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Goods & Services Tax
(GST)
Presenters-
Abhilash Shah 001
Anup Palarapwar 008
Gaurav Korgaonkar 017
Aditya Kondejkar 101
Ga...
“ What is GST?
GST is one indirect tax for whole
nation, which will make India one
unified common market.
Why do we want GST?
▸GST will greatly increase the revenues available at the
states’ and Centre's disposal by expanding th...
Objectives of GST
▸ One Country – One Tax
▸ Consumption based tax
instead of Manufacturing
▸ Uniform registration,
payment...
Tax being subsumed into GST
5
Center Level
• Central Excise Duty
• Additional Excise Duty
• Service Tax
• Additional Excis...
GST Timeline
6
2000 – GST
discussions begin –
Mr. Asim Dasgupta
Feb 2006 – GST
Announcement
Nov 2009 - GST
discussion pape...
GST Timeline
7
Aug 2015 - The GST
bill is introduced in
Rajya Sabha
Aug 2016 - The GST
Bill is passed in
Rajya Sabha
Sept ...
GST Structure in India
8
SGST CGST IGST
DualGST
Structure
1) State – State Goods & Service Tax (SGST)
2) Central –
a) Cent...
GST Structure in India
9
Worldwide GST
10
Country Rate of GST
France (First Country – 1954) 19.6%
Canada (Dual GST System) 5%
Brazil (Dual GST Syst...
How GST Works Within State
11
How GST Works in Inter-State Transfer
12
States Concern over GST
▸ Worry of manufacturing states -Tamil Nadu, Maharashtra and
Gujarat
▸ Destination-based tax (Bene...
Overall Impact of GST
14
GST will lower
effective taxes
Organized sector
to gain
Logistics costs to
fall
Heralding
transpa...
Sectoral Impact - Automobiles
▸ Small Cars (Sub 4 Meter Segment) - No Positive Impact on Car Prices with
28% GST Cess. Inf...
Sectoral Impact - Automobiles
16
Sectoral Impact – Media & Entertainment and Cement
17
Media&Entertainment
In the media & entertainment
sector, current ble...
Sectoral Impact – Retailing and Restaurants & QSRs
18
Retailing
Currently Service Tax as well
as VAT are imposed without
a...
Sectoral Impact - Renewable Energy & Steel
19
RenewableEnergy
Implementation of GST,
assuming 18% rate, will
increase sola...
Sectoral Impact - Oil & Gas and Hotels
20
Oil&Gas
Crude, natural gas, ATF,
diesel and petrol are
excluded from the coverag...
Sectoral Impact – Real Estate
▸ If the current service tax + VAT outgo is higher than the effective GST rate, it
will prov...
Sectoral Impact – Coal
▸ End-users of coal are expected to witness an increase in fuel costs with
implementation of GST
▸ ...
Expert Opinion - Vijay Kelkar, Satya Poddar & V. Bhaskar
Former finance secretary and tax expert Vijay Kelkar had termed t...
Expert Opinion - Abhishek Jain & Mr. Deshpande
"This was a specific task of the oil & gas industry as this would have
enab...
Positive Impact of GST on GDP
25
▸ According to research by NCAER, GST could increase the GDP by 0.9 to 1.7
percent.
▸ Exp...
Negative Impact of GST on GDP
26
▸ As the proposed GST rate is 18% which is higher than current service tax rate i.e.
15% ...
27
THANKS!
Any questions?
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GST - Final PPT

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GST - Final PPT

  1. 1. Goods & Services Tax (GST) Presenters- Abhilash Shah 001 Anup Palarapwar 008 Gaurav Korgaonkar 017 Aditya Kondejkar 101 Gautam Bandigare 111 Group 4
  2. 2. “ What is GST? GST is one indirect tax for whole nation, which will make India one unified common market.
