TGS

GST Rollout| Preparedness of GSTN

17 January 2017

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PwC

Table of Contents

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S. No. Particulars

1 GST - Overview

2 Compliance requirements under GST

3 Goods and Service Tax Network (GSTN)

4 GSTN – Ecosystem

5GSTN – Role in registration, return filing and payment of tax

6 GSP Ecosystem

7 Roadmap of GSTN

8 Challenges for GSTN

9 IT System – What should users do?

PwC

Discussion points

1. GST implementation deferred to a ‘realistic timeline’ of 1 July 2017

2. Revised GST laws to be discussed by GST Council in next meeting on 18 February 2017

3. Government to table CGSGT and IGST Bills in the upcoming Lok Sabha session of the Parliament starting from 9 March 2017

4. CGST and SGST laws to be the mirror copies, per the Council’s view

GST - Overview

14 June 2016

Draft Model GST Law released

(25 Chapters, 162 Sections)

15 Nov 2016

Copy of law sent to states for suggestions

26 Nov 2016

Revised Draft Model GST law

released

(27 Chapters, 197 Sections)

22-23 Dec 2016/ 3-4 Jan 2017/ 16 Jan 2017

Discussion on GST, IGST laws and compensation laws, and

approval of GST Council, resolution of issue of dual

control

GST Council Approved GST, IGST and

Compensation laws, Issue of dual control

apparently stands resolved

Release of revised law on CBEC website

Model law officially sent to state for

suggestionsRelease of law on

CBEC website

* Model GST law + GST Valuation Rules and IGST Law * Model GST law and IGST Law

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PwC

Compliance requirements under GST

4

Compliances

Registration

- Single registration for IGST/ SGST / CGST per State – Migration of existing registrations has already started

- Registration required in each State from where supplies made

Returns

- Minimum 3 returns per month per State

- Matching of returns

- Annual return – Reconciliation with financials

Refunds

- Allowed for exports, inverted duty structure etc

- No refund of accumulated credits

- 90% refund to be granted on provisional basis

Others

- Reconciliation of input tax credit availed with tax paid by the supplier

- Waybill - Power to prescribe documents for consignment of goods

- Statutory forms to be done away with

Meeting compliance requirements under GST would be an onerous task

PwC

Compliances under GST – Common Issues

5

Registration

•Registrations required in each State where there is a premise/ place of business connected to supply•No concept of centralized registration (as currently for service tax)•GSTIN to be State wise, PAN based 15-digit number

•ISD concept to continue for common services•IT system to be geared to record data for each registration and provide reports accordingly

Returns

•IT system should provide data for outward supplies on real time basis •IT system to be geared with GSTN so that details may be uploaded directly•State wise trial balance and profit and loss A/c may be required to provide reconciliation at time of submitting annual return

Payment

•Standardized single challan for CGST, SGST and IGST•Different accounting codes for various types of transactions•IT system should provide State wise data for payment of taxes

Input Tax Credit

•Important to have checks in the IT system to reconcile the details uploaded by vendor with the actual purchases•Loss of credit in case of vendor non compliance•Addition in output tax of recipient in case of discrepancy

PwC

Goods and Services Tax Network (GSTN)

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GSTN has been set up primarily to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the GST

GSTN doing backend for 20 States and 5 Union Territories; CBEC and rest 9 states are developing backend themselves

FAQ’s on enrollment under GST has been released

GSTN officially launched its website www.gst.gov.in for migration of existing registrants

GSTN has finalized 34 companies as GSPs

Prototype for returns and payments modules released for industry

PwC

GSTN Ecosystem

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• A common GST system will provide link to all State/UT Commercial Tax departments, Central Tax authorities, Taxpayers, Banks and other stakeholders;

• Taxpayers will interface with GST System via GST system portal or via GSP ecosystem provided by way of applications for activities such as Registration, Tax payments, Returns filing and other information exchange with GST core system;

• Information captured will be shared with the respective State/Union Territories (UTs) and Centre (CBEC) for further processing;

• State/UTs and Centre will process the information and re-transmit the processed information to GST system which will be available for Taxpayers for viewing various MIS reports via their choice of applications

Uploading of details of sales to dealers/ Filing of periodic returns

Company

GSTN IT system

VendorsDistributor

Network of Banks

State / Centre

Database

Uploading details of sales to Company

Automatic linking of details of purchase

from vendors for credit

Automatic linking of details of purchase

from Company for credit

Payment of GST in cash

Automatic uploading of challan details for GST paid in cash

Details of GST and credits

PwC

GSTN – Role in registration, return filing and payment of tax

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Registration Process

Return ProcessInput Credit Verification -

Invoice MatchingIGST Settlement

GST Common Portal

To act as pass through portal between tax authorities and GST dealers where dealers would register, file return and make tax payments

To forward the registration, return and payment information to Centre and respective State tax authorities for further action

Input Tax Credit (ITC) matching

To provide dealer ledger wherein GST dealers would be able to view consolidated summary of their tax liability, payment history, ITC entitlement and utilization (set off against tax liability)

To process return information for IGST settlement between Centre and States

• Enrolment at GST Common Portal

• Online filling up of Registration form

• Approval from both State & Centre

• Issue of Registration Certificate (GSTIN)

• Upload of invoice level sales / purchase statement

• Calculation of tax liability and payment of tax

• Filing of return

• Forwarding of Return information to State / Centre

• Self assessment of liability for one return period

• Matching of invoice

• Communication on discrepancy sent to dealers

• Reversal of ITC ( Input Tax Credit) in the next return

• Calculation of IGST settlement amount based on cross-utilization of credit by dealers

• Intimation of successful settlement to tax authorities.

