Incentives to Exporters

Transcription

1 Accolet Advisors Private Limited Accounting Consulting Legal Tax Incentives to Exporters Deepak Kumar Jain B B.Com., FCA., ACS., LLB 02-Feb-2013

2 Economic indicators 12 What this means? GDP comprises of mix from agriculture, manufacturing and services All sectors have seen a declining trend particularly manufacturing and agriculture GDP Growth Rate - Agri - Manufacturing - Services Overall GDP: 6.9% [ ] 1

3 Economic indicators 400, , , , , , ,000 50,000 0 Corporation tax Income tax Wealth tax Taxes of Union Territories Customs Total: 1077,612 Crores Union Excise Duties Service Tax , ,786 1,244 2, , , ,000 Indirect Tax Revenues INR Crore Other Tax Revenues INR Crore Customs 186,694 Union Excise Duties 194,350 Service Tax 124,000 Total indirect tax revenue 505,044 Taxes of Union Territories/ Others 3,555 Income tax 195,786 Corporate tax 373,227 Total direct & other duties 572,568 Source: Finance Bill

4 Economic indicators Nature of tax Budget Estimates Revised Estimates Shortfall Corporate tax 3,59,990 3,27,680-32,310 Income tax 1,72,026 1,71, Wealth tax 635 1, Overall shortfall in tax collections is primarily attributed to corporate tax Taxes of Union Territories 1,973 2, Customs 1,51,700 1,53,000 1,300 Union Excise Duties 1,64,116 1,50,696-13,420 Service Tax 82,000 95,000 13,000 Total 9,32,440 9,01,664-30,776 3

5 Economic indicators Year Customs Excise Service tax ,700 39, ,800 61,000 2, , ,700 14, , ,500 17, , ,200 38, (RE) 153, ,696 95, (BE) 186, , ,000 Growth in last 12 years 3.9 times 3.2 times 62 times % Growth in from % 29% 31% Average increase (%) in indirect tax in from % What this means While excise and customs have grown modestly at 3-4 times in the last 12 years, service tax has grown 62 times. Average increase in indirect tax from last year s base is 27% i.e. Common man pays 27% more to consume the same goods or services. While GDP is growing at 7%, tax growing at 27%, clearly means, savings are hit. 4

6 Customs duty: rate movement Sl. Year Duty Rate Customs Duty Rate of customs duties has seen a rescinding trend over the years: % 160% % 150% 140% % % 120% 110% % 100% % % 80% 85% 65% % 60% % 38.50% % 50% 40% 30% 42% % 35% 20% 25% 15% 10% % 12.50% % 0%

7 Excise duty: rate movement Sl. Year Duty Rate Rate of customs duties has seen a rescinding trend over the years: % Central Excise Duty Rates % 110% % % % % % % 50% % 40% % 24% % 16% 16% 16% 14% % 10% 8% 10% 12%

8 Service tax: rate movement Sl. Period Rate Rate of customs duties has seen a rescinding trend over the years: 1 01 Jul May % 2 14 May Sep % 3 10 Sep Apr % 4 18 Apr May % 5 12 May Feb % 6 24 Feb Mar % 7 01-Apr-12 onwards 12.36% Service Tax Rate Movement 15.00% Rate, 12.36% 10.00% 5.00% 0.00%

9 Channel for incentives Procurement Options DTA EOU/STP SEZ Without payment of duty With export benefits Without payment of duty

10 Background to SEZ SEZ s policy introduced in the year 2000 and remained until 09-Feb-2006 under the FTP The Special Economic Zones Act, 2005, was enacted on 23rd June, 2005 SEZ Rules, came into effect on 10th February, 2006 The main objectives of formulating SEZ appears to be, to: a. Generate additional economic activity b. Promote exports of goods and services; c. Promote investment from domestic and foreign sources; d. Create employment opportunities; e. Develop infrastructure facilities 9

11 Benefits SEZ Unit Tax Holiday for 5 years and 50% exemption for next 5-10 years - MAT on profits Customs duty exemption on goods imported/ exported No excise duty Service tax exemption/ refund Exemption/refund of CST/VAT Electricity duty exemption Stamp duty exemption Export benefits to supplier SEZ Developer Tax Holiday for 10 consecutive years out of 15 years - MAT on profits Customs duty exemption on goods imported/ exported No excise duty Service tax exemption/ refund Exemption/refund of CST/VAT Electricity duty exemption Stamp duty exemption Export benefits to supplier 10

