made by school student for education purpose only it is just to show how gst works and how it had worked in other country,it also show what are the impact of gst in india and other countries.
2. GST
• Goods and service tax (GST) is a comprehensive tax
levy on manufacture, sale and consumption of goods
and service at a national level.
• GST is a tax on goods and services with value addition
at each stage.
• GST will include many state and central level indirect
taxes.
• It overcomes drawback of previous tax system
• One of the aims of introducing GST is to reduce the cascading
effects of taxes which is the primary focus of VAT but vat
system is not comprehensive enough to do so.
3. • Direct Tax :
e.g.: Income Tax, Corporate Tax, Wealth Tax
• Indirect Tax :
e.g.: Excise duty, custom duty, Service Tax, Octrai
Tax, VAT.
Tax Structure in India
4. Short comings in current
Tax System
Tax Cascading (Tax on Tax)
Complexity
Taxation at Manufacturing Level
Exclusion of Services
Tax Evasion
Corruption
5. Previous Indirect Tax System
Excise Duty
An excise or excise tax (sometimes called an excise duty) is a type of
tax charged on goods produced within the country (as opposed to
customs duties, charged on goods from outside the country). It is a tax
on the production or sale of a good. This tax is now known as the
Central Value Added Tax (CENVAT).
6. VAT
Implemented in April-1/2005
It is replacement to complex Sales Tax
It overcomes a Cascading Effect of Tax
It applied on " Value Added Portion" in sales
price
(Value Added Tax)
For goods like liquor, cigarettes etc. many governments charge
high VAT rates of 12.5% or 14-15%. Also, many state governments
follow a general rate of VAT for goods which cannot be categorized
to suit the above classification. Such goods are taxed at 12%, 13%
or even 15% in different states.
7. Product sold from Mumbai to Nagpur
Price = Rs 1000
VAT @ 10% = Rs 100
• Product sold from Nagpur to Chennai
• Price = Rs 1100
• Profit =1000
• Sale Price =Rs2100
CST @ 10% = Rs 210
Total Cost
Rs -2310
Illustration of VAT
8. Problems with VAT
It is not uniform in nature
VAT is different for different states
Different rates of taxation for different
good
9. GST is a comprehensive value added tax on goods
and services
It is collected on value added at each stage of sale
or purchase in the supply chain
No differentiation between goods and services as GST
is levied at each stage in the supply chain
Seamless input tax credit throughout the supply chain
At all stages of production and distribution, taxes are
a
Pass through and tax is borne by the final consumer
All sectors are taxed with very few
exceptions / exemptions
What is GST
10. History
Feb, 2006 : First time introduced concept of GST and
announced the date of its implementation in 2010
Jan. 2007: First GST study by ASSOCHAM released
by Dr. Shome
Feb. 2007: F.M. Announced introduction of GST from
1 April 2010 in Budget
The Government came out with a First Discussion
Paper on GST in November, 2009
Introduced the 115th Constitution Amendment (GST)
Bill in the year 2011.
11. Model Of GST
GST
Structure
centre
GST
GST to be levied
by the
Centre
State
GST
GST to be
levied by
the State
Dual
GST
GST to be levied by the Centre and
the States concurrently
12. Tax rates Applicable
0% Food grains, Alcohol, Tobacco,
Petroleum Products
5% mass consumption like spices,
tea and mustard oil
12% washing machines, air
conditioners, refrigerators,
shampoo, shaving stuff and
soap
18% Ordinary cars and bikes.
28% Luxury Cars, , Luxury Cloths,
GST Rate
13. Illustration of GST
• Product sold from Nagpur to Chennai
• Price = Rs 1100
• Profit =1000
• Sale Price =Rs2100
Product sold from Mumbai to Nagpur
Price = Rs 1000
CGST @ 5% = Rs 50
SGST @ 5% =Rs 50
IGST @ 10% = Rs 210
Less:
CGST
SGST
Total Cost
Rs -2210
14. Benefits of GST
Transparent Tax System
Uniform Tax system Across India
Reduce Tax Evasion
Export will be more competitive
15. GST – Advantages
• As a developing country, India needs a transparent & unambiguous tax structure
• A complex tax structure with multiple rates of taxes
• Multiple taxes across the supply chain
• High transaction cost in the hands of the tax payers
• Increased tax collections due to wider tax base and better compliance
• Improvement in international cost competitiveness of indigenous goods and
services.
• Enhancement in efficiency in manufacture and distribution due to economies of
scale
• GST encourages an unbiased tax structure that is neutral to business processes,
business models, organization structure, product substitutes and geographical
locations
• Helping as a weapon against corruption
• GST operates on a negative list i.e. All goods and services are subject to GST
unless specifically exempted
•
16. GST – Advantages
• Nature of complexities i.e. Classification to valuation
regarding taxability, was existing in the previous
structure.
Some of such burning issues are:
Excise on MRP
Excise, VAT and service tax on software,
VAT & service tax on:
• Works contracts
• Right to use
17. Dual GST : central GST & state GST
Destination based state GST
Uniform classification
Uniform forms – returns, challans ( in electronic mode)
No cascading of central and state taxes
Cross credit between centeral and state not allowed
Tax levied from production to consumption
GST Features
18. Government
administration regarding
GST
According to government of India, GST will provide many facilities to
consumers and to the producers and also will make those people pay
tax who do not pay service tax such as wholesaler's. GST will also reduce
Chances of corruption and black-marketing of product on high prices.
GST will also help government to fill there treasury and utilise it for
welfare of its people. For such motive government is also providing
training to small scale industries and also giving some concession so that
the can be able to compete in market.
19. GST : Global Perspective
• Goods and services tax in brazil
• Brazil was the first country to adopt GST system.
• Brazil has adopted a dual GST where the tax is levied
by both the central and the provincial governments.
• GST rate is 20 %.
21. Effect of uniform rate in Singapore
According to the Singapore government, the introduction of the GST corresponds to
lower direct tax rates. The top personal income tax rate in Singapore was reduced
from 33 to 30% whereas the company income tax rate was cut down 27 from 30%,
basically lowering the direct tax burden of the working population and companies
operating in Singapore. The Singapore Government claims that the GST is fairer tax
since everybody is involved and that whole population contributes to the revenue. So,
instead of working population paying direct taxes, residents of Singapore pay indirect
taxes like GST. Governance has moved away from direct collection of taxes.
22. Conclusion
1. Process and not an event.
2. Implementation
3. Increase in GDP
4. Benefits an Individual
5. Inflation can be sustained.