  3. 3. Why do we want GST? ▸GST will greatly increase the revenues available at the states’ and Centre's disposal by expanding the tax base ▸GST will facilitate ‘Make in India’ by converting the geographical landscape of the country into a single market. ▸GST would improve tax governance in two ways a) It is a self-collecting and self-enforcing tax. b) It is difficult to evade tax 3
  4. 4. Objectives of GST ▸ One Country – One Tax ▸ Consumption based tax instead of Manufacturing ▸ Uniform registration, payment and Input Credit ▸ To eliminate the cascading effect of Indirect taxes on single transaction 4 ▸ Subsume all indirect taxes at Centre and State Level under ▸ Reduce tax evasion and corruption ▸ Increase Compliance ▸ Reducing economic distortions
  5. 5. Tax being subsumed into GST 5 Center Level • Central Excise Duty • Additional Excise Duty • Service Tax • Additional Excise Duty • Special Additional Duty of Customs State Level • State VAT/Sales Tax • Entertainment Tax • Octroi & Entry Tax • Purchase Tax • Luxury Tax • Tax on Lottery & Gambling
  6. 6. GST Timeline 6 2000 – GST discussions begin – Mr. Asim Dasgupta Feb 2006 – GST Announcement Nov 2009 - GST discussion paper is published Feb 2010 - Project launched to computerize commercial taxes Mar 2011 - Congress introduces the GST bill in Lok Sabha Nov 2012 – FM set deadline to resolve problems related to the transition to GST Aug 2013 - Standing committee suggests amendments to the bill Dec 2014 - The GST bill was reintroduced to the Lok Sabha May 2015 - Lok Sabha passes the GST bill
  7. 7. GST Timeline 7 Aug 2015 - The GST bill is introduced in Rajya Sabha Aug 2016 - The GST Bill is passed in Rajya Sabha Sept 2016 - 16 States ratify the GST bill Sept 2016 - The GST bill gets the presidential assent Sept 2016 - First meeting of GST Council held Oct 2016 - Madhya Pradesh to serve as the country's supply hub Nov 2016 - Four Tier GST Tax Structure Finalized Nov 2016 - GST portal has become live Jan 2017 – Eights Meeting of GST Council Held
  8. 8. GST Structure in India 8 SGST CGST IGST DualGST Structure 1) State – State Goods & Service Tax (SGST) 2) Central – a) Center Goods & Service Tax (CGST) b) Integrated Goods and Service Tax (IGST) 5% 12% 18% 28% GST Rate in India
  9. 9. GST Structure in India 9
  10. 10. Worldwide GST 10 Country Rate of GST France (First Country – 1954) 19.6% Canada (Dual GST System) 5% Brazil (Dual GST System) 17% Australia 10% Germany 19% Japan 5% Singapore 7% New Zealand 15%
  11. 11. How GST Works Within State 11
  12. 12. How GST Works in Inter-State Transfer 12
  13. 13. States Concern over GST ▸ Worry of manufacturing states -Tamil Nadu, Maharashtra and Gujarat ▸ Destination-based tax (Benefit to state with more consumption) ▸ Losses of revenues on movement of goods made to states ▸ Compensation for losses suffered in the first five years whereas states want it for 10 years ▸ First three years 100 %, forth year 75 % , fifth year 50 % ▸ Additional tax of up 1 % on inter-state trade of goods for two years or longer period 13
  14. 14. Overall Impact of GST 14 GST will lower effective taxes Organized sector to gain Logistics costs to fall Heralding transparency, reducing cascading effects Services will become more expensive
  15. 15. Sectoral Impact - Automobiles ▸ Small Cars (Sub 4 Meter Segment) - No Positive Impact on Car Prices with 28% GST Cess. Infact, Small Cars would likely be expensive by 1% to 2% ▸ Mid Sedan, Mid SUV Range (> 4 Meter, But Engine < 1.5 Litre) - Prices would likely Increase by 2% to 3% as is expected that GST + Additional Luxury Cess will make up for 40% Tax ▸ Luxury High End Cars (Engine > 1.5 Litre) - Prices would go up as GST+ Addl. Cess will be imposed o these items ▸ In all - There would not be any benefit post GST - to the passenger car Sector. It was earlier anticipated for 20% Cess - but with 28% GST on Cars - it will likely be detrimental for Automobile sector - which was eagerly awaiting for GST and buyers who deferred purchase call for 2017 15
  16. 16. Sectoral Impact - Automobiles 16
  17. 17. Sectoral Impact – Media & Entertainment and Cement 17 Media&Entertainment In the media & entertainment sector, current blended indirect tax is in the range of 27-40%. GST implementation will bring down effective indirect tax although the exact rate of GST on Media and entertainment is not yet finalized Cement Cement industry currently suffers from high taxation structure along with multiple taxes It is expected that cement industry may be kept at a standard rate of 18% A lower rate along with the elimination of cess and increase in credits should have an overall positive impact on the industry
  18. 18. Sectoral Impact – Retailing and Restaurants & QSRs 18 Retailing Currently Service Tax as well as VAT are imposed without any set-off Introduction of GST will: a) Reduction of Indirect costs b) Will bring unorganized and organized players on the same page thus reducing the price gap Restaurants&QSRs GST rate will be higher than current service tax rate and hence prices will go up With 18% GST, the impact will be negative Also as aerated drinks are kept under luxury goods category the GST for the same is 28% plus addl. Cess which will further increase the negative impact.
