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1© Rödl & Partner 27.09.2016
Globally active
Legal & Tax Partner Germany
2nd MIIM Exchange Platform
Goods and Services Tax (GST) : Implications for the Mittelstand
Rödl & Partner | Berlin I 27.09.2016
2© Rödl & Partner 27.09.2016
Constitutional Amendement
„GST
Council“
GST Bill
Passing theBill
1. April 2017
?
Goods and Services TaxStatus and Roadmap
3© Rödl & Partner 27.09.2016
Basic Customs DutyExcise Duty
Additional DutiesVAT / CST
Service Tax Petroleum TaxElectricity Duty
Stamp DutyEntry Tax
/ LBTR&D Cess
GST
Goods and Services TaxExisting Tax Provisons – Summary
4© Rödl & Partner 27.09.2016
CGST
IGST
SGST
Local supply of
goods / services
CGST
SGST
IGST (i.e. CGST + SGST)Interstate supply
of goods / services
IGST (i.e. CGST + SGST)
BCDImport of Goods
GST
IGST (i.e. CGST + SGST)Import of Services
Goods and Services TaxOverview
5© Rödl & Partner 27.09.2016
IGST
IGST CGST SGST
CGST
IGST CGST x
SGST
IGST x SGST
No credits adjustments between CGST and SGST
Goods and Services TaxInput Tax Credit
6© Rödl & Partner 27.09.2016
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
“Supplier shall indemnify Purchaser against any claims, demands, […] resulting from the non-
performance 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.”
The recipient must reduce his own tax risks for example through contractual provisions:
Goods and Services TaxInput Tax Credit
7© Rödl & Partner 27.09.2016
Credit Claims
Match with GST
deposited by the supplierNo Match
Default of
purchaserOther cases
Final
Not rectified
RectifiedGST Addition
Pay GST
subsequent
Goods and Services TaxInput Tax Credit
8© Rödl & Partner 27.09.2016
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.
Goods and Services TaxInput Tax Refund (Vorsteuererstattung)
9© Rödl & Partner 27.09.2016
• Example: Import of goods in current regime where basic custom duty (BCD) assumed at 10%
Rate of Duty INR INR
(B) Total Cost for Indian Partner incl. Customs Duty 129,44
(B1) Special Additional Duty (SAD) 4,00% 4,98
(B2) Subtotal for calculating SAD (B3+B5+B7+A) 124,46
(B3) Education Cess 3,00% 0,71
(B4) Subtotal for calculating Education Cess (B7+B5) 23,75
(B5) Additional Duty (AD) 12,50% 13,75
(B6) Sub Total for calculating AD & Cess of AD (A+B7) 110,00
(B7) Basic Custom Duty ("BCD") 10,00% 10,00
(A) 100,00Customs Value
Goods and Services TaxComparison Cost Structure - Current vs. GST
10© Rödl & Partner 27.09.2016
• Example: Simulation import of goods in GST where basic custom duty (BCD) assumed at 10%
Goods and Services TaxComparison Cost Structure - Current vs. GST
Rate of Duty INR INR
(B) Total Cost incl. Customs Duty 132,00
(B3) IGST 20,00% 22,00
(B2) Sub Total for calculating IGST (A+B1) 110,00
(B1) Basic Custom Duty ("BCD") 10,00% 10,00
(A) 100,00Customs Value
11© Rödl & Partner 27.09.2016
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!
Goods and Services TaxTransitional Provisions
12© Rödl & Partner 27.09.2016
Business Impact
Supply Chain
Cost Structure
IT Support
Contracts
Employee Training
Transition
Goods and Services TaxGST Ready ?
13© Rödl & Partner 27.09.2016
THANK YOU
14© Rödl & Partner 27.09.2016
„Jeder Einzelne zählt“ – bei den Castellers und bei uns.
Menschentürme symbolisieren in einzigartiger Weise die Unternehmenskultur von Rödl & Partner. Sie verkörpern unsere Philosophie von
Zusammenhalt, Gleichgewicht, Mut und Mannschaftsgeist. Sie veranschaulichen das Wachstum aus eigener Kraft, das Rödl & Partner zu
dem gemacht hat, was es heute ist. „Força, Equilibri, Valor i Seny“ (Kraft, Balance, Mut und Verstand) ist der katalanische Wahlspruch aller
Castellers und beschreibt deren Grundwerte sehr pointiert. Das gefällt uns und entspricht unserer Mentalität. Deshalb ist Rödl & Partner eine
Kooperation mit Repräsentanten dieser langen Tradition der Menschentürme, den Castellers de Barcelona, im Mai 2011 eingegangen. Der
Verein aus Barcelona verkörpert neben vielen anderen dieses immaterielle Kulturerbe.
Your Contacts
Seema Bhardwaj
Rödl Rechtsanwaltsgesellschaft
Steuerberatungsgesellschaft mbH
Straße des 17. Juni 106
D- 10623 Berlin
Tel.: +49 (30) 810 795-53
Fax: +49 (30) 810 795-81
E-Mail: [email protected]
Tillmann Ruppert
Rödl Rechtsanwaltsgesellschaft
Steuerberatungsgesellschaft mbH
Äußere Sulzbacher Straße 100
D – 90491 Nürnberg
Tel.: +49 (911) 9193 - 3125
Fax: +49 (911) 9193 - 9125
E-Mail: [email protected]
