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Why GST

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Why GST

  1. 1. Why GST? Ca. Jayesh Gogri GSC Intime Services Pvt. Ltd.
  2. 2. EXISTING STRUCTURE OF INDIRECT TAXES IN INDIA 24-Jan-15 GSC Intime Services Pvt. Ltd. 2
  3. 3. Taxes in India • Every Indian Citizen generally pays – Income tax • Business man – Customs Duty – Excise Duty – VAT – LBT/Entry tax/Octroi • Profession – Profession tax – Service tax • At home – Stamp Duty – Electricity Duty – Wealth tax • Travelling – Tolls, luxury tax, Service tax • For movie – Entertainment tax 24-Jan-15 GSC Intime Services Pvt. Ltd. 3
  4. 4. Major taxes in India Tax Direct tax Income Tax Capital Gain Tax MAT Wealth Tax STT Indirect tax Customs Duty Excise Duty Central State Service tax VAT/CST Octroi/Entry Tax/LBT 24-Jan-15 GSC Intime Services Pvt. Ltd. 4
  5. 5. Constitution of India • Article 265: No tax shall be levied or collected except by the authority of law. • No Concentration of Powers • Separation of Powers: – Union List – State List 24-Jan-15 GSC Intime Services Pvt. Ltd. 5
  6. 6. India has a Two tier Taxation System • Income tax • Service Tax • Customs duties • Central Excise • Sales Tax Central government (Union List) • Stamp Duty • State excise • Entertainment tax • Local Sales Tax • Land Revenue • Profession tax State government (State List) • Local Body Tax • Octroi • Cess • Entertainment tax • Profession tax Local bodies (State List – Delegated to Local Bodies)
  7. 7. Unique features of Indirect taxes 24-Jan-15 GSC Intime Services Pvt. Ltd. 7 • Affects top line of any business • Recoverable from end customer ultimately • Transaction based tax • Premise based tax • Set off Provisions available • Procedural Laws • Frequent changes in legislature • High penal consequences
  8. 8. ISSUES WITH EXISTING TAX SYSTEM 24-Jan-15 GSC Intime Services Pvt. Ltd. 8
  9. 9. Issues with Tax System • Multiple Taxable Events • Different Threshold Limits • Multiple Rate Structure • Litigation Issues • Different Valuation Provisions • Interpretation of Goods and Services • VAT vs service tax • Different kinds of Exemptions • Frequent Notifications • Multiple Composition Schemes 24-Jan-15 GSC Intime Services Pvt. Ltd. 9
  10. 10. Taxable event Customs Duty • Import into or export out of India- • Crossing the customs frontiers Excise Duty • Manufacture of goods Service tax • Provision of services VAT/CST • Sale of goods Profession tax • On carrying on profession, trade Entry tax • Import into the State for sale, use or consumption Stamp Duty • On execution of documents LBT/Octroi • Import into local limits • for sale, use or consumption 24-Jan-15 GSC Intime Services Pvt. Ltd. 10
  11. 11. Multiple Taxable Events 24-Jan-15 GSC Intime Services Pvt. Ltd. 11 Tax law Taxable event Central excise Manufacture of goods Customs Import into or export out of India Service tax Provision of Service VAT Sale of goods Stamp duty On execution of Documents Profession tax On carrying on profession/trade
  12. 12. Different threshold limits 24-Jan-15 12GSC Intime Services Pvt. Ltd. Tax law Threshold limit Customs NO *Baggage = General: 45000/- Central Excise 1.5 Crores Service tax 10 lakhs VAT 10 lakhs (Varies from State to State) LBT 5 lakhs
  13. 13. Multiple Rates 24-Jan-15 13 2.06% 1% 12.36% 12.5% 5% 20% 12.36% 6.18% 7.5%+12.36%+7.5%+12.36%+ 4% 5% 2% GSC Intime Services Pvt. Ltd.
