Goods & Services Tax
Are you ready for the change?
GST is seen as the single most important tax reform initiative in India since independence. It is expected to provide a significant boost to investment and growth of the economy.
GST will have a significant impact on almost all aspects of businesses operating in the country, including the supply chain, sourcing and distribution decisions, inventory costs and cash flows, pricing policy, accounting and IT systems and transactions management.
In order to prepare for the GST, the companies need to understand its full implications, make and test the system changes and prepare a roadmap for a smooth transition to GST.
While the important dimensions of the new tax structure are being closely examined, the time is ripe for the businesses to start making preparations for a successful changeover and implementation.
What is GST?
The indirect tax regime in India is proposed to be replaced by a comprehensive dual GST with Central GST and State GST to be levied concurrently by the Centre and the States.
GST would replace most indirect taxes currently in place. The tax base is anticipated to be comprehensive, including virtually all goods and services, with minimum exemptions.
Following the destination principle, GST structure would include imports while exports would be zero-rated. For inter-State transactions in India, the State tax would apply in the State of destination as opposed to that of origin.
Full input credit system would operate in parallel for CGST and SGST, however, cross utilization of input tax credit between CGST and SGST would not be permitted.
GST will have a far reaching impact on virtually all aspects of businesses operating in the country, for instance, pricing of products and services; supply chain optimization; IT, accounting and tax compliance systems.
Ernst & Young can help.
Ernst & Young has been closely involved with the GST initiative through its Policy Advisory Group - a specialized team of experienced professionals, including former government officials - that advises businesses as well as governments on diverse policy issues. The Group helps businesses anticipate policy changes, assess their impact on their operations, and engage in a constructive dialogue with the relevant authorities for remedial measures to address any concerns.
The Group has diverse VAT and GST experience with extensive interactions with both the Centre and the State Governments in India and overseas engagements in jurisdictions such as Canada, China and European Union.
