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GST-ACT

GOODS AND SERVICES TAX.


ONE NATION-ONE TAX

1
Basics of Taxes

 Means of Revenue for Govt.

 Central Levies
 State Levies
 Local Levies

2
CHAPTER -1-GST Act 2017-INTRODUCTION
 GST is Single Tax across India.( replacing all earlier Indirect Tax Except for Customs duty)
 Major Tax reform in India since independence.
 GST is a Tax applicable on Supply of Goods & Services across India.
 GST is also known as Value Added Tax. (Multi point Tax system)
 NO GST on Export of Goods & Services ( Full Exempted)
 Out of Total Tax revenue collection of India , 60 % is Indirect Tax share.
 GST council at Centre level will administer the whole GST structure.

 GST is a destination based Tax. (Earlier origin based Tax).


 GST is a multi point Tax. Which means, At each & every stage tax is applicable & ITC is available on tax
paid earlier stage,

3
Types of Taxes

 Direct Taxes – Central Levy


– Income Tax
– Wealth Tax – Withdrawn wef 1st Apr, 2015.

 Indirect Taxes – Combination of Central / State and Local Levies

– Customs Duty
– Excise Duty
– Sales Tax
– Stamp Duty
– Service Tax
– Octroi / Municipal Taxes, Property Taxes etc.
4
Indirect Tax –Overview
 Maharashtra value Added Tax (MVAT Act 2002) (Effective from 1st April 2005) (State Act: Goods Moving
within the state of Maharashtra, Transaction covered under this Act.

 Central Sales Tax Act, 1956 (CST Act) (Central Act, common in whole of India) (Central Govt i.e Finance
Minister of India amends this Act) (Goods Moving from one state to another state transaction covered
under CST Act).

 Central Excise Act 1944 (It is a Central Act which is common in whole of india).Applicable on Goods
which are Produced or Manufactured & Consumed in India.

 Customs Act 1962 (It is a Central Act which is common in whole of india).Applicable on Goods from
Outside Imported & Exports.

 Service Tax (Finance Act 1994) (Central Act). Applicable on Services only

5
Incidences & Levy of Taxes in India

Tax Incidence Levied By


Income Tax Income Central Govt
Customs Imports Central Govt
Excise Manufacture Central Govt
Service Tax Service Central Govt
Sales Tax Sales States
Octroi Entry of Goods M Corporations

6
GST – Largely in Lieu of ….
GST – CGST / SGST / IGST

Tax Incidence Levied By


Income Tax Income Central Govt
Customs Imports Central Govt
Excise Manufacture Central Govt
Service Tax Service Central Govt
Sales Tax Sales States
Octroi Entry of Goods M Corporations

7
INEFFICIENCIES IN CURRENT TAX REGIME
Inefficiencies... ….Consequences
 Multiple taxes at both Federal
and State level  Increased Tax costs
(Double taxation, Overlap in taxable values)  both Centre & State end up taxing same
transaction
 Non-Vatable taxes / Cascading
impact
(VAT/CST on Excise duty, Octroi /LBT on VAT)  Flawed structure
 Tax concerns drive business decisions
 Narrow Tax base (higher threshold limits) over operational efficiencies

 ‘Origin’ based levy as against  Increased compliance costs


‘consumption’ based  Additional resources to meet requirement
(Multiple markets instead of Unified one) of multiple tax authorities

 Cumbersome procedures
(Declaration Forms, )
8
CURRENT TAX STRUCTURE & COST

Particulars Worst case scenario Best case scenario


Cost of RM 100 100
CST/ VAT 2 (CST) 12.5 (VAT)
Net Cost of RM 102 100
Value Add: 100 100
Selling Price
202 200
(Final Product)
CST/VAT 4.04 (CST) 25 (VAT)
Net Cost (to Dealer) 206.04 200
Tax Cost impact -3%* 0

* AddedTax burden on LBT / Octroi not


considered
GST Scenario
9
COMPARISON OF TAX STRUCTURE
Present Tax Structure Tax Structure in GST
[Major Constituents]

Excise Duty Central


Manufacture of Goods
GST Intra-state Supply
State or UT of Goods / Services
Service Tax Provision of Service GST

