1. GST- Transition and Implementation Issues

2. GST Transition: Impact on Business, People and Technology
Information Technology
Supply Chain
Internal/ Human Capital
GST
Procurement and Sales
Tax and finance
Transition Management
Business Policies
© 2017, Vaish Associates Advocates
Risk Technical Forum

3. GST Transition- Supply Chain, Procurement and Sales
Redesigning of supply chain purely on basis of logistics cost and customer service considerations
Review strategizes for consolidation/deconsolidation of warehouses, depot, branches, stock level etc.
To identify locations where any credit accumulation or credit leakages taking place
Supply Chain
Sales
Procurement
Impact of GST
Re-visit procurement strategy in view of credit, compliance and registration considerations
Contract negotiations consequent to increase in rates and credit considerations
Four- way match: PO vs. GRN vs. Invoice Vs. GSTN
Inclusion of appropriate GST clauses in the agreements
Change in tax rates and hence pricing- Effect on demand
Compliance with the Anti profiteering provisions-Remodelling of pricing strategies
Reviewing of the policy for advance receipts, debit note/credit note
Review of Discount policies and promotional schemes
© 2017, Vaish Associates Advocates

4. GST Transition- Tax and Finance, Internal/Human Capital
Tax And Finance
Internal/ Human Capital
Understanding the changed positions regarding taxability, availability and utilization of credit, exemptions etc.
To evaluate the GST impact on each level of supply-chain on as is business scenario and under certain assumed scenarios
Impact on cash flow, credit and budgeting
Tax impact on Inter-unit transactions between state borders
Impact of valuation rules on inter-company / inter-unit transactions
Understanding new compliances, documentation etc.
Impact of GST
Awareness sessions to appropriate people in IT, HR, accounting, tax etc.
Detailed training on new Standard operating procedures and changes effected
Organization restructuring-Management hierarchal/ reporting change
GST impact on corporate plans e.g. restructuring, new projects and transactions
Whether floating a new entity for separate business verticals;
© 2017, Vaish Associates Advocates

5. GST Transition-IT System
Master Data
System configuration
Transaction Processing
Reporting
Formats
Modifications to the current master data elements to ensure the GST related information is captured
Importance of Location of Supplier, HSN Codes and Assessee codes
Creation and blocking of G/L accounts
Modification to tax codes, tax determination rules, tax structures which are implied during sales and purchase transactions
Impact of GST
Modification to process for capturing of tax postings during sales and purchase transactions of goods and services
Realignment of processes of availing tax credits during various business transactions
Changes to existing business and taxation reports being generated from the ERP systems.
Creation of new reports to ensure compliance to GST related taxation norms
Changes in the format of invoice, credit/debit memo etc.
Changes in the formats for the PO, Open contracts etc.
Important to educate /train the end users on the process and system changes
© 2017, Vaish Associates Advocates

6. GST Transition- Internal Policies
Employee reimbursement policy
Inter Company transactions and Cross charges
Review of policy for tax accounting of employee expenses and reimbursements (eg Luxury taxes on Hotel bills, severance pay etc.
Review of policy for free gifts, canteen services etc. to the employees
Impact of GST
Review of policies related to Inter Company transactions, Cross charges and sharing of resources
Are the existing billing systems able to record intercompany GST transactions?
© 2017, Vaish Associates Advocates

7. Return of goods after appointed date Pending refund/rebate claims
Transition management in relation to compliance, documentation and awareness
Inventory Management
Transition of Credit
Return of goods after appointed date
Transition of Credit
Inventory management for existing stock on the appointed day:-
- Stock of Inputs in warehouse
- Stocks of inputs in transit
- Stocks of finished goods in warehouse
Impact on production plan and procurement plan
Migration of tax balances and open business transactions such as Open Purchase Orders, Open Sales Orders, etc. as per realigned business processes and enterprise structure
Pending proceedings of appeal, revision, review initiated before the appointed day to be disposed of in accordance with the provisions of the earlier law
Transition of most credit on input as well as finished goods allowed, provided last 6 months returns have been filed
Credit in last returns to become sacrosanct – Important to map all credits in returns of current regime
50% deferred credit of capital goods would be allowed- Item wise details to be provided
Details of goods sent out without payment of excise duty, on approval to be given separately for each location
40% credit on finished stocks, where no tax invoice available
- (of CGST) for the persons not registered earlier but registered under GST
- (of SGST) for goods taxed with Vat only at first point of sale
Sales return/ semi finished goods returned by Job workers post 6 months to be considered as supply, and also, the input tax credit enjoyed by the manufacturer will be liable to be recovered
Sales returns/ semi finished goods returned by Job workers prior to GST cut off date to be tracked separately
The pending refund claims will be disposed of in accordance with the provisions of the existing law- to be paid in cash
No refund of amount carried forward as credit under GST
Pending refund/rebate claims
Pending Proceedings
© 2017, Vaish Associates Advocates

8. Suggested Approach for GST Transition
Identifying key areas of impact across the value chain of operations
Assessing GST impact under various assumed business scenarios and finalizing business strategies
Reviewing Sales and Purchase contracts-Contract Negotiations- Training the Vendors
Change in business processes to align to the new tax regime
Update of various software solutions across all locations to meet the proposed structure
Preparedness for Transitional Period so as to avail transitional credit and not to lose any ITC
Training of all personnel on new processes
© 2017, Vaish Associates Advocates

9. Questions?