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GST in India


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Logistics & SCM , IIPMB

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GST in India

  2. 2. Contents  Meaning of Tax.  Types of taxes.  Introduction.  History.  Tax Structures.  Implementations.  Model of GST.  GST Chain.  Functioning of GST.  Taxable Person.  Registration Under GST.  Returns.  Rate of Tax.  Exempted Goods.  Flaws of GST Model.  References.
  3. 3. TAX  A tax is a fee charged (levied) by a government on a product, income, or activity. The purpose of taxation is to finance government expenditure.  Use of tax in financing public goods and services, such as street lighting, street cleaning  Infrastructure development.
  4. 4. Types Of Tax Direct tax Directly levied on the individual group or an organization by the imposing entity. Examples of direct taxes: Income tax, corporate tax, wealth tax etc.
  5. 5. Indirect Tax A tax levied on goods and services rather than on income or profits. Examples of indirect taxes:- Excise duty, Customs duty, VAT, Central sales tax, Entry tax, Octroi tax, Service tax, etc.
  6. 6. What Is GST  GST stands for Goods and Service Tax which is a comprehensive tax levied on manufacture, sale and consumption of goods and services at pan-India level. Implying, GST will subsume host of central (Excise, Countervailing Duty and Service Tax) and state taxes (Octroi, VAT, Entry tax and Luxury tax).  GST is touted as the biggest indirect tax reform in India since independence and is expected to boost GDP growth by 100 to 150 basis points.
  7. 7. History
  8. 8. Existing Tax structure in India Tax Structure Direct Tax Income Tax Wealth Tax Indirect Tax Central Tax Excise Service Tax Custom State Tax VAT Entry Tax, luxury tax, Lottery Tax, etc.
  9. 9. Proposed Tax Structure in India Tax Structure Direct Tax Income Tax Wealth Tax Indirect Tax = GST (Except customs) Intra- state CGST (Central) SGST (State) Inter State IGST (Central)
  10. 10. State wise Implementation S.No. State Passed On Government 1 Assam 12th August, 2016 BJP, CM Chief Minister Sarbananda Sonowal 2 Bihar 16TH August, 2016 RJD-JDU, CM Nitish Kumar 3 Jharkhand 17th August, 2016 BJP, CM Raghubar Das 4 Himachal Pradesh 22nd August, 2016 Congress, CM Virbhadra Singh 5 Chhattisgarh 22nd August, 2016 BJP, CM RAMAN SINGH 6 Gujarat 23rd August, 2016 BJP, CM Vijay Rupani 7 Madhya Pradesh 24th August, 2016 BJP, CM Shivraj Singh Chouhan 8 Delhi 24th August, 2016 AAP, CM Arvind Kejriwal
  11. 11. 9 Nagaland 26th August, 2016 Naga People’s Front, CM T.R. Zeliang 10 Maharashtra 29th August, 2016 BJP-SHIVSENA, CM Devendra Fadnavis 11 Haryana 29th August, 2016 BJP, CM Manhoar Lal Khattar 12 Sikkim 30th August, 2016 SDF, Pawan Kumar Chamling 13 Telangana 30th August, 2016 TRS, CM Kalvakuntala Chandrasekhara Rao 14 Mizoram 30th August, 2016 Congress, CM Lal Thanawala 15 Goa 31th August, 2016 BJP, CM Lakshmikant Pareskar 16 Odisha 1th September, 2016 BJD, CM Naveen Patnaik 17 Puducherry 2th September, 2016 Congress, V. Narayanaswamy
  12. 12. 18 Rajasthan 2th September, 2016 BJP, CM Vasundhara Raje 19 Andhra Pradesh 8th September, 2016 TDP, CM N. Chandrababu Naidu 20 Arunachal Pradesh 8th September, 2016 Janta Party, CM Prem Khandu 21 Meghalya 9th September, 2016 Congress, CM Mukul Sangma 22 Punjab 12th September, 2016 BJP-AKAALI, CM Prakash Singh Badal 23 Tripura 26th September, 2016 CPI, CM Manik Sarkar
  13. 13. Subsuming of Existing Taxes • Central Excise • Additional duties of Custom (CVD) • Service Tax • Surcharges and all cesses CGST • VAT/sales tax • Entertainment Tax • Luxury Tax • Lottery Tax • Entry Tax • Purchase Tax • Stamp Duty • Goods and passenger Tax • Tax on vehicle • Electricity, banking, Real state SGST • CST IGST