  14. 14. Litigation Issues 24-Jan-15 GSC Intime Services Pvt. Ltd. 14 Commissioner (Appeals) Tribunal High Court Supreme Court
  15. 15. Taxable values… Tax laws Taxable Value Service Tax • Gross Amount Charged for the provision of Service • Intercontinental Consultants & technocrats Pvt. Ltd. vs. Union of India 2013 (29) STR 9 (Del.) admitted in 2014 (35) STR J99 (SC) Excise • Price actually paid or payable including any amount paid or payable by reason of, or in connection with the sale except ED, VAT and other taxes • CCE, Mumbai vs. Fiat India Pvt. Ltd. 2012 (283) ELT 161 (SC) Customs • price actually paid or payable when sold for export to India for delivery at the time and place of importation or for export from India for delivery at the time and place of exportation • Any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges… • Ashok Traders vs. UOI 1987 (32) ELT 262 (Bom.) 24-Jan-15 15GSC Intime Services Pvt. Ltd.
  16. 16. …Taxable values Tax laws Taxable Value VAT Valuable consideration paid or payable including any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof except cost of insurance or installation, if charged separately Including Central Excise/Custom Duty paid (Maharashtra State) Stamp Duty • Market value or the transaction value whichever is higher • Sometimes flat rate of SD on the transaction 24-Jan-15 16GSC Intime Services Pvt. Ltd.
  17. 17. Goods vs Services 24-Jan-15 GSC Intime Services Pvt. Ltd. 17 Infotech Software Dealers Association vs. Union of India 2010 (20) STR 289 (Mad.) AGS Entertainment Pvt. Ltd. vs. Union of India 2013 (32) STR 129 (Mad.)
  18. 18. VAT vs Service tax 24-Jan-15 GSC Intime Services Pvt. Ltd. 18 Valley Hotel & Resorts 2014 (35) STR 28 (Uttarakhand) Hotel East Park 2014 (35) STR 422 (Chhattisgarh)
  19. 19. Exemptions, exclusions etc. 24-Jan-15 GSC Intime Services Pvt. Ltd. 19 Service Tax Mega Exemption Negative List Service Provided outside India M-VAT Schedule ‘A’ Central Excise Exemptions for SSI Other full/partial exemptions
  20. 20. Notifications 24-Jan-15 GSC Intime Services Pvt. Ltd. 20 23/ 201 4-ST 06/2015- Cus(NT) ???
  21. 21. Composition Schemes • Numerous Composition Schemes – MVAT • Developer – 1% • Restaurants - 8%/10% • Bakers – 4%/6% • Retailers – 1%/1.5% – Central Excise • Compounded levy Scheme – LBT • Basis of Turnover – 1,00,000 to 2,00,000 : 4,000… – 9,00,000 to 10,00,000 : 20,000 • Valuation for Composition Schemes? • Tax on Tax? 24-Jan-15 GSC Intime Services Pvt. Ltd. 21
  22. 22. TAX on TAX?? • Constitutional Issues – State List/Union List • Objective of Revenue Collection • VAT + Excise/Customs Duty – Cascading Effect • VAT on Service Tax? – Article 366(29A) : Deemed Sales • VAT on Service? – Freight Charges • Anything done by the dealer? 24-Jan-15 GSC Intime Services Pvt. Ltd. 22
  23. 23. Procedures… 24-Jan-15 GSC Intime Services Pvt. Ltd. 23 RegistrationRegistration PaymentsPayments ReturnsReturns RefundsRefunds
  24. 24. …Procedures ACES ICEGATEMAHAVAT NMMCONLINE 24-Jan-15 GSC Intime Services Pvt. Ltd. 24
  25. 25. Ca. Jayesh Gogri Director 2/22 Nityanand Nagar, Sahar Road, Andheri (East), Mumbai-400 069. +91 22 2684 0208 +91 9821 012 151 info@gscintime.com jayeshgogri@gscintime.com Right advice at right time… 24-Jan-15 GSC Intime Services Pvt. Ltd. 25

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