Customs duty Imports & Exports


CVD/SAD
Inter-state Supply
Integrated
GST & Import - Export
Sales Tax of Goods / Services
VAT/CST
Sale of Goods
Compensation Cess
Entry Tax Entry of Goods
Octroi/LBT
(applicable on notified supplies)

Central Taxes State Taxes Taxable Event 10


TAXES SUBSUMED IN GST

CENTRAL TAXES STATE TAXES

Purchase
NCCD Tax
Luxury Entry
Tax Tax,
Service CVD & LBT

CGST
Tax
Excise
duty
SAD

SGST
Cesses
VAT/CST

Surchar
ges
Surchar Entertai
Cesses ges nment
Tax

11
Change in Tax Structure
Current Tax Regime GST Regime
Excise Duty

Depots Depots
Manufacturers Manufacturers IGST

Dealers Dealers

CGST /
VAT
SGST

Customer Customer
12
TAXES NOT GETTING SUBSUMED IN GST
Sales tax
on
Petroleum
Petroleum products limited to: products

Excise
duty on •Petroleum Crude
Petroleum Property
products •Diesel Tax

•Motor Spirit
•Natural Gas
Excise
duty on
•Aviation Turbine Fuel Stamp
Duty
Tobacco
products

Road Tax /
Vehicle
Tax
Basic
Customs
duty
Electricity
duty

Tobacco products are the only items which will be


taxed both under Excise as well as in GST 13
STEPS TOWARDS GST COMPLIANCE
1 • Determination of Taxable Event
2 • GST Registration
3 • Classification of Goods / Services & Rates
4 • Valuation of Supply
5 • Nature of GST - (CGST+SGST/UTGST) or (IGST)
6 • Point of Taxation
7 • ITC Entitlement (admissibility / restrictions)
8 • Payment of GST
9 • Filing of GST Returns (Monthly/Annual)
14
GST –
DETERMINATION OF
TAXABLE EVENT

15
TAXABLE EVENT
Trigger point for GST levy is “supply” of ‘goods’ and/or ‘services’
GST is generally levied when “supply” is made for –
• A consideration (exception apply)
• Business purpose

“Supply” includes: Schedule I: Cases where GST is payable even when no


• sale consideration is charged :
• transfer 1. Supplies between:
• licence (i) related persons and
• lease (ii) distinct persons (same legal entity with two
• rent different GST registrations)
• barter
• exchange  Inter-state Stock transfers involving same legal identity
• disposal  Inter-unit debits between two different registrations of
same legal entity
16
TYPE OF SUPPLIES
Taxable Supplies (ITC benefits allowed)
 Normal Supply: Supply of only single type of goods or service
• GST to be paid at the rate prescribed for the goods or service in question
 Composite Supply: Supply of two or more goods/services naturally bundled
together in ordinary course of business. For eg.
(i) Charger sold with Laptop;
(ii) Tool Box/Spare Tyre sold with vehicle
(iii) Loading/Unloading with Transportation
• GST to be paid at the rate prescribed for principal / main goods or service
under supply

 Mixed Supply: Two or more individual supplies of goods/services, made for a


single price. For eg. (i) Accessories sold with vehicle
(ii) Sale of goods along-with freight & insurance
• GST to be paid at the highest rate prescribed for any
of the goods/services involved in such supplies 17
TYPE OF SUPPLIES ….continued
 Non-taxable Supplies / Exempt Supplies (ITC benefits NOT
allowed)
 Non – Taxable Supplies are those where the supply itself is not taxable such
as -
 Supplies where no consideration is attached (other than Schedule I)
 Services provided by employees, Courts etc.(covered by Schedule III)
 Non – Taxable Supplies are those where Govt. can notify exemption

 Zero rated Supplies: (ITC benefits allowed)


 Applies only to Supplies made in course of Exports & to SEZ Developer/Unit

18
Taxability in GST – General provisions
 Supply should be of “goods” and / or “services”
 ‘goods’ means very kind of movable property (includes ‘actionable claim’
but excludes ‘money’ & ‘securities’). Actionable claim limited only to
“Lottery, Betting & Gambling”
 ‘services’ means anything other than ‘goods’ (excludes ‘money’ &
‘securities’). However, sale of immovable property (Land & Buildings for
which Occupancy Certificate is issued) not taxable in GST.