  19. 19. Sectoral Impact - Renewable Energy & Steel 19 RenewableEnergy Implementation of GST, assuming 18% rate, will increase solar power project cost by 13-15% However, given strong government thrust to promote renewable energy, the GST Council could exclude / provide a concessional rate renewable energy from the regime. Steel The overall tax incidence on the sector to potentially remain same Currently, indirect taxes in the sector are close to 15-18% depending upon whether the sales are within or outside the state If the GST is levied at 18% the effective tax rate will remain at similar levels and there will be no visible impact on the steel sector
  20. 20. Sectoral Impact - Oil & Gas and Hotels 20 Oil&Gas Crude, natural gas, ATF, diesel and petrol are excluded from the coverage of GST for the initial years Remaining petroleum products (for eg kerosene, naphtha, LPG, etc) are covered within the coverage of GST. But impact will be known once the rate for these products is finalized Hotels Hotel rooms currently attract Service tax and Luxury tax Currently Service tax stands at 8.7% and luxury tax varies between 5-12.5% Thus the impact of GST on hotels will be negative or positive depending on the rate as well as the state in which the property is located
  21. 21. Sectoral Impact – Real Estate ▸ If the current service tax + VAT outgo is higher than the effective GST rate, it will provide some relief to the consumer ▸ Leasing of residential properties does not attract service tax and so will have no impact of the implementation of GST ▸ Leasing of commercial properties attracts service tax and will be impacted by GST. Again, the impact will depend on the effective rate of GST ▸ From the developer’s point of view, implementation of GST will results in lower construction costs. However, it needs to be seen if these benefits shall be passed on to the customers 21
  22. 22. Sectoral Impact – Coal ▸ End-users of coal are expected to witness an increase in fuel costs with implementation of GST ▸ Excise duty on coal is levied at 6%, whereas VAT is levied at 5%. Assuming a GST rate of 18%, delivered cost of coal is likely to increase by 5-6% per tonne of coal ▸ The increase in fuel costs are not expected to have any impact on the profitability of power generation companies ▸ The impact of the increase in power purchase costs on retail tariffs will vary on a state-to-state basis, depending upon existing tariff structure and subsidy levels 22
  23. 23. Expert Opinion - Vijay Kelkar, Satya Poddar & V. Bhaskar Former finance secretary and tax expert Vijay Kelkar had termed the four-tier structure as “disappointing”. According to him it “robs the GST of its efficiency enhancing potential” "One rate is a crucial part of the structure. It would enable the levy of a single low rate on a very broad and comprehensive base, eliminating litigation and rent-seeking on classification disputes, promoting voluntary compliance and ensuring simple and effective implementation," 23
  24. 24. Expert Opinion - Abhishek Jain & Mr. Deshpande "This was a specific task of the oil & gas industry as this would have enabled availability of inputs GST credits in relation to these products.” "In the earlier GST Council meetings there were some indication that services which have abatement today may fall under the 12 percent bracket; however no further clarity emerged on that post the GST Council meeting on Thursday,” "Uncertainty rates for gold is not warranted as gold is a key determinant of the rate structure," Deshpande of Deloitte says 24
  25. 25. Positive Impact of GST on GDP 25 ▸ According to research by NCAER, GST could increase the GDP by 0.9 to 1.7 percent. ▸ Exports which grew at 13 per cent CAGR during 2010 and 2013 is expected to increase at around 6-8 per cent due to implementation of GST thereby further adding to GDP. ▸ In long run, GST will be positive for the economy over the longer term as it simplifies the tax structure, increasing compliance, reduces tax evasion, expands tax base and significantly improves the functioning of the logistics network. ▸ Currently, companies sourcing capital goods for capacity expansion cannot claim tax credit on capital goods purchased; this will change with the GST regime. Because of GST, capital goods prices would become effectively 12-14 per cent cheaper as companies avail tax credit. This is likely to increase investments and could lead to incremental GDP of 0.5 per cent.
  26. 26. Negative Impact of GST on GDP 26 ▸ As the proposed GST rate is 18% which is higher than current service tax rate i.e. 15% (including cess), so the services will become costlier and it will lead to inflation for a short period. ▸ GST will impact the Real Estate business negatively as it will add up the additional 8 to 10 percent to the cost and reduce the demand about 12 percent. ▸ According to the government's estimates, excise tax exemptions result in foregone revenues of Rs. 1.8 lakh crore. The comparable figure for the states is about Rs. 1.5 lakh crore. Together, India loses about 2.7 per cent of GDP because of exemptions.
  27. 27. 27 THANKS! Any questions?

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