Transition to GST: A year into the system

Transition to GST: A year into the system

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  30 June 2018 Transitionto GST: A year into the system
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  Transition to GST:A year into the system 1 Contents Highlights 21. Overview 32. 2.1 Employment and Demand Generation 3 2.2 Overview Index 4 Detailed Feedback 53. 3.1 Valuation 5 3.2 GST Rates and Classification 5 3.3 Impact of GST on Prices 6 3.4 Refunds 6 3.5 Impact of GST on Logistics, Transportation and Warehousing 6 3.6 Impact of Introduction of E-way Bill 7 Annexure 8
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  Transition to GST:A year into the system 2 Transition to GST 1. Highlights TRANSITION TO GST HighlightsHighlightsHighlightsHighlights ‘ MAJORITY OF THE RESPONDENTS (83%) BELIEVE THAT IMPLEMENTATION OF GST WAS A STEP IN THE RIGHT DIRECTION NEARLY TWO THIRDS OF THE RESPONDENTS (65%) ARE SATISFIED WITH THE OVERALL IMPLEMENTATION OF GST SATISFIED WITH THE OVERALL PROCESS OF REFUNDS SATISFIED WITH THE OVERALL PROCESS OF IMPLEMENTATION OF THE E- WAY BILL • satisfied with ease in registration process (additions)71% • satisfied with the overall Input Tax Credit process63% • satisfied with the overall provisions of valuation of supply of GST 72%satisfied with the penalty provisions 50% satisfied with the rate of interest 52% 70% of the respondents are satisfied with the format of the invoices 61% of the respondents are satisfied with the overall process of filing returns 64% of the respondents feel that maintenance of records is easier under GST 59 % TRANSITION TO GST HighlightsHighlightsHighlightsHighlights ‘ MAJORITY OF THE RESPONDENTS (83%) BELIEVE THAT IMPLEMENTATION OF GST WAS A STEP IN THE RIGHT DIRECTION NEARLY TWO THIRDS OF THE RESPONDENTS (65%) ARE SATISFIED WITH THE OVERALL IMPLEMENTATION OF GST SATISFIED WITH THE OVERALL PROCESS OF REFUNDS SATISFIED WITH THE OVERALL PROCESS OF IMPLEMENTATION OF THE E- WAY BILL • satisfied with ease in registration process (additions)71% • satisfied with the overall Input Tax Credit process63% • satisfied with the overall provisions of valuation of supply of GST 72%satisfied with the penalty provisions 50% satisfied with the rate of interest 52% 70% of the respondents are satisfied with the format of the invoices 61% of the respondents are satisfied with the overall process of filing returns 64% of the respondents feel that maintenance of records is easier under GST 59 % TRANSITION TO GST HighlightsHighlightsHighlightsHighlights ‘ MAJORITY OF THE RESPONDENTS (83%) BELIEVE THAT IMPLEMENTATION OF GST WAS A STEP IN THE RIGHT DIRECTION NEARLY TWO THIRDS OF THE RESPONDENTS (65%) ARE SATISFIED WITH THE OVERALL IMPLEMENTATION OF GST SATISFIED WITH THE OVERALL PROCESS OF REFUNDS SATISFIED WITH THE OVERALL PROCESS OF IMPLEMENTATION OF THE E- WAY BILL • satisfied with ease in registration process (additions)71% • satisfied with the overall Input Tax Credit process63% • satisfied with the overall provisions of valuation of supply of GST 72%satisfied with the penalty provisions 50% satisfied with the rate of interest 52% 70% of the respondents are satisfied with the format of the invoices 61% of the respondents are satisfied with the overall process of filing returns 64% of the respondents feel that maintenance of records is easier under GST 59 %
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  Transition to GST:A year into the system 3 2. Overview GST, the single taxation regime, was implemented a year back and though there were some initial implementation issues, as is the case with any system for the first time, it is safe to say that the GST has been the biggest tax reform of Independent India. As per a survey conducted by the Confederation of Indian Industry (CII), a significant majority of the respondents (83%) have lauded the government for implementing GST saying that it was a correct decision taken by the government. Further, nearly 42% of the respondents have indicated a positive impact of GST on their sales, followed closely by around 40% of respondents who have not experienced any changes in their sales. 2.1 Employment and demand generation GST has had a positive impact on employment, with over one-third of the respondents indicating an increase in employment. Less than 10% of the respondents indicated a decrease in employment. This trend is reflected in the demand for goods and services, with 78% of the respondents witnessing an increase or no change in demand for goods post GST implementation. Similarly, 90% of the respondents witnessed an increase or no change in demand for services post GST implementation. TRANSITION TO GST: A YEAR INTO THE SYSTEM 2 Overview GST, the single taxation regime, was implemented almost a year back and though there were some initial implementation issues, as is the case with any system for the first time, it is safe to say that the GST regime has been a step in the right direction. As per a survey conducted by the Confederation of Indian Industry (CII), a significant majority of the respondents (83%) have lauded the government for implementing GST saying that it was a correct decision taken by the government. Further, nearly 42% of the respondents have indicated a positive impact of GST on their sales, followed closely by around 40% of respondents who have not experienced any changes in their sales. Employment and demand generation GST has had a positive impact on employment, with over one-third of the respondents indicating an increase in employment. Less than 10% of the respondents indicated a decrease in employment. This trend is reflected in the demand for goods and services, with 78% of the respondents witnessing an increase or no change in demand for goods post GST implementation. Similarly, 90% of the respondents witnessed an increase or no change in demand for services post GST implementation. Yes 83% No 2% Too early to comment 15% Was GST the right step? 42% 10% 40% 8% Positive impact Negative impact No Change Too early to comment Impact of GST on sales Was GST the right step? Impact of GST on sales
