GST and Black Money

1. GST, BLACK MONEY &
TAX EVASION

2. GST
 The proposed GST law shall be a simple ‘ACT’ replacing all Acts relating to levy of
indirect taxes.
 Undoubtedly the most significant reform since the liberalisation in 1991, GST will
transform India’s economic landscape.
 Goods and service tax (GST) is a comprehensive tax levy on from manufacture to final
consumption of goods and service at a national level.
 GST would basically be a destination based tax will make life easier for businesses in
India.
 Companies will not have to file tax returns with multiple departments, but there will
be just one web-based form to file tax returns.
 The country will finally become one common market, with uniform pricing across
states.

3.  Goods and service tax (GST) is globally known as VAT or a national level VAT
 More than 140 countries have already introduced GST / National VAT.
 To remove cascading effect of taxes and provide a common nation-wide market for
goods and services, India is moving towards the introduction of GST.
 Typically it is a single rate system but two/three rate systems are also prevalent.
 France was the first country to introduce GST system in 1954.
 India will be one of the very few countries with a dual GST regime alongside Canada
and Brazil.
 Standard GST rate in most countries ranges between 15-20%.

4. Taxes Subsumed
 GST replaced several existing taxes and levies which include:
 Central Taxes to Subsumed
 Central excise duty
 Services tax
 Additional customs duty, Surcharges & Cess
 CVD & SAD
 State Taxes to subsumed :
 State-level value added tax
 Purchase Tax
 Luxury Tax
 Entry Tax
 Octroi
 Entertainment Tax

5.  State taxes :-
 State Excise Duty :- alcohol, alcoholic preparations, and narcotic
 substances.
 Stamp Duty
 Profession Tax
 Motor Vehicle Tax
 Electricity Duty –Doubtful because of inclusion of electricity in the definition of
term “goods”
 Sale tax on five petroleum products :- Petroleum Crude, Motor Spirit (petrol), High
Speed Diesel, Natural Gas and Aviation Turbine Fuel
 Central Taxes:-
 Customs Duty.

6. SGST, CGST and IGST
 Dual tax – CGST-SGST
 Registered office not relevant; location of
 goods is relevant
 Intra-State supply, if ‘from’ and ‘to’ in one State
 One tax – IGST
 Movement for ‘delivery’ relevant;
 even stock-transfer taxable
 Imports – basic customs + IGST

7. Black Money
 In India, black money is funds earned on the black market, on which income
and other taxes have not been paid. Also, the unaccounted money that is
concealed from the tax administrator is called black money. The black money
is accumulated by the criminals, smugglers, hoarders, tax-evaders and other
anti-social elements of the society. Around 22,000 crores of rupees are
supposed to have been accumulated by the criminals for vested interests,
though writ petitions in the supreme court estimate this to be even larger, at
₹300 lakh crores.

8. Black Money
 The most common source of black money is illegal means through the black money or
underground economy, such as drug trafficking; weapons trading; terrorism; prostitution;
selling counterfeit or stolen goods, such as credit cards; or selling pirated versions of
copyrighted items, such as software and musical recordings.
 The portion of a country’s income that is tied to its black economy affects the economic
growth of the country. The black economy constitutes a financial linkages, as tax income
from unreported earnings is not received by the government, thereby constituting a loss of
revenue. In addition, as these funds rarely enter the banking system, economies are stifled
because the money remains hidden that otherwise could be used by banks to stimulate the
economy by funding small business owners and entrepreneurs.

9. Tax Evasion
 Tax evasion is the illegal evasion of taxes by individuals, corporations,
and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the
true state of their affairs to the tax authorities to reduce their tax liability and
includes dishonest tax reporting, such as declaring less income, profits or gains
than the amounts actually earned, or overstating deductions.
 Tax evasion is an activity commonly associated with the informal economy.
One measure of the extent of tax evasion (the "tax gap") is the amount of
unreported income, which is the difference between the amount of income that
should be reported to the tax authorities and the actual amount reported.

10.  Failure to pay proper taxes can lead to criminal charges. In order for charges to
be levied, it must be determined that the avoidance of taxes was a will full act
on the part of the tax payer. Not only can a person be liable for payment of any
taxes that have been left unpaid, but they can also be found guilty of official
charges and may be required to serve jail time.

11. Ways To Evade Tax
 SMUGGLING
 EVASION OF WEALTH TAX, GST
 SUBMISSION OF FALSE RETURN.
 SUBMISSION OF FALSE CERTIFICATES TO GET DEDUCTIONS.
 CHARGING PERSONAL EXPENSES AS REVENUE EXPENSE.
 DUMMY SALARY ENTRIES

12. Tax Evasion vs Tax Avoidance
 While tax evasion requires the use of illegal methods to avoid paying proper
taxes, tax avoidance uses legal means to lower the obligations of a taxpayer.
This can include efforts such as charitable giving to an approved entity or the
investment of income into a tax deferred mechanism.