12 Types of SEZ s Multi-product SEZ Manufacture of one or more goods or provision of one or more services, of two or more sectors Sector specific SEZ Manufacture of one or more goods or provision of one or more services, of a particular sector Other SEZ s SEZ s in port SEZ for free trade and warehousing 11

13 Minimum Area Requirement Zone Type Min. Area Min. built up space Min. processing area Multi-product 1000 hectares Not specified 50% Multi -services 100 hectares Not specified 50% Sector specific 100 hectares Not specified 50% Electronic Hardware and software including ITES 10 hectares 1 lakh sq.m. 50% Gems and jewellery sector 10 hectares 50,000 sq.m. 50 % Bio- tech/ Non- conventional energy 10 hectares 40,000 sq.m. 50 % FTWZ (Stand alone) 40 hectares 1 Lac sq.m. 50 % FTWZ (SEZ for specific sector) No min. area Not specified Note: North-eastern States, Uttranchal, Sikkim, J&K, Goa, have special requirements for min. area and min. built up space. 12

14 SEZ Administrators Authorities Board of Approval ( BOA ) Approval Committee Development Commissioner Role Performed Constituted by the Central Government to promote and ensure orderly development of SEZ Approve, reject, modify SEZ proposals Approve Authorised operations of the SEZ Unit in SEZ Approve/reject/modify proposals for providing infrastructure facilities in SEZ Set-up under the chairmanship of Development Commissioner SEZ unit approvals Approve list of goods and services required for Authorised operations by SEZ Unit Monitor utilisation of goods and services in the SEZ Monitor compliance of conditions of letter of approval Has overall charge and administrative control of the SEZ Monitoring performance of Developer and unit Provide guidance to entrepreneurs for setting-up unit Promote exports from SEZ 13

15 SEZ Administrators Authorities Specified Officer ( SO ) Authorised Officer ( AO ) Role Performed Assistant Commissioner/Deputy Commissioner of customs posted in the SEZ reports to Development Commissioner Designate place for loading and unloading of SEZ cargo BLUT to be jointly filed with SO and Development Commissioner Disbursing authority for Drawback claims Quantifying duty payable on DTA sales Inspector/Appraiser/Superintendent of customs posted in the SEZ Authorised by, and reports to Specified Officer Developer/unit to interact with AO on day to day basis for clearance of imports, procurements and exports 14

16 SEZ Beneficiaries Beneficiary Developer Co-Developer Units Particulars A person who has been granted a letter of approval to establish a SEZ vide Notification - Responsible for the development and operations of the SEZ - No exit route Any person who intends to provide any infrastructure facilities in the SEZ, or undertake any authorised operation in the SEZ and has been approved by the Board through letter of approval He is in the same shoes as that of the Developer Companies that occupy and set-up operations in the SEZ for carrying out the authorized operations 15

17 Modes of import or export Sea Port Airport Post/ Courier Downloads Procurement & Supply options ICD Land Customs Station 16

18 NFE SEZ Units have to achieve Positive Net Foreign Exchange ( NFE ). NFE is calculated cumulatively for a period of five years from the commencement Approval Committee to review the performance based on annual performance report in Form I Period of operations < 1 year None How monitored > 1 year < 5 years Monitored for the number of completed years > 5 years One for such number of years which fall in the subsequent block(s) of five years Negative NFE How monitored 1 st & 2 nd year Unit place on watch list 3 rd year Show cause notice issued Continues upto 5 th year Penal action initiated 17

19 Records SEZ Units to execute Bond in Form H to cover following obligations: Proper utilization and accountal of goods imported or procured duty free Achievement of positive NFE Bond in Form H to cover following activities pertaining to the SEZ Unit Movement of goods between port of import/ export and the SEZ; and The authorized operations of the Unit Temporary removal of goods without payment of duty, for the purposes of repairs, testing, sub-contracting, etc or other temporary removals into DTA; Re-import of exported goods 18

20 Records SEZ Units have to maintain proper accounts financial year wise indicating the following, in value terms: Goods imported or procured from DTA Consumption or utilization of the goods so imported/procured Production of goods including by-products, waste or scrap or remnants Disposal of goods manufactured or produced by way of Exports Sales or Supplies in the DTA Transfers to other SEZ units Transfers to EOU or STP/EHTP/BTP Units Balance in stock 19