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  Transition to GST:A year into the system 4 2.2 Overview index Satisfaction was high across the spectrum on GST implementation issues. Respondents gave positive feedback on several aspects of the GST including registration, format of invoices, overall process of filing of returns and maintenance of records. An overview highlighting the satisfaction index score for some of the selected indicators from the survey is presented below. TRANSITION TO GST: A YEAR INTO THE SYSTEM 3 Overview index Satisfaction was high across the spectrum on GST implementation issues. Respondents gave positive feedback on several aspects of the GST including registration, format of invoices, overall process of filing of returns and maintenance of records. An overview highlighting the satisfaction index score for some of the selected indicators from the survey is presented below. 3.1 3.0 2.9 2.8 2.8 2.8 2.7 2.7 2.6 2.5 2.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Registration/Additionof business Formatofinvoices Provisionsofvaluationof supply ProcessofFilingofReturns OverallGST implementation Easymaintenanceof recordsunderGST OverallprocessofITC OverallE-wayBill implementation Processofrefundunder GST Satisfiedwithpenalty provisions? Satisfiedwithrateof interest? Satisfaction Index: OverviewSatisfaction Index: Overview
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  Transition to GST:A year into the system 5 3. Detailed Feedback This section details the impact on select areas following the implementation of GST. 3.1 Valuation The respondents showed a high level of comfort with the provisions on valuation: A vast majority of 72% were either fully or somewhat satisfied with the provisions. More detailed questions were asked on the level of satisfaction with different kinds of valuation. These include valuation of B2B, B2C as well as inter-branch/ self-supply. Valuation of imports and exports as well as supply from 100% EOUs were considered satisfactory. The results are depicted in the graph below. 3.2 GST Rates and Classification On products coverage under GST, 87% of the respondents indicated that their products were listed while only 13% said that their products are not listed/ classified.  Respondents were largely satisfied with the exemptions provided on supply of goods and services, relatively less satisfied with exemption on imports while exemption on exports was satisfactory. Satisfaction Index: Valuation 2.9 3.0 2.9 2.9 2.8 3.0 2.9 3.0 2.9 2.7 2.9 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Overallprovisionsofvaluation ofsupplyunderGST Areyoucomfortablewith valuationofB2Bsupplyunder GST Areyoucomfortablewith valuationofB2Csupplyunder GST Areyoucomfortablewith valuationofinter-branch/ self-supply Areyoucomfortablewith valuationofsupplyforJob Work Areyoucomfortablewith valuationofsupplyfrom100% EOU Areyoucomfortablewith valuationofimports Areyoucomfortablewith valuationofexports Areyoucomfortablewith valuationofused machinery/capitalgoods Areyoucomfortablewith valuationofusedmotor vehicles Areyoucomfortablewith valuationofothercapital goods
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  Transition to GST:A year into the system 6 TRANSITION TO GST: A YEAR INTO THE SYSTEM GST Rates and Classification On products coverage under GST, 87% of the respondents indicated that their products were listed while only 13% said that their products are not listed/classified. Respondents were largely satisfied with the exemptions provided on supply of goods and services, relatively less satisfied with exemption on imports while exemption on exports was satisfactory. Impact of GST on Prices GST has had a positive impact on the price movements of supplies. One-third of the respondents witnessed a downward movement in the wholesale process of their supplies. Similarly, nearly 30% of the Overallprovisi valuationofs underGS Areyoucomfo withvaluation supplyunder Areyoucomfo withvaluation supplyunder Areyoucomfor withvaluationof branch/self-su Areyoucomfor withvaluation supplyforJob Areyoucomfor withvaluatio supplyfrom100 Areyoucomfo withvaluatio imports Areyoucomfo withvaluatio exports Areyoucomfor withvaluationof machinery/ca Areyoucomfor withvaluationof motorvehicl Areyoucomfort withvaluationof capitalgood Yes 87% No 13% Are the Products manufactured by you listed/classified 2.9 2.8 2.8 3.0 1.0 2.0 3.0 4.0 GST exemptions forsupply ofservices GST exemptions forsupply ofgoods GST exemptions forimports GST exemptions forexports 3.3 Impact of GST on Prices GST has had a positive impact on the price movements of supplies. One- third of the respondents witnessed a downward movement in the wholesale process of their supplies. Similarly, nearly 30% of the respondents witnessed a fall in retail prices of supplies. A majority witnessed no change in their supply prices. Consequent to GST, the end-consumer benefited with one-third of the respondents indicating a fall in their selling prices.  3.4 Refunds Respondents were largely satisfied with the overall process of refunds. Process of refund of IGST on goods export was more satisfactory as compared to the process of refund of IGST on services export. Specific satisfaction index for each is provided in the graph below. Satisfaction Index: Refunds Satisfaction Index: ExemptionsProduct coverage under GST 2.6 2.8 2.8 2.6 2.5 1.0 2.0 3.0 4.0 Overallprocessof refundunderGST Processofrefund ofIGSTpaidon exportgoods Processofrefund ofIGSTpaidon serviceexport Processofrefund ofInvertedtax accumulation Processofany otherrefundslike tax,interest, penalty,feeetc.
