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Presentation on transaction taxes for retail or franchising sector

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The presentation made at the FRO 2009 - Small Business Growth Summit on Sept 20, 2009 at Bangalore

The presentation made at the FRO 2009 - Small Business Growth Summit on Sept 20, 2009 at Bangalore

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Presentation on transaction taxes for retail or franchising sector Presentation on transaction taxes for retail or franchising sector Presentation Transcript

  • Operating in Retail TAX Know how Small Business Growth Summit Bangalore, September 20, 2009
    • CHALLENGES
    • Applicability of tax to a specific transaction
      • Combination of VAT / CST, Service Tax and Central Excise
      • Retrospective amendments
    • Multi products and locations
      • Warehousing & inventory policies
      • Differences in the state wise commodity tax laws
    • Inflexible contracting terms
      • Lead time for delivery
      • Supplier / customer demands
    • OPPORTUNITIES
    • Increased NRV for the products
      • Tax savings / mitigations for all players in the supply chain
      • Product more attractive to resellers
    • Beat the competition
      • Passing of tax benefits to end users
    • Additional working capital
      • Credits, exemptions, refunds etc throughout the supply chain
    Tax Management
  • Supply Chain Manufacturer or productised service provider Wholesaler / Aggregator (Company Outlet) Wholesaler / Aggregator (External Partner) E N D C O S U M E R S Retailer (External Partner) Retailer (Franchisee Outlet) Retailer (Company Outlet) Retailer (Wholesaler’s Outlet) Retailer (Consignment Sales) Retailer (Agency Relationship)
  • Supply Chain
    • Refund of Additional Duty of Customs for resellers
    • Inter-State Sale vs. stock transfer
    • Franchising opportunities (utilise service tax credits)
    • Warehousing activities (utilise service tax credits)
    • Service tax on outward movements
    • Discounts vis-à-vis FOC
    • Storage vis-à-vis rent for exporters
    Opportunities Challenges
  • Supply Chain
    • Forex implications on overseas brands supplying locally
    • Concentration of profits arising out of Service Tax / VAT credits
    • Service tax, Central Excise and VAT on the same transaction
    • Import of services and subsequent sale of goods
    • Factoring of tax cost into MRPs
    • Ineligible - VAT for service providers and Service Tax for resellers of goods
    • Utilisation of basic exemption threshold is not always beneficial
    Opportunities Challenges
  • Managing the tax function
    • Corporate Governance
    • Stake holders and social responsibility
    • Right to access information
    • Business partners and public
    • Ignorance of law is no excuse
    • Presumption of culpable mental state
    • Steps initiated by the Govt.
    • Invoicing methodologies relaxed
    • Compliance made easy
    • Presumptive schemes of taxation
    • MRP based taxation
    • Self assessments
    • Self declarations in lieu of detailed scrutiny
    • GST…
  • Managing the tax function
    • The BIG bang GST
    • Empowered Committee reaffirms implementation effective April 2010
    • Concurrent Dual Structure – State and Central GST
    • All other transaction taxes except Customs to be abolished
    • Credits across the board – Services vis-à-vis goods
    • Inter-State disparities and trade wars to vanish
    • Cascading impact on taxation to be completely removed
    • Principle of neutrality – uniform % of tax regardless of supply chain distribution
    • Simplification – computation, documentation, compliances…
    • What to look for?
    • Franchising / Retail
    • Reductions in the tax cost in the supply chain
    • Compliances further simplified
    • Complexities involved in multiple products / locations would be eliminated
    • Tax differences for goods and services to be wiped out
    • Inter-State disparities no longer a worry
    Look beyond… Franchising / Retail Unified account monitoring - Extension of tax support function to the franchisee / retailers Corporate Responsibility, Uniformity in positions, Economies of scale Demand for centralised compliance
  • thank you [email_address] +91 . 80 . 4151 6187 www.accretiveglobal.com “ An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage” - Jack Welch