 Nature of a “supply” viz. whether “goods” or “services” is based on Schedule II


and the provisions concerned with “composite supply” and “mixed supply”;
 Free supplies made to unrelated person not taxable (however, ITC will have to
be reversed)

19
Taxability in GST – General provisions
 Aggregate turnover upto Rs. 20 lakh p.a. not taxable (North East States upto
Rs. 10 lakh) (Threshold limit will not apply in the case of inter-state and reverse
charge transactions)

 Option of Composition levy @2% (C+SGST) for manufacturers having


aggregate turnover up to Rs. 50 lakh p.a.; for Caterers/ restaurant @5% p.a.
and others @1% p.a. (apply GST definition for manufacture) – NO ITC

 Composition levy not available if the person is a service provider (except


caterers/ restaurant) or undertakes inter-state supply of goods

 Registered taxable person receiving goods or services from an


unregistered person will be required to pay GST on reverse charge basis

20
GST - Registration

21
Registration In GST
 Every Supplier to obtain GST Registration in the State from where he makes a
taxable supply of goods and/or services:
 In relation to “goods”: Registration is required to be taken in the State from
where such movement originate or where goods are located

 In relation to “services”: Registration needs to be obtained in respect of


“business premises” directly concerned with making the supply of service

 Transitional Provisions under GST, allows for migration / enrolment of existing


registrants into GST. (https://www.gst.gov.in/help/user-guide)

 Typically, a single GST Registration is required for all supplies made from a
particular State.

 Option available for Business Vertical-wise Registration


22
GST - Classification

23
GST–Classification (Goods Vs. Services)
Schedule II of Model GST Law
Goods Vs. Services

 Transactions where NO transfer of title


 Transactions involving transfer of title in
in goods is passed and only the “right to
goods at any point in time; transfer of
use” the goods is passed (Lease, License,
ownership in goods (Sale)
hire, rent etc.)
 Permanent transfer of business assets  Construction of complex, before getting
Occupation Certificate
 IT programming: development,
 Permanent transfer of IPR (trade mark)
upgradation, customisation
 Actionable Claims (limited to Lottery,  Treatment / Processes carried out on
Betting & Gambling activity) goods belonging to another (job-work)
 Works Contract in relation to
Immovable Property
24
Classification Of Supply
 Activities involving supply of both goods & services

 Servicing under Warranty (vehicles, equipment, machinery etc.)


– Intention of supply is to provide service.
– Single line item in invoice for “replaced parts” and “labour”. GST rate for
“service” to apply

 Maintenance/Repair activity on Customer’s vehicle


– Separate line item in invoice for “replaced parts” and “labour” and GST rates
to be applied separately

 Body Building Activity


– Intention is to fit body and billing for sale of body
– GST Rate of goods will apply

25
GST- Valuation

26
VALUATION IN GST

 GST is payable on “Transaction Value”, i.e., the Price paid for supplies
made to “unrelated person” and where “price is the sole consideration”

“Taxable Value” includes: “Taxable Value” excludes:


 Expenses incurred by the recipient  Discounts
on behalf of supplier  agreed upon prior to supply
 Reimbursable costs and
 Taxes / duties other than GST  indicated in the tax invoice
(such as Basic Customs duty)
 Post-supply discounts (not agreed
upon prior to supply)
 Subsidy received (other than from
Govt.)
 Interest for delayed payment of
consideration 27
VALUATION IN GST
 Treatment of Discounts & Incentives:

 Discounts given at the time of supply (indicated in the invoice)


deductible

 Discounts agreed prior to supply but given subsequently eligible


for deduction if -
• Tax burden is not passed on to customer
• Recipient has reduced ITC claimed to the same extent
• To be settled through Credit Note

28
GST – Nature of Tax
Intra-state – CGST plus SGST
Vs.
Inter-state - IGST

29
Nature Of Tax

 Supply of goods within the same State (Intra-State):


 Both CGST and SGST (UTGST) will have to be charged

 Supply of goods from one State to another (Inter-State):


 Only IGST will have to be charged

 Destination of goods / address of buyer important


 This helps to ascertain whether supply is intra-state or inter-state

 Stock-Transfers
 No Tax when the stock-transfers happen within a State
 IGST applies on inter-state stock transfers
30
Dual Nature Of Tax

Location of
Supplier & Place
of Supply in the
same state:
CGST+SGST

Location of Supplier
& Place of Supply in
different state:
IGST

31
GST - Input Tax Credit

32
INPUT TAX CREDIT
 Applicability:
 In general, ITC of GST & Compensation Cess paid on any goods or
services is allowed if used for business activities.

