Goods and Service Tax (GST) aims to consolidate indirect taxes into a single tax, replacing multiple taxes and improving tax administration efficiencies. GST is a destination-based tax on the consumption of goods and services. It is based on a value-added tax system and will have two components - Central GST and State GST. The proposed GST reform in India is expected to integrate state economies, boost growth, increase tax revenues, and make the manufacturing sector more competitive through reduced costs.

1. Goods and Service tax
GOODS AND
SERVICE TAX
How it will change taxation in India
BY
K . Amaresh Gupta
PGDM
1401010
Institute of Public enterprise

2. Its main objective is to consolidates all indirect tax levies into
 a single tax, except customs (excluding SAD)
 replacing multiple tax levies,
 overcoming the limitations of existing indirect tax structure, and
 creating efficiencies in tax administration.
What is GST?
GST stands for “Goods and Services Tax”, and is proposed to be a
comprehensive indirect tax levy on manufacture, sale and
consumption of goods as well as services at the national level.

3. GST is a destination based tax and levied at single point at the time of
consumption of goods or services by the ultimate consumer.
Zero rating of exports and inter State sales of goods and supply of services.
GST is based on the principle of value added tax and either “input tax
method” or “subtraction” method, with emphasis on voluntary compliance
and accounts based system.
One of the biggest taxation reforms in India -- the Goods and Service Tax
(GST) -- is all set to integrate State economies and boost overall growth.

4. Three Prime Models of GST
GST to be levied
by the Centre
Central
GST
State
GST
Dual GST
GST to be levied
by the States
GST to be levied by
the Centre and the
States concurrently

5. Intra state
taxable
supply
Excise and
service tax will
be known as
CGST
Local VAT
&other Taxes
will be known
as SGST
Inter state
Taxable
supply
CST will be
known as
Integrated
GST
Approx sum
total of CGST
& SGST
Import from
outside
India
Custom Duty
In place of
CVD &
SAD,IGST will
be changed
Proposed Indirect Tax Structure

6. The proposed GST will have two components – Central GST and State GST –
the rates of which will be prescribed separately keeping in view the
revenue considerations, total tax burden and the acceptability of the tax.

7. Simple tax
structure
Increased
tax
revenues
Competitive
pricing
Boost to
export
Why is GST important ?

8. A sample taxation regime can make the manufacturing sector more competitive
and save both money and time
Cost of production falls in the domestic market, Indian goods and services will be
more price-competitive in foreign markets
Experts opine that the implementation of GST would push up GDP by 1%-2%

9. Positive impact on Indian economy
• Speeds up economic union of India
• Better compliance and revenue buoyancy Replacing the cascading effect [tax on tax] created
by existing indirect taxes Tax incidence for consumers may fall Lower transaction cost for
final consumers
• By merging all levies on goods and services into one, GST acquires a very simple and
transparent character
• Uniformity in tax regime with only one or two tax rates across the supply chain as against
multiple tax structure as of present
• Increased tax collections due to wide coverage of goods and services
• Improvement in cost competitiveness of goods and services in the international market

10. What impact GST will have on pricing of products as compared to
current scenario

11. Country Rate of GST
Australia 10%
France 19.6%
Canada 5%
Germany 19%
Japan 5%
Singapore 7%
Sweden 25%
New Zealand 15%
u.k 20%
Almost 150 countries have introduced GST in some form since now
Present GST rates of some of the countries
The GST rate in various countries ranges from 5% to 25%

12. Probable GST Rates in India The GST
rates in India are expected to be
12% to 20% for the 1st year,
12% to 18% for the 2nd year and
16% for the 3rd Year and onwards.
Estimated GST Rate

13. GST Rates – to be based on RNR
• Floor rate with a small band of rates for standard rated goods or services for SGST
• This is similar to mandatory guidelines which will be issued by GST Council in line with
European Directive 12/2006
• Optional Threshold exemption in both components of GST.
• Optional Compounding scheme for taxpayers having taxable turnover up to a certain
threshold above the exemption.
– Four rates
Merit rate for essential goods and services
Special rate for precious metals
Standard rates for goods and services in general
NIL rate
RNR->Revenue
Neutral Rate

14. What will be out of GST ?

15. Advantages of Comprehensive GST
• Introduction of GST would result in abolition of multiple types of taxes on
goods and services.
• It reduces effective rates of tax to one or two floor rates.
• Reduces compliance cost and increases voluntary compliance.
• Removes cascading effect of taxation and also distortion in the economy.
• Enhances manufacturing and distribution efficiency, reduces cost of production
of goods and services, increases demand and production of goods and services.

16. • As it is neutral to business processes, business models, organization structure,
geographic location, product substitutes, it promotes economic efficiency and
sustainable long term economic growth.
• Gives competitive edge in international market for goods and services
produced in a country, leading to increased exports.
• Reduces litigation, and corruption.
• Results in widening tax base and increased revenue to the Center and State.
• Reduces administrative cost for the Government.
Advantages of Comprehensive GST

17. Compensation Package to the States for Losses
• Major challenge before the Government is to finalize the compensation package
for the States in case of loss due to implementation of the GST.
• Under the GST structure, the tax would be collected by the States where the goods
or services are consumed, and hence losses could be heavy for the producer States
and the Centre would be required to compensate them for loss of revenue.
• There are fears that states may lose some revenue because of the introduction of
GST. The bill allows for compensation for revenue loss to states for a period of 5
years.