Surya Roshni Limited · NSE:SURYAROSNI
Surya Roshni — Investor Presentation (March 2016)
63 slides from Surya Roshni's investor presentation, March 2016
Slide 1: GST Impact and Implementation Project
GST Impact and Implementation Project Surya Roshni Limited
Slide 2: Background
Background Steel • M/s Surya Roshni Limited (SRL) founded in 1973 started with its steel division • SRL- one of the largest in steel tube industry • Manufactures steel pipe products for various industries Lighting • SRL started its lighting division later • One of the leading brands in the Lighting
Slide 3: SRL – Business Network
SRL – Business Network Manufacturing Local units of SRL (Inter,Intra)/Import (Lighting- of Raw Material Kashipur, Steel- Malanpur) Customer Depots( For Ghaziabad Hub (Institutional/Indust customized (Trading) rial) products) Finished Goods SRL Branches Raw Material Distributor (Various States)
Slide 4: GST - Roadmap
GST - ROADMAP Expected GST roll out date - 1st July, 2017 Fall-back date – 1st September, 2017 Preparedness GST compliant IT system Domain knowledge for staff / management GST compliant accounting system Smooth and tax efficient transition strategy Copyright (c) 2017 Lakshmikumaran & S
Slide 5: GST – Salient Features
GST – SALIENT FEATURES Taxes subsumed under GST: Excise duty, VAT, CST, Service tax, CVD, SAD, Entry tax, etc. Taxes not subsumed: Clean energy cess, Electricity Duty, etc. GST is IT System driven GST is destination based consumption tax (VAT) Rate of tax on goods : 5% / 12% / 18% Copyrigh
Slide 6: Supply
Supply Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Slide 7: Meaning of Goods
Meaning of Goods Every Kind of Movabl e Other Money and Means Propert than Securities Goods y Include s Growing Crops, grass and Actionable things attached to or Claim forming part of the land which are agreed to be severed before supply or under a contract of supply
Slide 8: Meaning of Services
Meaning of Services Anythin Other Means g than Servic Goods es EXPLANATION Given in Law: Services does not include money and Securities but include following transactions in money: • An activity relating to the use of money or • Its conversion by cash or by any other mode, from one form, currency or
Slide 9: Taxable Event – Supply
Taxable Event – Supply All forms of supply GST Bill Malaysia: All forms of Supply, SUPPLY Made or agreed to be including supply of imported made services, done for a consideration INCLUDE S For a consideration Australia: A Supply is any form of Supply whatsoever By a Person In the course or United K
Slide 10: Supply without Consideration
Supply without Consideration Schedule I (Serial No. 2) to GST Bill “Supply of goods or services between related persons, or between distinct persons as specified in section 25, when made in the course or furtherance of business.” Gifts by employer to employee in a financial year upto Rs 50,000 not
Slide 11: Composite or Mixed Supply
Composite Mixed Supply Composite Supplyor Mixed Supply A supply A supply comprising two comprising two or or more supplies more supplies, for a single price one of which is a shall be treated principal supply, as supply of that shall be treated particular supply as a supply of which attracts such pr
Slide 12: Case Study: Composite supply
CASE STUDY : Composite supply • Major Sales of SRL- FOR basis Ex-Factory sale of goods Transportatio n service Issues: - Whether composite supply or independent supplies? - What if there is a difference in rates of tax?
Slide 13: Case Study: En-route damage
CASE STUDY : En-route damage Sale of goods – FOR destination basis En-route damage Issue: - Whether supply? - Time of supply already taken place for the seller?