21 Records Records to be maintained for a minimum of 7 years If an enterprise is operating both as a DTA unit as well as a SEZ Unit It shall have two distinct identities with separate books of account it shall not be necessary for the SEZ unit to be a separate legal entity SEZ Units have to submit Annual performance reports in Form I, with the Development Commissioner Annual Performance Report to be furnished within 90 days from the end of the financial year The Development Commissioner will place the Performance Reports so submitted before the Approval Committee 20

22 EOU/ STPI Scheme Status provided to export oriented units, as an EOU or an STP, by development authority Operations carried out from a bonded premises EOU or STP units are required to be Net Foreign Exchange Earner Sales in DTA are allowed on payment of applicable duties or taxes As a manufacturer: 50% of BCD and full CVD As a service provider: Applicable service tax DTA sales are allowed upon permission from authority, which are permitted upto 50% of export turnover EOU s are required to file monthly, quarterly and annual performance report and maintain identified books of accounts 21

23 SEZ Vs. EOU Vs. Non SEZ/ EOU Particulars SEZ EOU Non SEZ/ EOU Import duties on capital goods and raw materials Nil Nil Excise duty on domestic procurement on other than capital goods Nil Nil Eligible for incentives such as advance license, EPCG, etc. Eligible for incentives such as advance release order, etc or cenvat, which is eligible for refund Karnataka VAT on purchases Refund Refund Refund TN VAT on purchases Nil Refund Refund Central Sales Tax Nil Refund under DGFT Cost Input Service Tax Exemption/ refund Refund Refund Domestic Sales (manufacturer) Domestic Sales (Service Provider) Full customs duty & Applicable VAT 50% of BCD with full CVD & Applicable VAT Excise duty & Applicable VAT Service Tax Service Tax Service Tax 22

24 Pre-export and Post-export Benefits Pre-export Advance Authorization Export Promotion Capital Goods Scheme (EPCG) Duty Free Import Authorization (DFIA) Post-export Duty Drawback (DBK) Focus Market Scheme (FMS) Focus Product Scheme (FPS) Vishesh Krishi and Gram Udyog Yojana (VKGUY) Served From India Scheme (SFIS) Status Holder 23

25 Pre-export benefits Advance Authorization EPCG DFIA Allowed for Physical Export, Deemed Export and Intermediate Supplies Inputs, fuels, oil, energy sources, catalyst are allowed to be imported without customs duty. Exemption is from basic customs duty countervailing duty, additional customs duty education cess, antidumping duty and safeguard duty. Benefit is available to manufacturer exporter or merchant exporter Goods are to be physically incorporated in the export product Goods imported thereunder will be with actual user condition 24

26 Pre-export benefits Advance Authorization EPCG DFIA Authorizations are issued based on inputs and export items given under SION (standard Input Output Norm) Duty free import of mandatory spares upto 10% of CIF value of Authorisation which are required to be exported/ supplied with resultant product are allowed Import and export, upto 24 months (extension is allowed) Minimum Value addition is 15%, subject to certain variations Advance Release Orders are issued for procurement of inputs from indigenous source against invalidation of approval for import of inputs 25

27 Pre-export benefits Advance Authorization EPCG DFIA Application for grant of advance authorization is to be made in form ANF 4A Application with prescribed documents shall be submitted to concerned regional authority Application for fixation or modification of SION to be made in ANF 4B Request for extension in EOP may be made in ANF 4E. RA may grant one extension for six months from expiry date. Request for a further extension of six months may be considered by RA based on all unutilized imported items as per Authorization and on payment of applicable fee. 26

28 Pre-export benefits Advance Authorization EPCG DFIA Zero duty scheme Capital goods are allowed to be imported at Zero duty, for exporters of, with an export obligation of 6 times of duty saved, to be fulfilled over 6 years: Engineering and Electronic Products Basic Chemical & Pharmaceuticals Apparels and Textiles Plastics Handicrafts Chemicals and Allied Products Leather & Leather Products Paper & Paper Boards and Articles thereof Ceramic Products Glass and Glassware Rubber and Articles Thereof Plywood and Allied Products Marine Products Sports Goods and Toys 27

