Globally active 2nd MIIM Exchange Platform Goods and Services Tax (GST) : Implications for the Mittelstand Rödl & Partner | Berlin I 27.09.2016
Legal & Tax Partner Germany
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27.09.2016
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Goods and Services Tax Status and Roadmap
Constitutional Amendement „GST Council“
GST Bill
Passing the Bill
1. April 2017 ?
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27.09.2016
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Goods and Services Tax Existing Tax Provisons – Summary
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VAT / CST
Basic Customs Duty
Excise Duty Additional Duties
Electricity Duty
Service GST Tax
Petroleum Tax
R&D Cess
Stamp Duty
Entry Tax / LBT
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Goods and Services Tax Overview
CGST Local supply of goods / services
Interstate supply of goods / services
GST
CGST SGST
IGST (i.e. CGST + SGST)
SGST Import of Goods
Import of Services
IGST (i.e. CGST + SGST)
BCD
IGST (i.e. CGST + SGST)
IGST
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27.09.2016
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Goods and Services Tax Input Tax Credit
IGST
IGST CGST SGST
CGST
IGST CGST
SGST
x
IGST
x
SGST
No credits adjustments between CGST and SGST
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27.09.2016
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Goods and Services Tax Input Tax Credit Procedural Requirements •
Possession of proper tax invoice
•
Receipt of underlying goods and/or services
•
Payment of GST by the supplier
•
Filing of GST return by the purchaser
The recipient must reduce his own tax risks for example through contractual provisions: “Supplier shall indemnify Purchaser against any claims, demands, […] resulting from the nonperformance or non-observation of any of his duties under the terms of the Agreement. Supplier shall especially indemnify Purchaser against any losses, damages, costs or any other losses of what so ever nature, if purchaser fails to avail the credit of GST applying on sales due to non-provision of a correct invoice or due to the failure or late deposit of GST by the supplier.”
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27.09.2016
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Goods and Services Tax Input Tax Credit Credit Claims
Match with GST deposited by the supplier
No Match
Default of purchaser
Other cases
Final Not rectified Pay GST GST Addition subsequent
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Rectified
27.09.2016
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Goods and Services Tax Input Tax Refund (Vorsteuererstattung) Requirements
•
Exporting Entity, or
•
Entity with “Inverted Duty Structure” - Meaning not clear (perhaps varying tax rates )
•
Refund application to be filed within two years
The System is similar to the existing CENVAT-Rules (Excise Duty / Service Tax). As compared to VAT no refund of input tax surplus.
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27.09.2016
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Goods and Services Tax Comparison Cost Structure - Current vs. GST • Example: Import of goods in current regime where basic custom duty (BCD) assumed at 10%
Rate of Duty (B) Total Cost for Indian Partner incl. Customs Duty (B1) Special Additional Duty (SAD) (B2) Subtotal for calculating SAD (B3+B5+B7+A) (B3) Education Cess (B4) Subtotal for calculating Education Cess (B7+B5) (B5) Additional Duty (AD) (B6) Sub Total for calculating AD & Cess of AD (A+B7) (B7) Basic Custom Duty ("BCD") (A) Customs Value
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INR
INR 129,44 4,98
4,00% 124,46 3,00%
0,71 23,75
12,50%
13,75 110,00
10,00%
10,00 100,00
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Goods and Services Tax Comparison Cost Structure - Current vs. GST • Example: Simulation import of goods in GST where basic custom duty (BCD) assumed at 10%
Rate of Duty (B) Total Cost incl. Customs Duty (B3) IGST (B2) Sub Total for calculating IGST (A+B1) (B1) Basic Custom Duty ("BCD")
INR 132,00 22,00
20,00% 110,00 10,00%
(A) Customs Value
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INR
10,00 100,00
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Goods and Services Tax Transitional Provisions Transition in the new tax law
•
New registrations for EXISTING taxpayers under GST as of now not required
•
Existing closing balance input (VAT / CENVAT) will be carried forward in GST
•
Existing litigations and processes to be assessed as per earlier law
Existing unutilised CENVAT-Credit (Excise Duty / Service Tax) will be coverted into CGST Credit. Adjustment against SGST not possible. May result in extra costs!
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27.09.2016
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Goods and Services Tax GST Ready ?
Transition
Contracts
Employee Training
IT Support
Business Impact
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Supply Chain
Cost Structure
27.09.2016
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THANK YOU
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27.09.2016
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Your Contacts Tillmann Ruppert Rödl Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft mbH Äußere Sulzbacher Straße 100 D – 90491 Nürnberg
Seema Bhardwaj Rödl Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft mbH Straße des 17. Juni 106 D- 10623 Berlin
Tel.: +49 (911) 9193 - 3125 Fax: +49 (911) 9193 - 9125 E-Mail:
[email protected]
Tel.: +49 (30) 810 795-53 Fax: +49 (30) 810 795-81 E-Mail:
[email protected]
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