This document outlines some of the key impact areas of implementing the Goods and Services Tax (GST) in India. It notes that GST will create a uniform tax rate nationwide and remove exemptions, cascading taxes, and barriers to interstate trade. This is expected to lead to supply chain reengineering, consolidation of warehouses, and flexibility in sourcing. It also may cause some initial inflation and working capital strains. The document provides an example of how prices will be lower after GST compared to the pre-GST tax regime due to full tax credits being available. Finally, it states that GST will significantly impact many business functions and processes across every industry.

1. 1
GST KEY IMPACT AREAS

2. 2
SIGNIFICANT IMPACT
 Uniform GST rate pan-India and creation of common national market.
 Removal of exemptions (Product/location specific) allows seamless tax credit.
 Geographic distribution of production base
 Removal of Cascading effect of indirect taxes
 Potential for fresh capitalization in Service Sector in view of removal VAT/CST cost.
 Impending supply chain re-engineering.
 Consolidation of Branches/Depots/WH (tax-induced) into Mother warehouses to
rationalize costs
 Potential up-turn of inflationary trend, initially
 Sourcing and Vendor management.
 Removal of CST, a cost – Flexibility to procure inter-state.
 Higher GST rate, especially goods falling under the consumption basket of poor.
 Working capital strains due to up-front payment of GST

3. 3
SIGNIFICANT IMPACT
 Export Competitiveness - Potential increase of 10 to 14%
 No challenges associated with collection of Form-F, C, etc. and costs.
 Creditability of SAD/CVD on trading – Value addition to suffer GST.
 Petroleum products to continue under ED/VAT till inclusion in GST – non-creditable.
 Removal of check-post/barriers – ease of movement and logistics cost reduction.
 ERP Tax Engine require significant architectural changes
 Significant migration exercise - Localization and Customization
 Inter-state supplies and IGST
 Inter-state Procurement and tax credits.
 Dealer registration under Central Excise to transition to GST on supplies.
 Customer and Vendor master updation – State-wise, Commodity-GST rate wise;
 Parallel running of ED/VAT for Petro-products
 Reports, Credit matching, Returns and Reconciliations

4. 4
PRE-GST TAX REGIME –PRICE EFFECT
Manufacturer
Cost Price- Rs.1,000
VAT@10%
Selling price- Rs.1,100
Wholesaler
Buying price-Rs.1,000
Value added-Rs.900
CST@12%@ (without C
Form)
Selling price- Rs.2,128
Retailer
• Buying price-Rs.2,128
• Value added-
Rs.425.60
• VAT @15%
• Selling price-
Rs.2,936.64
Buyer price- Rs.2,936.64
VAT is available for credit for wholesaler . CST is absorbed as cost in hands of retailer

5. 5
POST-GST TAX REGIME –PRICE EFFECT
Manufacturer
Cost Price-
Rs.1,000
GST@10%
(CGST+SGST)
Selling price-
Rs.1,100
Wholesaler
Buying price-
Rs.1,000
Value added-Rs.900
IGST@10%@
Selling price-
Rs.2,090
Retailer
• Buying price-Rs.2,090
• Value added-Rs.418
• GST @10%
• Selling price-
Rs.2,758.80
Buyer price- Rs.2,758.80
GST is available for credit for wholesaler and retailer

6. 6
OVERALL …
Procurement Supply Chain Accounting/
Costing
Logistics
Training Compliances IT Systems Working capital
IT Systems
Training &
Communication
Compliance
Requirements
Tax
Management
GST touches every function and every
industry