29 Pre-export benefits Advance Authorization EPCG DFIA Concessional duty scheme This Scheme allows import of capital goods at 3% Customs duty instead of the prevailing rate of duty. In order to avail the benefit specified under the EPCG Scheme, the importer is required to obtain a license from the Director General of Foreign Trade. The import of goods at this concessional rate of duty is subject to an export obligation (EO) equivalent to 8 times of duty saved on capital goods imported under the scheme to be fulfilled over a period (EOP) of 8 year reckoned from the date of issue of license. Differential EO and EOP in case of: Particular EO EOP Agro Units, Units in Cottage or Tiny Sector 6 12 SSI (Investment in P&M < 50 Lakhs) 6 8 Duty saved > 100 Crores

30 Pre-export benefits Advance Authorization EPCG DFIA Concessional duty scheme Duty saved is the difference between the duty normally payable and the concessional duty payable under the scheme If Additional Customs duty (CVD) is paid in cash, the same would not be taken into consideration while computing the net duty saved provided Cenvat Credit is not availed on the same. 29

31 Pre-export benefits Advance Authorization EPCG DFIA The condition for fulfillment of EO are The EO shall be fulfilled by export of goods manufactured or produced by the use of the capital goods import under the scheme. The EO shall be in addition to any other export obligation undertaken by the importer, except the export obligation for the same product under advance licence, DFRC, DEPB and drawback scheme. The EO under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products except for certain excluded categories. 30

32 Pre-export benefits Advance Authorization EPCG DFIA The condition for fulfillment of EO are The export shall be direct export in the name of the EPCG licence holder. However, export through third party is also allowed provided the name of the EPCG licence holder is also indicated in the shipping bill. Export proceeds shall be realized in freely convertible currency except in case of deemed exports. (eg., supply to 100% EOUs) Exports shall be physical export except in the case of deemed exports. 31

33 Pre-export benefits Advance Authorization EPCG DFIA Inputs, fuels, oil, energy sources, catalyst, are allowed to be imported without customs duty. Exemption is from basic customs duty countervailing duty, additional customs duty education cess, antidumping duty and safeguard duty. Goods are to be physically incorporated in the export product Goods imported thereunder will be with actual user condition Authorizations are issued based on inputs and export items given under SION (standard Input Output Norm) only 32

34 Pre-export benefits Advance Authorization EPCG DFIA Minimum Value addition is 20%, subject to certain variations Upon fulfillment of export obligation, request for transferability of authorization or inputs imported against it may be made before concerned RA on payment of applicable duty. Application for grant of advance authorization is to be made in form ANF 4H Application with prescribed documents shall be submitted to concerned regional authority 33

35 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder The objective of drawback is to nullify the effect of customs duty, central excise duty, service tax, etc., paid with respect to and contained in goods exported outside India. This is intended to make the goods competitive in the global market. The scheme is applicable in the following scenarios: Goods imported into India and exported as such outside India Goods imported into India and exported outside India after being used Goods imported and/ or indigenously procured and used in the manufacture of goods that are exported outside India 34

36 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder There are two schemes operating in relation to drawback of duties Drawback in relation to goods imported into India and re-exported as such outside India (referred as Section 74 drawback ) Drawback in relation to goods used in manufacture of goods that are exported outside India (referred as Section 75 drawback ) 35

37 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Section 74 Drawback The application of Section 74 Drawback cover two scenarios, viz., goods exported as such and goods exported after being used. In case of the first scenario, the drawback is restricted upto 98% of the duty paid on such goods, while in the second scenario, it is restricted depending on the length of the period from the date of clearance for home consumption of the imported goods and the date when such goods are placed under customs control for export. The percentage of drawback in relation to the second scenario has been notified by the Central Government vide Notification No. 19-Cus, dated 06- Feb-1965 (as amended to date). 36

38 Post-export benefits Duty drawback Period (between clearance & export) % of DBK FMS/ FPS VKGUY SFIS Status Holder 3 Months and Less 95% 3 Months to 6 Months 85% 6 Months to 9 Months 75% 9 Months to 12 Months 70% 12 Months to 15 Months 65% 15 Months to 18 Months 60% More than 18 Months Nil 37