This is further subject to:


1. Restrictions & Negative List
2. Conditions & Documentation
3. Credit Matching & Reversal
4. Utilisation: Manner of set-off

33
ITC Entitlement
 Fundamentally ITC is not allowed for use in –
 Non-business activities / Non-taxable activities
 Supplies for charity, supplies put to use for private consumption
 Free of Cost material, Trade Samples
 Exempt supplies –as notified by Govt.
However supplies for Exports & SEZ are zero rated for which ITC is allowed

 Negative List – Items of which ITC not allowed


 Passenger Vehicles for company use
 Credit of GST paid on Transport Vehicles allowed
 Material/service used in construction of immovable property such as office /
Stockyard / show-room

 Services used by company employees: Catering, Club Membership;


Health & Fitness Centre, rent-a-cab
34
Conditions for ITC
 Basic Conditions to take Set-off of Input Tax Credit (ITC):
 Goods/Services should be for business purpose
 Possession of purchase Invoice
 Goods / Services should be actually received
 Supplier must have paid due GST and declared details in GST Returns

 ITC needs to be reversed with interest if payment is not made within 180 days
from date of invoice. Re-credit of ITC allowed if payment made subsequently.

 Time Limit: All ITC Claims to be settled before September month of next
financial year
35
CONDITIONS FOR TAKING ITC
 Other Limitations
 No credit of Capital Assets can be taken if Depreciation is claimed under
Income Tax

 ITC of Capital Goods:


• ITC of GST paid on Capital Goods is allowed at one go instead of two
instalments in CENVAT rules

 ITC required to be reversed if :


• Goods are lost/ stolen/ destroyed/ returned/gifted/ given as free sample
• Goods sent on “Job work” are not received within the prescribed time
frame (1year for raw material and 3 year for Capital goods)

36
MANNER OF ITC UTILISATION
Order in which ITC to be Utilised Restriction in ITC Utilisation
IGST
• IGST IGST CGST
IGST • CGST SGST

• SGST CGST CGST


IGST

CGST • CGST SGST SGST


• IGST IGST

CGST SGST
• SGST
SGST
• IGST GST Comp.
Cess
37
GSTN Portal

GSP = GST Suvidha Provider


Repository and a link between the ASP & GSTN
Portal
GSP Provider GSP Provider
ASP = Application Service Provider
Storage + Applications + Reconciliations
Convert data in prescribed formats for GSTN uploads,
Statutory Returns, Bank Transfers & reconcile
ASP Provider transactions between Suppliers & Buyers ASP Provider

ERP (SAP) = Transactional System


Channel Partners
Master data, Transaction Codes, Invoice Verifications,
reconciliations with GSTN and suppliers/dealers
Suppliers / Sellers Dealers / Buyers

38
GST – Time of Supply

39
TIME OF SUPPLY
(DATE BY WHICH TAX LIABILITY GETS TRIGGERED)

 For Outward Supplies (Forward Charge) - earliest of the following:


( For both, Goods & Services)
 Date of Invoice
 Where invoice is not issued for goods, date of removal / date of delivery
 Where invoice is not issued for service, date of completion of service
(invoice should be issued within 30 days from date of completion of
service
 Date of Receipt of Payment

 In case of advances, since date of receipt of payment is earlier, GST liability


gets triggered even if invoice is issued later. (No ITC available at this stage)
 GST will not apply on “deposits” unless it is adjusted against payments to be
received. 40
TIME OF SUPPLY
(DATE BY WHICH TAX LIABILITY GETS TRIGGERED)

 For Inward Supplies (Reverse Charge) - earliest of the following:


 For Goods: “Date of receipt of goods” or “Date of Payment” or “30 days
from the Date of Invoice”
 For Services: “Date of Payment” or “60 days from the Date of Invoice”.
(Where service provider is an “associate enterprises” located outside
India, it shall be the “Date of debit entry” in the books of accounts)

41
GST – Returns

42
RETURNS IN GST
Supplier Recipient
GSTR - 1 GSTR - 1
(Outward Supplies) (Outward Supplies)
To be filed by 10th of following month To be filed by 10th of following month

(Supplier can confirm


modified GSTR-1 by 17th)
GSTR - 1A GSTR - 2A
(Draft Outward) (Draft Inward)
Will be received by Supplier Will be received by Recipient
(Recipient can modify GSTR-2A)
GSTR - 2 GSTR - 2
(Inward Supplies) (Inward Supplies)
To be filed by 15th of following month To be filed by 15th of following month

GSTR - 3 GSTR - 3
(Monthly Return) (Monthly Return)
Pay due tax after set-off and file Pay due tax after set-off and file GSTR-3
GSTR-3 by 20th of following month by 20th of following month 43
RETURNS IN GST …..continued
• GSTR-4: Quarterly Return for compounding Taxable persons

• GSTR-5: Return for Non-Resident foreign taxable person

• GSTR-6: Return for Input Service Distributor

• GSTR-7: Return for authorities deducting tax at source (TDS)

• GSTR-8: Returns for e-commerce operator & Tax Collected at Source (TCS)

• GSTR-9: Annual Return [along-with Registration-wise (each State)


Reconciliation of GST Annual Return with Audited Accounts]

• GSTR-10: Final return (on closure of business)

44
Current Taxes
Vs.
GST
(Impact on Transactions)

45
Probable GST Rate Structure
Category Illustrative Items Current Tax (%) GST (%)
EXCISE VAT

Exempt Goods/
Agro Products NIL NIL NIL
Services
Partially
Tractor NIL 5.5 5
Exempted
Merit Goods Electric Vehicles 6 5.5 12

Standard Rate Commodities (e.g. steel) 12.5 5.5 18


Other than M.V. Parts, Small Cars, Two
12.5 13.5 28
Standard rate wheelers, CV
Luxury Goods Other Passenger Vehicles 32 13.5 28 + cess

Sin Goods Tobacco >65 >25 28 + cess + excise

Services 15 NIL 18
46
Proposed Indirect Tax Structure for Auto Industry
Current Scenario GST Scenario (Indicative)
Excise Duty CGST
1. Duty on Manufacturing 1. Tax on Supply of goods
2. Vehicles - Tax rate 12.63 % to 35.13 % 2. Single rate 14%, Cess on Luxury Cars could be 12%
3. Spares – 12.5% after abatement 3. Spares – 9%
State VAT SGST
1. Different states different rates 1. Uniform Rate across all States
2. Vehicles- Tax rate 12.5% to 15% 2. Single rate for Vehicles 14%
3. Some States have 5% rate for Spares 3. For Spares 9% across all States
Interstate Stock Transfer Interstate Stock Transfer
1. Excise duty as mentioned above 1. IGST @ 28% plus Cess could be 12% fully cenvatable
2. 0% VAT / CST against Form F 2. F Forms will be abolished
Interstate Sales / CST Interstate Sales
1. Excise duty as mentioned above 1. IGST @ 28% Plus Cess could be 12% full cenvatable
2. CST 2% against Form C 2. C forms Abolished
Service Tax Services GST
1. Service Tax @ 14.5% (0.5% Non Cenvatable) 1. CGST @ 9%
2. 15% wef 1st Jun, 2016 (with 05% Krushi Vikas 2. SGST @ 9%
Cess) 3. IGST 18%
47
4. Fully Cenvatable on inputs
GST benefits to M&M
 Cost of 2% CST on Ex-Plant Billing will not be there
 There will be NO cascading impact on VAT / CST Billing
 Similar Benefits On Purchase Side

 ITC on Warranty / Service Coupon MVML would now be available


 Service Tax on A&SP - ITC on MVML Products would be available
 Service Tax - Outbound Freight on MVML Prod would be NO Cost
 General Entry tax in MP, WB, Orissa & CG would Not be a Cost
 No Declarations (C & F Forms)
 Spares & Accessories will have lesser Taxes (GST Assumed 18%) 48
Tangible GST benefits to Dealers