  14. 14. Model of GST  SGST and CGST for intrastate transaction : In the GST system, both Central and State taxes will be collected at the point of sale. Both components (the Central and State GST) will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.  IGST for Interstate transaction: ‘IGST Model’ will be in place for taxation of inter State transaction of Goods and Services. The scope of IGST Model is that center would levy IGST which would be CGST plus SGST on all inter State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services.
  15. 15. GST Set off Chain Manufacturer • Input Credit of Goods+ services • After taking set off of Input credit, pay the Output Liability on value addition Wholesaler • Input Credit of Goods+ services from manufacturer • After taking set off of Input credit, pay the Output Liability on value addition Retailer • Input Credit of Goods+ services from wholesaler • After taking set off of Input credit, pay the Output Liability on value addition Consumer • Ultimate Output Liability recovered from consumer
  16. 16. Functioning of GST The illustration shown how GST will work. VAT GST Base Price 100 100 + 12% Excise duty 12 NA +12.5% VAT 14 NA State GST NA 8 Centre GST NA 12 Total Tax Burden 26 20 Value Of Product to Consumer 126 120
  17. 17. Taxable Person  It will cover all types of person carrying on business activities, i.e. manufacturer, job-worker, trader, importer, exporter, all types of service providers, etc.  If a company is having four branches in four different states, all the four branches will be considered as TP (Taxable person) under each jurisdiction of SGs.  A dealer must get registered under CGST as it will make him entitle to claim ITC of CGST thereby attracting buyers under B2B (Business to Business) transactions.  Importers have to register under both CGST and SGST as well.
  18. 18. GST on Export of Goods and Services  GST on export would be zero rated.  Similar benefits may be given to Special Economic Zones (in processing zones only).  GST paid by Exporter on the procurement of goods and services will be refunded.
  19. 19. Registration under GST  Each taxpayer would be allotted a PAN linked taxpayer identification number with a total of 13/15 digits.  This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance.  The exact design would be worked out in consultation with the Income-Tax Department.
  20. 20. Returns under GST  The taxpayer would need to submit periodical returns to both the Central GST authority and to the concerned State GST authorities.  ITC credit can also be verified on the basis of the returns filed and revenues reconciled against Challan data from banks.  Common standardized return for all taxes (with different account heads for CGST, SGST, IGST) can come into picture.
  21. 21. Rate of Tax  The combined GST rate is being discussed by government. The rate is expected around 16 per cent. After the total GST rate is arrived at, the States and the Centre will decide on the CGST and SGST rates. Currently, services are taxed at 12 per cent and the combined charge indirect taxes on most goods are around 20 per cent.
  22. 22. Rate of GST in some Countries Country Tax Rate Australia 10% France 19.60% Canada 5% Germany 19% Singapore 7% New Zealand 15%
  23. 23. Exemption of Goods and Services Tax  Alcohol.  Tobacco Products.  Petroleum Products.
  24. 24. GST and Information Technology (IT) Interface  Based on the legal provisions and procedure for GST, the content of work-flow software such as ACES (Automated Central Excise & Service Tax) would require review.  On the IT front, there has been consensus that there will be a common portal providing three core services (registration, returns and payments).
  25. 25. Flaws of GST Model  Major flaw of this model is , Local Dealers have to pay CGST in addition to SGST.  In Addition to this, CGST mainly represents the Excise/service tax and SGST mainly represents the VAT portion but, because of ‘No differentiation between Goods and Services’ service supply within the state would attract SGST as GST is levied at each stage in the supply chain and Assessee have to Pay CGST as well SGST.  The issue which still needs to be resolved are, the revenue sharing between States and Centre, and a framework for exemption, thresholds and composition.
  26. 26. Thank You