A Glance at future – Post GST Supply Chain Strategies We are Hellmann July CONFIDENTIAL – For Internal circulation only

GST Regime – Wish v/s Reality What India Fancied Since 2006 We wanted a bright sun rise of GST Regime which will save us from the clutches of the current complex indirect tax regime. What India May Get in 2016 (2017?) We may end up getting a half-cooked, complex GST regime which would open several areas for litigation. Watch out for a very cloudy sun rise!!

GST & Distribution Networks Fragmented Distribution networks heavily dependent on the current indirect tax regime. May attempt to design distribution networks based on: 1.Time to Market (TTM) 2.Cost to Market (CTM) Main Challenges Time Lines: April ?? GST Council GST Network (GSTN) NIPFP proposed a GST rate of 24% (??) STN to be taxed. Inventory in the WH would be tax paid. Place of Supply Rules: Most Critical 1% additional tax on Inter State movement National Institute of Public Finance and Policy (NIPFP)

GST & Distribution Networks By When? May attempt to design distribution networks based on: 1.Time to Market (TTM) 2.Cost to Market (CTM)  Litigations  Representations  Clarifications On Several unanswered questions

GST Council and IT Infrastructure GST Network (GSTN)GST Council  GST Council to be constituted by the President of India within 60 days of passing of the Constitution (122 nd Amendment) Act, 2014  GST Council to make recommendations on following:  Taxes to be subsumed  Levy of GST, Model Law, Place of Supply Rules  Threshold Limit and list of exempted goods and services  Rates of GST (floor rates, special rates, etc.)  Apportionment of IGST  Special provisions for specific states  Every decision of GST Council shall require a majority of 3/4 th of total votes of members present, where 1/3 rd votes to be of Central Government and 2/3 rd of State Government.  Formulation of GSTN i.e. Goods and Services Tax Network  A SPV is set up to create enabling environment for smooth introduction of GST  GSTN-SPV will provide IT infrastructure and services to various stakeholders including the Centre and the States  GSTN-SPV proposes to invite tenders for IT handling, etc.  Good progress is being made in:  IT Architecture  IT Setup  Linking the present IT system to requirements under new systems  Pilot projects Source: KPMG

The Way Forward  Wait and Watch – for the final GST legislature.  Detailed study (afresh) of GST impact on the company business based on final legislature  Devising new business models for more efficient shift to GST regime  Implementation of GST Models through out the company based on final legislation  GST compliant accounting system  GST compliant documentation  Educate/ train company professionals for proper implementation of GST  Proper Guidance and Supervision of GST implementation process

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