Slide 14: Taxable Person - Registration
Taxable Person - Registration Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Slide 15: Taxable Person
Taxable Person Liability to pay CGST + SGST or IGST on TAXABLE PERSON. A Supplier liable to be registered in a state (or Union territory) from where he makes a taxable supply of goods or services • Person notor both to be registered: required • Aggregate turnover upto Rs. 20 Lakh (Rs. 10 Lakhs in NE
Slide 16: Registration: Mandatory and Optional
Registration Mandatory •Registration In each state (or Union territory) from where the supplier makes taxable Optional supply of goods and/or •Registration services Separate registration for each business vertical in a state Copyright 2016, Lakshmikumaran & Sridharan / Confidential
Slide 17: Multiple Business Verticals Registration
MULTIPLE BUSINESS VERTICALS REGISTRATION SRL BUSINESS VERTICALS LIGHTING STEEL (Uttrakha (Uttrakha nd) nd) Separate registrations for multiple business verticals in a State may be granted [Proviso to Section 25(2)] Copyright 2016, Lakshmikumaran & Sridharan / Confidential
Slide 18: Place of Supply
Place of Supply Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Slide 19: Destination Based Consumption Tax
Destination Based Consumption Tax • Destination based tax (consumption tax) are levied at places where goods and services are consumed rather than at places were they get manufactured or from where they are supplied i.e. production and the entire revenue relating to the goods or services should accr
Slide 20: Nature of Supply: Local / Inter State
Nature of Supply : Local / Inter State Situation Place of Supply Inter state Supplies ( Leviable to IGST) • If location of supplier and place of supply are in different States. • If supply of goods or services is made to SEZ Developer or SEZ Unit. Intra State Supplies (Leviable to If location of sup
Slide 21: Place of Supply: Goods other than import/export
Place of Supply :Goods other than import/ export Place where When movement movement 1 involved terminates for delivery When movement Location at the 2 not involved time of delivery Bill to Ship to Person on whom 3 model bill raised Supplied on board a Place where goods 4 conveyance taken on board Su
Slide 22: Place of Supply – Goods imported/exported
Place of Supply – Goods imported/ exported Import India Export The place of supply of goods imported into India shall be the location of the importer The place of supply of goods exported from India shall be location outside India
Slide 23: Place of supply of services
Place of supply of services General Rule Current regime Revised Model Law Location of recipient of B2B supplies: Location of service Recipient Location of service provider if B2C supplies: the above not available Address on Record exists - Location of Recipient Any other Case- Location of supplier
Slide 24: Place of supply of services
Place of supply of services Nature of service GST Bill • Place where immovable property is located or intended to be located • Location of immovable property is outside India - Location of Services directly relating the Recipient to immovable property • Where property located in more than one state-
Slide 25: Place of Supply of Services – Specific Rules
Place of Supply of Services – Specific Rules Both Supplier and recipient located in India Service Place of Supply (B2B) Place of Supply (B2C) Transportation of Goods, including Location where service Location where goods are mail or courier recipient is registered handed over for their transportatio
Slide 26: Place of supply: Bill-to/Ship-to Model
Place of supply : Bill-to/ Ship-to Model First Supply Place of supply Vendor Malanpur invoic First supply: e Principal place of Delivery invoic Second business of recipient i.e. of goods e Supply Malanpur Second supply: Kashipur Where delivery terminates i.e. Kashipur
Slide 27: Case Study
CASE STUDY Mumbai Delhi Annual General Meeting Hotel Compa ABC ny SRL Facts of Case: - SRL has a place of business in Delhi - SRL is holding its AGM in a Hotel in Mumbai - Hotel has issued an invoice to the company mentioning the address of Delhi - No Registration in Mumbai –Loss of SGST credit?
Slide 28: Exports
Exports Present Regime • 5% of total supply = Exports • SRL exporting without payment of duty under Rule 19 • Duty drawback claimed • MEIS benefit claimed GST Regime Export of Goods/Services Option 1: Export without payment of duty Claim refund of unutilised tax credits Option 2: Export on pay
Slide 29: Input Tax Credit
Input Tax Credit Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Slide 30: Inputs
Inputs Section 2 (59) : ‘Input’ means any goods, other than capital goods, used or intended to be used by a supplier in the course or furtherance of business. Section 2(60) : ‘Input Service’ means any service used or intended to be used by a supplier in the course or furtherance of business.
