Operating in Retail TAX  Know how Small Business Growth Summit  Bangalore, September 20, 2009
<ul><li>CHALLENGES </li></ul><ul><li>Applicability of tax to a specific transaction </li></ul><ul><ul><li>Combination of V...
Supply Chain  Manufacturer or productised service provider  Wholesaler / Aggregator (Company Outlet) Wholesaler / Aggregat...
Supply Chain  <ul><li>Refund of Additional Duty of Customs for resellers  </li></ul><ul><li>Inter-State Sale vs. stock tra...
Supply Chain  <ul><li>Forex implications on overseas brands supplying locally  </li></ul><ul><li>Concentration of profits ...
Managing the tax function  <ul><li>Corporate Governance  </li></ul><ul><li>Stake holders and social responsibility </li></...
Managing the tax function  <ul><li>The BIG bang  GST  </li></ul><ul><li>Empowered Committee reaffirms implementation effec...
Managing the tax function  <ul><li>What to look for? </li></ul><ul><li>Franchising / Retail </li></ul><ul><li>Reductions i...
thank you  [email_address]   +91 . 80 . 4151 6187 www.accretiveglobal.com “ An organization’s ability to learn, and transl...
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Transaction taxes for retail and franchising sectors

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

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Transaction taxes for retail and franchising sectors

  1. 1. Operating in Retail TAX Know how Small Business Growth Summit Bangalore, September 20, 2009
  2. 2. <ul><li>CHALLENGES </li></ul><ul><li>Applicability of tax to a specific transaction </li></ul><ul><ul><li>Combination of VAT / CST, Service Tax and Central Excise </li></ul></ul><ul><ul><li>Retrospective amendments </li></ul></ul><ul><li>Multi products and locations </li></ul><ul><ul><li>Warehousing & inventory policies </li></ul></ul><ul><ul><li>Differences in the state wise commodity tax laws </li></ul></ul><ul><li>Inflexible contracting terms </li></ul><ul><ul><li>Lead time for delivery </li></ul></ul><ul><ul><li>Supplier / customer demands </li></ul></ul><ul><li>OPPORTUNITIES </li></ul><ul><li>Increased NRV for the products </li></ul><ul><ul><li>Tax savings / mitigations for all players in the supply chain </li></ul></ul><ul><ul><li>Product more attractive to resellers </li></ul></ul><ul><li>Beat the competition </li></ul><ul><ul><li>Passing of tax benefits to end users </li></ul></ul><ul><li>Additional working capital </li></ul><ul><ul><li>Credits, exemptions, refunds etc throughout the supply chain </li></ul></ul>Tax Management
  3. 3. 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)
  4. 4. Supply Chain <ul><li>Refund of Additional Duty of Customs for resellers </li></ul><ul><li>Inter-State Sale vs. stock transfer </li></ul><ul><li>Franchising opportunities (utilise service tax credits) </li></ul><ul><li>Warehousing activities (utilise service tax credits) </li></ul><ul><li>Service tax on outward movements </li></ul><ul><li>Discounts vis-à-vis FOC </li></ul><ul><li>Storage vis-à-vis rent for exporters </li></ul>Opportunities Challenges
  5. 5. Supply Chain <ul><li>Forex implications on overseas brands supplying locally </li></ul><ul><li>Concentration of profits arising out of Service Tax / VAT credits </li></ul><ul><li>Service tax, Central Excise and VAT on the same transaction </li></ul><ul><li>Import of services and subsequent sale of goods </li></ul><ul><li>Factoring of tax cost into MRPs </li></ul><ul><li>Ineligible - VAT for service providers and Service Tax for resellers of goods </li></ul><ul><li>Utilisation of basic exemption threshold is not always beneficial </li></ul>Opportunities Challenges
  6. 6. Managing the tax function <ul><li>Corporate Governance </li></ul><ul><li>Stake holders and social responsibility </li></ul><ul><li>Right to access information </li></ul><ul><li>Business partners and public </li></ul><ul><li>Ignorance of law is no excuse </li></ul><ul><li>Presumption of culpable mental state </li></ul><ul><li>Steps initiated by the Govt. </li></ul><ul><li>Invoicing methodologies relaxed </li></ul><ul><li>Compliance made easy </li></ul><ul><li>Presumptive schemes of taxation </li></ul><ul><li>MRP based taxation </li></ul><ul><li>Self assessments </li></ul><ul><li>Self declarations in lieu of detailed scrutiny </li></ul><ul><li>GST… </li></ul>
  7. 7. Managing the tax function <ul><li>The BIG bang GST </li></ul><ul><li>Empowered Committee reaffirms implementation effective April 2010 </li></ul><ul><li>Concurrent Dual Structure – State and Central GST </li></ul><ul><li>All other transaction taxes except Customs to be abolished </li></ul><ul><li>Credits across the board – Services vis-à-vis goods </li></ul><ul><li>Inter-State disparities and trade wars to vanish </li></ul><ul><li>Cascading impact on taxation to be completely removed </li></ul><ul><li>Principle of neutrality – uniform % of tax regardless of supply chain distribution </li></ul><ul><li>Simplification – computation, documentation, compliances… </li></ul>
  8. 8. Managing the tax function <ul><li>What to look for? </li></ul><ul><li>Franchising / Retail </li></ul><ul><li>Reductions in the tax cost in the supply chain </li></ul><ul><li>Compliances further simplified </li></ul><ul><li>Complexities involved in multiple products / locations would be eliminated </li></ul><ul><li>Tax differences for goods and services to be wiped out </li></ul><ul><li>Inter-State disparities no longer a worry </li></ul>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
  9. 9. 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

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