 On Secondary Freight – Entire Service Tax amount

 On Showroom if rented Entire ST Amount

 On Godown Rent if rented – Entire ST Amount

 Service Tax on DMS Debits - Partial amount in the


ratio of Service / Sales

 Service Tax on Training Debits - Partial amount in the


ratio of Service / Sales

49
Tangible GST benefits to Dealers

 No C Forms to be Issued to M&M

 Seamless Tax Credit

 Better Fungibility

 Lesser Compliances and Govt. Queries

 No Ambiguity of Taxability - Service / Goods

50
Tax Impact on Sales (Supply ): Current Tax Vs. GST
Present Taxation GST
1. Transaction: Sale of Vehicles from factory
ED: Paid on Transaction Value (TV) i.e., Price • GST is payable on TV* (Price charged from
charged from Dealer. No Credit entitled to Dealer).
Dealer
• GST paid by Plant is allowed as ITC to the
VAT / CST: Payable on TV (price) + ED Dealer.
(VAT paid is entitled as ITC to the Dealer. CST
not available as ITC)
2. Transaction: Sale of Vehicles from RSO to Dealer

ED: Not payable. However, ED already paid • GST is payable on (RSO price to
on vehicle is considered as Cost Dealer)
VAT/CST: Payable on TV (RSO price to • GST paid by Plant is entitled as ITC to
Dealer) RSO

51
Tax Impact on Sales (Supply ): Current Tax Vs. GST
Present Taxation GST
3. Transaction: Sale of Vehicles by Dealer
ED: Not payable. However, ED already • GST is payable on TV (Price) charged by
paid on vehicle is considered as Cost Dealer to Customer
VAT/CST: Payable on TV (Dealer’s
price to Customer)

4. Other Billings by Dealer

RTO/ Octroi /Insurance recovery: • No GST if charged at actuals


• Any service fees charged subject to GST
• No Service Tax if charged at actuals
• Any service fees charged subject to Separate line item in invoice for charges
Service Tax recovered at actuals and for service fee
52
Tax Impact on Services : Current Tax Vs. GST

Present Taxation GST


7. Warranty Charges & Claim settlement
Sales of Vehicle Sales of Vehicle
• Both ED & VAT/CST is paid on Warranty charges • GST would be paid on Vehicle Price
(being part of price of vehicle), inclusive of Warranty Charges
Warranty Servicing Warranty Servicing
• Warranty Supplies (material plus service) is • GST as applicable to “service” would
subjected to VAT and Service Tax on respective be liable on Warranty Supplies !
value (material plus service)
• Dealer need to issue Tax Invoice &
report in GST Return for M&M to claim
credit

8. Extended Warranty / AMC Charges


• Service Tax is paid by M&M . • GST required to be paid as service .
53
Discounts & Incentives

Sr. Scheme Route GST Impact & Requirement


Deduction allowed. Need to indicate on
1 BNDP Discount (Price) Invoice
invoice.
Retail Billing Salesman • Deduction allowed only if –
2  Discount is agreed prior to supply
Monthly Schemes
 CN is linked to original invoice
3 Exchange/Loyalty  Dealer proportionately reduces ITC
availed earlier
4 Corporate/CSD Claims
CN  All CN to be closed within 6 month of
5 Rishtedari Bonus closure of FY

• Dealer’s books to reflect this as


6 Quarterly Incentive purchase-price reduction otherwise
GST implication to Dealer 54
Discounts & Incentives
Sr. Scheme Route GST Impact & Requirement
7 Finance subvention CN • Financer will charge GST (currently also
Service Tax is charged).
• Not to be considered as Cost as M&M entitled
to ITC
8 Government Incentive CN • Dealer will charge GST (currently also Service
Tax is charged).
• Not to be considered as Cost as M&M entitled
to ITC
 Identify the nature of scheme
 Check whether it is discount or incentives /commission
• Discounts should lead to reduction of product price. GST benefit can be
taken. M&M will issue Credit Note and Dealer to reduce ITC
• Incentives / commission which are not resulting into reduction of product price
will have GST impact . Dealer will be required to pay GST
55
Impact on Dealer working Capital