Slide 31: Manner of Availing ITC
Manner of Availing ITC Manner of taking Input tax credit (Section 16) ITC as self-assessed in the return of a taxable person shall be credited to his electronic ledger to be maintained in the GST portal. Credit shall be utilized in the following manner: IGST CGST SGST IGST utilised in the CGST
Slide 32: Availment of ITC: Conditions
Availment of ITC: Conditions 7 1 No Credit Time Limits beyond Possession of (E.g. FY 15-16) specified tax invoice Earliest of: period 6 Monthly returns Receipt of 2 Filing of return for September 2016 are filed by 20th Limiting Goods/Service factors s (last date: 20th Oct 2016) Filing of Annual
Slide 33: Input Tax Credit
Input Tax Credit Credit of ITC can be provisionally taken by a taxable person in the return, on self-assessment basis. If a registered taxable person does not furnish a valid return in Form GSTR 3, then he shall not be allowed to utilize such credit till he discharges his self-assessed tax liabi
Slide 34: Input Tax Credit on Capital Goods
Input Tax Credit on Capital Goods Capital Goods: Goods the value of which is capitalized in the books of accounts of the person claiming credit and which are used in the course or furtherance of business Current scenario GST scenario In the first FY in which capital goods are • 100% credit will be a
Slide 35: GST: Seamless Credit Flow?
GST: Seamless Credit Flow? • GST Objective : Seamless credit across entire supply chain – There should be no dead credit in the system • GST – No Cross utilization between CGST and SGST – CGST and SGST paid in X state not available as credit in Y state – Negative list under Section 17
Slide 36: Input Tax Credit – Negative List of items
Input Tax Credit – Negative List of items SL Negative list Item Exceptions 1 Motor vehicles and other conveyances a. Further supply of such vehicles b. Transportation of passengers c. Imparting training d. Transportation of goods 2 Food & Beverage, outdoor catering, beauty treatment, health Providin
Slide 37: Input Tax Credit – Negative List of items
Input Tax Credit – Negative List of items SL Negative list Item 6 Goods or services used in construction of any immovable property on his own account, even if used for business (other than Plant & Machinery) 7 Goods or services or both received by a non- resident taxable person except on goods impor
Slide 38: Issue: Used for personal consumption
Issue : Used for personal consumption • ‘goods and/or services used for personal consumption’ – Illustration : LED bulbs manufactured by Kashipur Plant used by the employee of same plant for personal use • Whether ITC available?
Slide 39: Issue: Gifts
Issue : Gifts • 17(4)(h)- Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples – Meaning of gift? – Section 122 of Transfer of Property Act, 1882, “Gift” is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration
Slide 40: Issue: Gifts
Issue : Gifts • Credit on the following :- – Calendars, Diaries, etc given without condition – Display boards, flyers, etc with conditions but no contractual obligations – Promotional items supplied with the obligation on dealer to perform certain activity in return FOC Vendor Manufacturer Supply De
Slide 41: Issue: Samples
Issue : Samples • 17(4)(h)- Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples • What is a free sample? – Singapore VAT Law and Malaysian GST Law: “An industrial or commercial sample in a form of good which is given to an actual or potential customer and not ord
Slide 42: Issue: Interest
Issue : Interest • 17(4)(h)- Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. • Interest liability from the date of wrongful availment – Exclusion covers situation based on disposal – Whether it will be considered to be wrongful availment of ITC?
Slide 43: Section 17(4)(h) - Optional?