PwC

GSTN – Role in registration, return filing and payment of tax…Contd.

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Payment

Under GST, all challans will have to be prepared by taxpayers on the GST portal only.

This has been done to ensure that bank tellers do not enter wrong TIN number from hand written challans;

Post generation of challan, the taxpayer would have two options i.e. either to pay tax online or over the counter at the bank;

The GST portal will prepare a summary of all payment confirmations received by it from Banks and share the same with RBI and accounting authorities for reconciliation.

PwC

Roadmap - GSTN

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Steps to be undertaken

- Migration process to be completed for remaining registrants

- Finalisation of GSTN system interface

- Finalisation of GSTN system interface for States

- Finalisation of GSTN portalGSTN launched November 2016

Steps completed

July 2017 ?

- Registration migration process started –Approximately 42%* registrants have enrolled

- Prototypes released for returns and payment - Feedbacks obtained

- 34 GST Suvidha Providers selected – on-boarding process initiated

- User Acceptance testing has been started

* Source: Average data as per information available in public domain (www.gst.gov.in)

PwC

Possible challenges for GSTN

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Changes in Model GST Law and Rules - Since software development takes time, constant changes in law and rules delay the process

Building back-end infrastructure for 25 States to adopt to State GST laws a complex task

Issues faced at the time of GST enrolment of existing registrants (such as migration of centralised Service tax registrants having centralised Service tax registration and having presence in more than 1 States)

Training - Readiness/ Integration of different stakeholders such as government, banks, officers ICEGATE, etc and training them to use the newly built GSTN system

Resolution of dual control issue – Important to determine the mechanism to be adopted to provide assessee information to Centre and State authorities (Resolved in last meeting)

Use of Cutting Edge Technologies - System built with cutting edge technologies like open API, Big Data, distributed computing etc (Lack of precedence)

PwC

Possible challenges for GSTN

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Maintenance of data confidentiality – Secure data access

Ensure that the system prepared is efficient and robust enough to take the load of humongous increase in number of taxpayers

Integration Points - Integration with State systems, CBEC system, banks, Aadhar, MCA, GSPs etc. is a big task. GST to be successful only if the ecosystem is functioning properly

Management of testing life cycles – Difficult due to limited timelines

Robust call center - Building a robust call center to manage the queries of around 1 crore tax payers and tax authorities would be quite challenging

PwC

Output

Generate GST compliant output:

• PO, GRN, Sales invoices, STN

• Tax and credit reports for tax filling

• Data reports based on return formats

IT System – what should users do?

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Input

Capture data at source:

• Vendor and customer details

• Product master and tax codes

• Link PO to Purchases and SO to Sales

Processing

•GST registration levels – State wise registrations to be capturedTax Registration

•Define master data related to Company’s registrations, vendors, customers, charge lines etc.

Master Data

•Tax data requirements for supplies and procurementsTax Configuration

•Automation of CGST , SGST and IGST computationsTax Computation

•Capture state-wise ITC separately for CGST, SGST and IGST GST ITC

•ITC utilization against payable for CGST, SGST , IGSTITC Utilization

• Documentation to be driven through IT systems to capture details for GST returns

Documentation

• Tax return compatible reportsReporting

• Smooth transition strategy to capture and report data from both current and GST regime

Parallel reporting of data

Changes required in IT system

- Users can opt for applications developed by GSP’s

PwC

Government and GSTN confident of readiness of GST system

Thank You!

Discussion Points

This presentation has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this presentation without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this presentation, and, to the extent permitted by law, PwC , its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refrainingto act, in reliance on the information contained in this presentation or for any decision based on it. Without prior permission of PwC , the contents of this presentation may not be quoted in whole or in part or otherwise referred to in any documents.

© 2016 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited (a limited liability company in India), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

PwC

Overall construct of GSTN dashboard

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Dashboard

Provides insight of dashboard

• Ledger balances

• Dealer profile

• Mismatch reports

• Summary

• Add/ Edit details

• Amend details

Returns

GSTR 1, 2 and 3

Dashboard also provides:• Details of receipt of notices • Quick links – History of amendment,

Update Profile, Change Password, Register/ Update DSC and Update Business Logo

• Separate tabs for services, Notifications & Circulars, Acts & Rules and Downloads

• Services offered – Registration, Ledgers, Returns, Payments and User services

PwC

GSP Ecosystem

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• GSTN to create an ecosystem of service providers viz GST Suvidha Provider (GSP) providing innovative solutions (Portal, Mobile App, Enriched API) either themselves or through its third party partners for making tax filing more easy and convenient to tax payers.

• GSTN envisages a very important role of GSPs in making GST rollout easy and convenient for tax payers.

• 34 Companies have qualified as GSPs in Phase I

• GSPs to provide tax payers with various services like invoice upload, tax payments, return filing, reconciliations, etc to maintain their individual business ledgers (sales ledger and purchase ledger) and other value added services around the same