GST- Impact on Supply Chain-FMCG

Arijit GhoshMarch -2017

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Hub & Spoke Model

Max Warehouse Capacity Utilization

Reduction of Warehouse Overhead cost

Reduction of Material Cost Reduction of Supply chain

Blue-whip effects on Demand Planning.

Optimum Logistics Expenses

Reduction of Wastage

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Application Hub & Spoke Model in India

Intra/Inter state stock transfer

Stock transfers are taxable in the following two cases:Intrastate stock transfer: No Tax Applicable on transfer within same registration in one stateIntrastate stock transfer: Only when an entity has more than one registration in one stateInter state stock transfer: Transfer between two entities located in different states is taxable

Supply Chain Process Before GST

Finished Goods Transferred Depot I to another Depot II to avoid tax Depot II to CSA Transfer also non Taxable

Depot II

CSADepot I

Production Unit

Stock Transfer

Supply Chain Process After GST

Inter State Depo to Depot Transfer will be taxable - IGST CSA will be Super Stockist (Customer)- Transaction will be considered as Sale.-IGST

Depot N

Production Unit

Stock Sale (IGST)

Super Stockist

Depot WSeparate Registration Number

Stock Sale (IGST)

Customer

Internal Customer

Job Work Process Before GST

Raw Material Transferred to another State Branch II to avoid tax Issue Job Work to Third party and Received to Branch II

Branch I

Branch II

Third Party Job Work

Job Work Process After GST

The Branch 1 can sent for Job Work without payment of tax provided such goods are received back by the principal within one year of their being sent out.

Stock transfer will be Taxable for Interstate. To avoid Taxes - Branch 1 has to send for Job Work.

Branch I

Third Party Job Work

GST on Goods

Intra-State Supply

Dual tax – CGST-SGST Registered office not relevant;

location of goods is relevant Intra-State supply, if ‘from’ and

‘to’ in one State

Inter-State Supply

One tax – IGST (higher rate) Movement for ‘delivery’ relevant;

even stock-transfer taxable Imports – basic customs + IGST

‘From’ location ‘To’ location ‘To’ location

IGST

CGST-SGST

GST on Services

Intra-State Supply

Dual tax – CGST-SGST Place of usage relevant ‘Test’ of such place listed for

various services

Inter-State Supply

One tax – IGST (higher rate) Imports – receiver to pay IGST When ‘place of usage’ not fixed,

use recipient’s address

Supplier’s address of GST

registration

Place of usage of service

Place of usage of service or recipient’s address of

GST registration

IGST

CGST-SGST

Thank You !!!