39 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder The conditions to claim drawback under Section 74 has been given below: It is in relation to goods actually exported outside India, which were previously imported Such goods are capable of being easily identified and duty was actually paid (either provisionally or as final) on their importation The goods have entered for re-export within two years from the date of payment of duty on the importation thereof. However, the Commissioner of Customs may extend the period on sufficient cause being shown by a further period not being more than one year. The market price of the goods shall not be less than the drawback claimed The drawback claimed should not be less than Rupees Fifty. 38

40 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder The procedure to claim drawback under Section 74 is provided below. The exporter should file shipping bill/ bill of export under claim for duty drawback alongwith the following document with the customs authorities at the time of export of goods Triplicate copy of shipping bill bearing examination report recorded by the customs officer at the time of export Copy of bill of entry or other document against which goods were imported Import Invoice Evidence of payment of duty at the time of importation Export Invoice and packing list Copy of bill of lading/ airway bill Any other information as specified in the deficiency memo 39

41 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder The goods are examined by the customs official for physical identification After shipment, a claim for drawback is filed with the department for sanction of drawback alongwith the supporting documents within three months of the let export order On receipt of the sanction order, the copy is forwarded to the drawback department for issuance of cheque. 40

42 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Section 75 Drawback The application of Section 75 is to nullify the effect of duty paid on indigenously procured or imported inputs that are used in the manufacture of goods that are exported outside India. However, no relief under this section is granted to capital goods, consumables and fuels used in the manufacture of export goods. The rates of drawback in these cases are announced by the Government, Ministry of Finance, for general category of goods and indicated in the schedule appended to Customs and Central Excise Duties Drawback Rules, The all industry rates are generally based on the all industry consumption of inputs, duties suffered thereon, quantity of wastages, FOB value of exports. 41

43 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder The procedure to claim drawback under Section 75 is provided below: The exporter is required to file a drawback shipping bill along with necessary declaration The goods are examined by the proper officer who will make his examination report on the triplicate copy of the shipping bill The documents required for processing claim are to be filed within three months from the let export order. Under the EDI, no separate drawback claims are filed, the shipping bill itself is treated as the drawback claim. The claims for drawback are settled by the appraiser if the amount is less than Rupees One Lakh and by the Assistant Commissioner in all other cases. The cheques in settlement of the claim are issued after a pre-audit 42

44 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder The procedure for fixation of brand rates under simplified scheme: The brand rates are determined for specific export products exported by specific exporters. The simplified Brand Rate Fixation scheme will be available to all manufacturer exporters who have a regular production of the product for which brand rate is being sought and who are corporate bodies having a detailed accounting system which is normally subject to statutory audit under the Company Law. The data will have to be supported by certificate from an independent Chartered Engineers Chartered Accountant/ Cost accountants in relation to the data furnished in Statements DBK I. II & III submitted along with the application. 43

45 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Focus Market Scheme To nullify the incidence of high freight cost and other externalities to select international market, to enhance export competitiveness, they are entitled to: Table 1 & 2 of Appendix 37C: 3% of FOB Table 3 of Appendix 37C: 4% of FOB Focus Product Scheme To promote export of products which have high export intensity/ employment potential, to offset infrastructural inefficiencies and other marketing costs, they are entitled to: Specified products in Appendix 37D: 2% or 5% of FOB Specified products in Appendix 37C: 4% or 7% of FOB 44

46 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Vishesh Krishi and Gram Udyog Yojana (VKGUY) (Special Agricultural and Village Industries Scheme) To compensate high transport costs and offset other disadvantages to promote exports of the following products: Agricultural Produce Minor Forest Produce Gram Udyog Products Forest Based Products Other Products, as notified from time to time Entitlement: Products listed in Appendix 37A: 5% of FOB Specified products in Table 1 of Appendix 37A: 7% of FOB 45

47 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Served from India Scheme (SFIS) Served From India Scheme aims to accelerate growth of services exported from India Service providers exporting specified services and earning free foreign exchange in excess of the prescribed threshold are eligible for benefits in the form of Duty Credit Scrip (Scrip) The eligible service exporters are entitled to the Scrip equivalent to 10% of the free foreign exchange earned in the current or the preceding year A scrip can be utilized towards payment of Customs duty/ Excise duty on procurement of specified goods A scrip is valid for a period of 24 months from the date of issue 46