• Dealer working Capital requirement to go up in case of Explant products


which were earlier billed with 2% CST

• In case of RSO Products there will be marginal reduction

Explant Model RSO Model


Current Current
GST % Pricing % GST % Pricing %
Manufacturer Price (Assessable Value) 100,000 100,000 100,000 100,000
Excise duty / C+SGST 28,000 28.0% 13,625 13.6% 28,000 28.0% 13,625 13.6%
Basic + Excise 128,000 113,625 128,000 113,625
VAT @ 12.5% - 0.0% 2,273 2.0% - 0.0% 15,339 13.5%
Dealer Landed Price 128,000 115,898 128,000 128,964
Diff 12,103 (964)
% 10.4% -0.7%

Current Volume share 32.0% 68.0% 56


OTHER SIGINFICANT TOPICS
 Taxability in case of Composite Supply / Mixed Supply :

 Sale of Tool-Kit/Jack Assembly:


• Would be treated as a Composite supply (Tax rate for Vehicle to apply)

 Sale of Accessories by Dealer:


• Dealer should issue separate invoice, else it would be a mixed supply
attracting GST applicable to vehicle

 GST Payments on Advance consideration (Deposits not treated as


advance):
 Tax to be paid as per vehicles model to be billed
 Dealers release advance payment : Modelwise /Billing location wise
 ITC credit allowed only after vehicle billed and invoice issued.
 GST payable on Interest charged for Delayed payment of consideration :
 Tax to be paid linking with invoice tax rate. 57
OTHER SIGINFICANT TOPICS

 Sales Returns:
 M&M will issue credit note with tax component
 Dealer needs to reduce ITC, if availed
 Need to close such issues within 6 month from closure of FY

 Other topics:
 Taxi Refund / Sale to Handicap: No clarity whether exemption will
continue in GST
 Sales to Embassies/UNICEF: GST chargeable. Recipient can claim
refund from Govt.

58
Business Challenges
 Stocks held as on GST transition date
 Full credit if Duty paid invoice available (1 year bar apply)
 40% of GST paid available where no duty paid invoice available
 Plan for disposal of stocks over a year old
 Liability of GST on Payments received in Advance
 Challenges around determining GST Rate & Location of Supply
 Strategic planning for sales prior to GST Date (based on final rate of GST)
 Challenges in claiming taxi refunds
 Vehicles removed in pre-GST and registered as Taxi, no process prescribed to
claim refund
 GST liability on Interest charged for Delayed payment
 Tracking Dealer-wise, model-wise, invoice-wise liability

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Change in Business Processes
 Warranty Servicing:
 GST rate for “service” to apply
 Sales Returns in GST:
 M&M will issue credit note and Dealer needs to reduce ITC
 Need to close such issues within 6 months from closure of FY
 Incentives paid to Dealers:
 This will be considered as consideration towards Sales promotion. GST will
apply on Dealer. ITC will be available to M&M
 Sales to Embassy, UN Agencies, World Bank projects :
 GST will apply. Recipient to claim refund from Govt.
 Sale of Accessories by Dealer:
 Dealer to issue separate invoice and not club with Vehicle price

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SALES & DISTRIBUTION GST PREPAREDNESS
 Compare Current Tax Vs. GST
(Mapping as per GST law)

 CFT formed for consolidation of RSOs / Stock Yards


(AD): “Hub & Spoke” Model
 Realignment of distribution / logistic arrangement

 Communication / Training to Dealers (Roll out by 1st April)

 Contract Review & Management


(Amendments to be incorporated in Dealership agreements)

 IT Preparedness at M&M
 IT Preparedness at Dealer (to be reviewed)
Completed Completed 50%- 80% < 50%
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GST Transition – Action points
 GST Registration:
 Ensure all dealers are obtained provisional GST Registration

 IT system:
 Dealers IT system in place for GST Compliance. (GSP & ASP service
providers can be engaged for support in tax compliance activities)

 Closure of pending topics of current tax regime:


 Issuance of CST Declaration Forms
 Price difference related credit notes

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