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  Transition to GST:A year into the system 7 3.5 Impact of GST on Logistics, Transportation and Warehousing While GST has resulted in enhancing efficiency: nearly two-thirds of the respondents have indicated a reduction in transportation time, on account of absence of state barriers. The impact on reducing logistics-related costs has been more muted. Around a third have witnessed reduction in logistics, warehousing, insurance and distribution costs. 3.6 Impact of Introduction of E-way Bill Respondents showed high level of satisfaction for the overall implementation process of E-way Bill. Responses sought on specific issues around E-way Bill system like exemptions, generation, validity, endorsement, value limits and cancellation among others were also positive. Details on the specifics presented in the satisfaction index graph below. Satisfaction Index: E-way Bill 2.7 2.7 2.8 2.7 2.8 2.7 2.8 2.8 2.8 2.8 2.9 1.0 1.5 2.0 2.5 3.0 3.5 4.0 OverallProcessof implementationofe-wayBill Exemptionsundere-wayBill Processofgenerationofe-way Bill Processofgenerationofbulke- wayBill Processofendorsementofe-way BilltoTransporter Validityperiodofe-wayBill sufficient Valuelimitforgenerationofe- waybill Provisionsofacceptance/ rejectionofe-wayBillby… Provisionsofcancellationofe- wayBill Processofgenerationofe-way billforjobworksupply Exemptionofe-wayBillfor transportationupto50KM
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  Transition to GST:A year into the system 8 Annexure 1. Respondent Profile The survey sample consists of above 200 firms of varying sizes. Major proportion of the firms (46%) have an annual turnover of more than Rs 100 crore, 29% have a turnover between Rs 5 crore to Rs 100 crore, 11% have reported turnover between Rs 1.5 crore to Rs 5 crore and 13% have a turnover of less than Rs 1.5 crore. Sectoral break-up shows that 75% of the firms belong to the manufacturing sector while the remaining 25% are from the services sector. 2. Methodology The survey was administered electronically to around 300 respondents. Respondents were asked to select an option for each question. Indices were computed as the weighted average of the number of respondents selecting an option. Weights have been allocated as under: – Fully satisfied: weight of 4 (Max) – Somewhat satisfied: weight of 3 – Somewhat dissatisfied: weight of 2 – Not satisfied: weight of 1 (Min)
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  The Confederation ofIndian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes. CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive role in India’s development process. Founded in 1895, India’s premier business association has around 9000 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 300,000 enterprises from around 265 national and regional sectoral industry bodies. CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues. Extending its agenda beyond business, CII assists industry to identify and execute corporate citizenship programmes. Partnerships with civil society organizations carry forward corporate initiatives for integrated and inclusive development across diverse domains including affirmative action, healthcare, education, livelihood, diversity management, skill development, empowerment of women, and water, to name a few. As a developmental institution working towards India’s overall growth with a special focus on India@75 in 2022, the CII theme for 2018-19, India RISE : Responsible. Inclusive. Sustainable. Entrepreneurial  emphasizes Industry’s role in partnering Government to accelerate India’s growth and development. The focus will be on key enablers such as job creation; skill development; financing growth; promoting next gen manufacturing; sustainability; corporate social responsibility and governance and transparency. With 65 offices, including 9 Centres of Excellence, in India, and 11 overseas offices in Australia, Bahrain, China, Egypt, France, Germany, Iran, Singapore, South Africa, UK, and USA, as well as institutional partnerships with 355 counterpart organizations in 126 countries, CII serves as a reference point for Indian industry and the international business community. Confederation of Indian Industry The Mantosh Sondhi Centre 23, Institutional Area, Lodi Road, New Delhi – 110 003 (India) T : 91 11 45771000 / 24629994-7 • F : 91 11 24626149 E : [email protected] • W : www.cii.in Reach us via our Membership Helpline: 00-91-11-435 46244 / 00-91-99104 46244 CII Helpline Toll free No: 1800-103-1244 Follow us on :     facebook.com/followcii       twitter.com/followcii         www.mycii.in