48 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder All exporters of listed services having foreign exchange earnings exceeding Rs.10 lacs in the current or the preceding year are eligible under this scheme The following category of services are eligible: Supply of a service from India to any other country; Supply of a service from India to service consumer of any other country in India; and Supply of a service from India through commercial or physical presence in territory of any other country Supply of a service in India relating to exports paid in free foreign exchange or in Indian Rupees which are otherwise considered as having being paid for in free foreign exchange by RBI 47

49 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder The scrip can be utilized for import/ procurement of Capital goods, including spares Office equipment and professional equipment Office furniture and consumables The goods should be freely importable under ITCHS The imports shall relate to services sector business of the applicant Import of vehicles shall not be allowed under this scheme The scrip and goods shall be non-transferable (except within group companies and managed hotels) and subject to actual user condition The scrip can be utilized for import under lease financing as well 48

50 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Eligible service providers to file an application on monthly/ quarterly/ half yearly/ yearly basis to the jurisdictional Regional Authority in Form ANF 3B The application to be filed within 12 months from the end of relevant month/ quarter/ half year/ year Service providers to submit a statement of imports/ procurement of goods made under the scheme within one month from the completion of imports or expiry of validity of the scrip, whichever is earlier. A copy thereof shall also be filed to the jurisdictional Excise authorities (Service tax cell). 49

51 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Status house is a recognition provided under Foreign Trade Policy, to large exporters including merchant exporters, manufacturer exporters, service exporters and STP/EOU/SEZ units. The status is conferred on achieving the following export performance in at least 2 out four years: Status Category Performance (In INR Million) Export House 200 Star Export House 1,000 Trading House 5,000 Star Trading House 25,000 Premier Trading House 75,000 50

52 Post-export benefits Duty drawback FMS/ FPS VKGUY SFIS Status Holder Status holders are provided with the certain benefits under the FTP, which are: Speedy customs clearance of import and export cargo on self-declaration basis Reduced period of 60 days for fixation of inputoutput norms Exemption from compulsory negotiation of documents through the regular banking channel Allowed to retain 100% of the earnings in the EEFC account Exemption from furnishing bank guarantee under any of the schemes of the Foreign Trade Policy Star Export Houses and above shall be permitted to establish Export Warehouses, as per DoR guidelines 51

53 Goods & Services Tax GST Impact on imports Pre GST Post GST Basic Customs Duty 10% Nil Basic Customs Duty 10% Nil Countervailing Duty 12.36% Nil Central GST 9% Nil Customs Education Cess 3% Nil State GST 9%? Additional Duty of Customs 4% Nil Cascading effect continues? Applicable Customs duty 28.85% Nil Applicable Customs duty 29.80%? 52

54 Goods & Services Tax GST Impact on purchase of goods Pre GST State 1 State 2 Post GST State 1 State 2 Interstate Purchase (Excise 12.36%) (CST 2% / 5% / 14.5%) Vendor Interstate Purchase (IGST 18%) Vendor No credit for CST Full credit of IGST Unit Local Purchase (Excise 12.36%) (VAT 5% /14.5%) No excise duty in case of purchased from dealer. Restriction on excise duty credits Unit Local Purchase (CGST 9%) (SGST 9%) Vendor Input credit only if related to business and for dealer in goods Vendor Full credit of SGST & CGST 53

55 Goods & Services Tax GST Impact on supply of services Pre GST Post GST State 1 State 2 State 1 State 2 Interstate (Service tax 12.36%) Vendor Interstate (IGST 18%) Vendor Full credit of IGST Unit Local (Service Tax 12.36%) Credit of service tax available Unit Local (CGST 9%) (SGST 9%) Vendor Vendor Full credit of SGST & CGST 54

56 Goods & Services Tax GST Impact on stock transfer Pre GST State 1 State 2 Post GST State 1 State 2 Unit Stock Transfer (No Tax) Unit Unit Stock Transfer (IGST 18%) Unit Customer Export (No tax) Case for refund Customer Export (No tax) 55

57 Accolet Advisors Private Limited Accounting Consulting Legal Tax Every reform is like a mask made to unfold, the existing and breeding to get unfolded by another Deepak Kumar Jain B H/P: deepak@accoletadvisors.com Green Apple, No. 16, 1 st Floor, Murphy Road, Ulsoor, Bangalore , India. Phone: