Globally active. Legal & Tax Partner Germany. 2 nd MIIM Exchange Platform Goods and Services Tax (GST) : Implications for the Mittelstand

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1 Globally active 2 nd MIIM Exchange Platform Goods and Services Tax (GST) : Implications for the Mittelstand Rödl & Partner Berlin I Legal & Tax Partner Germany 1

2 Status and Roadmap Constitutional Amendement GST Council GST Bill Passing the Bill 1. April 2017? 2

3 Existing Tax Provisons Summary VAT / CST Basic Customs Duty Excise Duty Additional Duties Electricity Duty Service GSTTax Petroleum Tax R&D Cess Stamp Duty Entry Tax / LBT 3

4 Overview CGST Local supply of goods / services CGST SGST GST SGST Interstate supply of goods / services IGST (i.e. CGST + SGST) Import of Goods IGST (i.e. CGST + SGST) BCD Import of Services IGST (i.e. CGST + SGST) IGST 4

5 Input Tax Credit IGST CGST SGST IGST CGST SGST IGST CGST x IGST x SGST No credits adjustments between CGST and SGST 5

Input Tax Credit 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 The

6 Input Tax Credit 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 The recipient must reduce his own tax risks for example through contractual provisions: Supplier shall indemnify Purchaser against any claims, demands, [ ] resulting from the nonperformance 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. 6

7 Input Tax Credit Credit Claims Match with GST deposited by the supplier No Match Final Default of purchaser Other cases Not rectified Pay GST GST Addition subsequent Rectified 7

8 Input Tax Refund (Vorsteuererstattung) 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. 8

9 Comparison Cost Structure - Current vs. GST 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) Customs Value 100,00 9

10 Comparison Cost Structure - Current vs. GST Example: Simulation import of goods in GST where basic custom duty (BCD) assumed at 10% 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) Customs Value 100,00 10

11 Transitional Provisions 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! 11

12 GST Ready? Business Impact Supply Chain Cost Structure IT Support Contracts Employee Training Transition 12

13 THANK YOU 13

Your Contacts Tillmann Ruppert Rödl Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft mbh Äußere Sulzbacher Straße 100 D 90491 Nürnberg Tel.

Juni 106 D- 10623 Berlin Tel.: +49 (30) 810 795-53 Fax: +49 (30) 810 795-81 E-Mail: seema.bhardwaj@roedl.pro Jeder Einzelne zählt bei den Castellers und bei uns.

Sie veranschaulichen das Wachstum aus eigener Kraft, das Rödl & Partner zu dem gemacht hat, was es heute ist.

14 Your Contacts Tillmann Ruppert Rödl Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft mbh Äußere Sulzbacher Straße 100 D Nürnberg Tel.: +49 (911) Fax: +49 (911) tillmann.ruppert@roedl.pro Seema Bhardwaj Rödl Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft mbh Straße des 17. Juni 106 D Berlin Tel.: +49 (30) Fax: +49 (30) seema.bhardwaj@roedl.pro 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. 14

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