Section 17(4)(h)- Optional? Schedule I : Transfer or disposal of business assets deemed as 17(4)(h)- Goods lost, stolen, destroyed, written off or disposed Supply even if without consideration when ITC has been of by way of gift or free samples. availed on such assets • Whether it is optional to ava
Slide 44: Issues in case of sales return under warranty
Issues in case of sales return under warranty * Sales return of goods covered under warranty ( 1 year) Current Treatment Credit note Free Replacement GST REGIME Credit note-Under section 34 of GST Bill The credit note has to be mentioned in return in the very same month
Slide 45: Illustration
ILLUSTRATION Defected goods Returns Defected Goods received are Custom scraped er ITC to be New goods are dispatched to reversed? customer GST levied? 47
Slide 46: Input Service Distributor
Input Service Distributor • Section 2 (61) : ISD means an office of the supplier of goods and / or services which receives tax invoices issued under Section 23 towards receipt of input services and issues tax invoices for the purpose of distributing credit of CGST / SGST and / or IGST paid on the sa
Slide 47: Seamless Flow of ITC - ISD
Seamless Flow of ITC - ISD Location of Location of Supplier Immovable a. Supplier will charge local SGST and property CGST State A State A b. Receiver located in State B cannot take ITC of SGST charged by Supplier in State A c. Blockage of seamless flow of ITC SOLUTION : Input service distributor? S
Slide 48: Transitional Provisions
Transitional Provisions Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Slide 49: Transitional Provisions – Retrospective price increase
Transitional Provisions – Retrospective price increase Malanpur ( Steel Division) Steel Prices are volatile- Upward or downward price variation For upward price revision- GST is payable on such revision Credit Note to be raised within 30 days of price revision What if credit note is not raised
Slide 50: Transitional Provisions: Depots eligibility for credit
Transitional Provisions : Depots eligibility for credit Manufacturi ng Depots Ghaziab Bangalor ad e • Whether credit of eligible duties held in stock will be available? Credit will be available in respect of inputs held in stocks and inputs contained in semi finished goods or finished goods. ( Sec
Slide 51: Valuation
Valuation Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Slide 52: Consideration for a Supply
Consideration for a Supply Consideration – Inclusive definition payment by recipient of the supply or any other person nexus between the payment and the supply Excise – consideration by buyer only Any payment in money or otherwise Supply Monetary value of any Act or Forbearance ‘in res
Slide 53: Valuation principle – Transaction Value
Valuation principle – “Transaction Value” Value of taxable supply- Transactional Value Three conditions Price actually paid or payable Supplier and recipient of the supply are not related Price is the sole consideration for the supply If conditions not met- Resort to Valuation Rules. MRP
Slide 54: Inclusions in value of supply
Inclusions in value of supply • Any taxes, duties, cesses, fees and charges levied under any other statute, if charged separately • Expenses incurred by recipient of supply for which supplier is liable • Incidental expenses, such as, commission and packing, charged by the supplier to the recipient o
Slide 55: Discounts – Excluded from Transaction Value
Discounts – Excluded from Transaction Value • Discounts allowed before or at time of supply – duly recorded in invoice • Discounts allowed after supply has been made – established as per agreement – known at or before the supply – specifically linked to invoice – input tax credit reversed by recipie
Slide 56: Draft Valuation Rules
Draft Valuation Rules Value of supply where consideration is not Hierarchy of Valuation Rules: wholly in money (Rule 1) Rule 4 to be applied only when Value when supply between value cannot be determined as distinct/related persons, other than per Rules 1 to 3. through an agent (Rule 2) Rule
Slide 57: Stock Transfer
Stock Transfer Stock Transfer to Depot Bangalore Malanpur Plant Depot (M.P) • What is value at which tax is to be paid? - (Valuation Rules to be referred to) • Additional Cash Flow Requirements IGST will be leviable 59
Slide 58: Other Specific Issues
Other Specific Issues Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.
Slide 59: Status of Exempted Kashipur unit
Status of Exempted Kashipur unit • GST Objective: Create one common market and free flow of credit to supply chain • For achieving objective, exemption scheme may be converted to refund scheme • First Discussion Paper on GST – Conversion of exemption schemes to refund schemes • Whether full refund o
Slide 60: Treatment of Advances
Treatment of Advances Time of Supply : Date of receipt of advance Receipt voucher to be Advance for goods paid to SRL issued under Section 31(3) of GST Bill Issues • Advance/Deposit Custom • Advance –received er against identified In case no supply takes goods? • Rate to be applied place against a
Slide 61: Works Contract
Works Contract PRESENT SCENARIO : • SRL enters into contract for supply & installation of LED lights Issue: Whether works contract? OR Whether composite supply? GST SCENARIO : Works contract = Deemed service Only immovable property covered Copyright (c) 2016. Lakshmikumaran & Sridharan / Con
Slide 62: Job work in GST Scenario – Section 143
Job work in GST Scenario – Section 143 • GST on job charges to be levied as service • Job-work procedure allowed without payment of tax Principal Job-worker • Job-workers is allowed to return the Removal from goods to any place of business of Job-worker Principal Removal from • Declaration by Princi
Slide 63: GST – Practical Issues
GST – Practical Issues • Series of Invoices in same state with same GSTN • Installation services done at place where no registration • Sales order in the name and address of Regional Office- supply to be made from plant • Corporate Guarantee provided to related company • Free issue of material by SR