1. All rights reserved All rights reserved | Preliminary & Tentative Ease of Doing Business in the GST Regime July 17, 2015 New Delhi Rajeev Dimri, Co-Chairman of Taxation Committee, and Partner, BMR & Associates LLP Federation of Indian Chambers of Commerce and Industry

2. All rights reserved All rights reserved | Preliminary & Tentative | 2 WHAT GST BRINGS IN? New concepts State level taxation of services Common for goods and services Re-define taxable event New tax legislations GST – New tax system New set of compliance

3. All rights reserved All rights reserved | Preliminary & Tentative | 3 WHAT GST BRINGS IN? Paradigm shift in present tax system Single largest economic reform till date… …emergence of common market

4. All rights reserved All rights reserved | Preliminary & Tentative | 4 GST REGIME - TAXPAYER EXPECTATIONS Consistency in key provisions across legislations Taxpayer oriented approach of the authorities Dedicated cell providing overall guidance Robust dispute resolution mechanism Greater emphasis on simplified refund process Smooth transitioning to GST

5. All rights reserved All rights reserved | Preliminary & Tentative | 5 HARMONIZED LEGISLATIONS Consistency in tax provisions  Key definitions e.g. supply, taxable event, charging provision  Threshold limit – common under CGST and SGST  HSN based classification of goods  Common list of exemptions  Valuation methodology – inclusion and exclusions to be clearly defined  Input credits 1 1 2 2 Record maintenance  One invoice format for billing across India – no State specific requirements  Synchronized record maintenance requirement

6. All rights reserved All rights reserved | Preliminary & Tentative | 6 HARMONIZED LEGISLATIONS 3 3 Compliances  Centralised portal for all compliances  Standardize format for statutory filings viz. periodic return across all States  One common return for CGST and SGST  Consistent timelines for tax payment and return filings

7. All rights reserved All rights reserved | Preliminary & Tentative | 7 INPUT CREDITS – WIDER COVERAGE Wider ambit of credit eligibility – credit on business related expenses should be allowed Restrictions to be carved out on selective basis and clearly defined No differentiation between inputs and capital goods Common centralized pool for CGST and IGST Common criteria for credit eligibility across all States Unutilized credit as at year end – option to taxpayer to carry forward credit or to claim refund Key objective of free flow of credit should be achieved

8. All rights reserved All rights reserved | Preliminary & Tentative | 8 TRANSACTION OUT OF GST PURVIEW While the output business transaction may not fall under GST, all inputs are likely to attract GST Credit eligibility and treatment of such credit should be clearly defined viz, −Whether credit be available or not −Whether such credit can be utilised against the GST liability of other business transactions −Whether refund of such credits shall be available Taxability – Taxability of petroleum products should be clearly defined

9. All rights reserved All rights reserved | Preliminary & Tentative | 9 EXPERT GUIDANCE CELL Key requirements  One Central GST cell to address queries of taxpayer  Handholding assistance  Clarifications on interpretative issues with statutory guidance  Proactive review of clarifications  Compilation of queries and responses on website  Time bound response to taxpayers representations  Circulation of key tax position to taxpayers and field formation

10. All rights reserved All rights reserved | Preliminary & Tentative | 10 CHANGE IN LAW Lead time – 3 months lead time should be allowed for introduction of any amendment Explanatory note – Clear explanation explaining rationale behind the amendment Will help the taxpayer in proper implementation of the amendment Two step consultation to be followed −Draft amendment should be issued for public comments −Review of the suggestions made by the industry before final amendment in law

11. All rights reserved All rights reserved | Preliminary & Tentative | 11 DISPUTE RESOLUTION PROCESS …Emergence of common market  Common adjudication and appellate proceeding under CGST and SGST −Taxpayer should be allowed to deal with one tax authority for adjudication −CG and SG should not take different views on common matter −For tax litigation, one common appeal for CGST and SGST should be filed  Limitation −Inherent right of the taxpayer −Even if no limitation is prescribed, a reasonable period should be considered −Proceedings in a financial year must close within a defined period

12. All rights reserved All rights reserved | Preliminary & Tentative | 12 DISPUTE RESOLUTION PROCESS Single largest Indirect tax regime till date… …Emergence of common market  Time bound adjudication provisions −Clear timelines for issuance of SCN −Non-passing of order within prescribed time line should result in dropping of proceedings  Restrictive disputes - No SCN disregarding circular or clarification by Expert Guidance Cell  Review panel – for issuance of SCNs beyond a specified monetary demand  Settlement Commission – to be made available to the taxpayer at any stage  Advance Ruling −Increased approachability −Increase in number of Advance Ruling forums

13. All rights reserved All rights reserved | Preliminary & Tentative | 13 AUDITS AND INVESTIGATIONS Avoidance of repetitive request for information Information request for records/ documents prescribed under law or standard business reports Mandatory issuance of Audit report upon completion Clear provisions to prevent multiple audits by different agencies Sufficient time to taxpayer for preparation Streamline information requirements – information available with Authorities not to be asked again viz. returns

14. All rights reserved All rights reserved | Preliminary & Tentative | 14 PENALTIES AND REFUNDS Deferral of penalty - provisions for a period of 5 years Penalties should initially be restricted to mala fide tax evasion cases Refund and duty drawback - Key device for claiming exemptions Fast tracking and expeditious disbursement of refund claims Parity in rate of interest payable in case of delay in refund claims Frequent updating of details of pendency of refund claims across all jurisdictions Automated refund process – All filings should be done online and acknowledgement should be displayed on website

15. All rights reserved All rights reserved | Preliminary & Tentative | 15 SMOOTH TRANSITIONING Taxability of ongoing services – where part performance takes place before GST 1 1 2 2 Treatment of advance invoices (work to be performed under GST), unpaid invoices etc Credit transitioning −Clarity on tracking of input credits allowed to be transitioned −Central taxes to be transitioned to GGST/ IGST pool −State credits to be transitioned to SGST credit pool 3 3 4 4 Status of pending litigations, litigation initiated under GST for the issues arising under current regime Common date for transitioning to CGST, SGST and IGST 5 5 Sufficient lead time to switch over to new regime

16. All rights reserved All rights reserved | Preliminary & Tentative Thank You