tax now
• Use online resources – google gst, caclubindia, yahoo
CA groups, taxindiaonline,
• Form a small group for GST in your area
• Start IDT Course with focus on GST.

21. Madhukar@hiregange.com
Acknowledgements to Nandini HG for collation