This PPT is helpful for those who wants to know the basic concept of Goods and Services Tax.

1. Subject: Goods &
Service Tax
Topic: GST: Concept
and Overview
Ms. Tanvi Sharda Sharma
Assistant Professor

2. Learning Objectives:
To understand basic concept of GST.
To learn about the constitutional, legislative framework and benefits of GST.
Learning Outcomes:
After completing this topic, one will be able:
To understand the concept and overview of GST.
To get to know which taxes subsumed in GST.
To get the knowledge about constitutional amendment and legislative framework for GST.
To know the features and benefits of GST.

3. GOODS AND SERVICE TAX: BASIC CONCEPT AND
OVERVIEW
• GST is a tax on goods and services with comprehensive and continuous chain of setoff benefits from the
Producer’s point and Service provider’s point up to the retailer level.
• GST is expected to be levied only at the destination point, and not at various points (from manufacturing to
retail outlets). It is essentially a tax only on value addition at each stage and a supplier at each stage is
permitted to setoff through a tax credit mechanism which would eliminate the burden of all cascading
effects, including the burden of CENVAT and service tax.
• Under GST structure, all different stages of production and distribution can be interpreted as a mere tax
pass through and the tax essentially sticks on final consumption within the taxing jurisdiction.
• Earlier, a manufacturer needs to pay tax when a finished product moves out from the factory, and it is again
taxed at the retail outlet when sold. The taxes are levied at the multiple stages such as CENVAT, Central
sales tax, State Sales Tax, Octroi, etc. is replaced by GST introduced at Central and State level.

4. • All goods and services, barring a few exceptions, brought into the GST base. There will be no
distinction between goods and services.
• Under GST, the taxation burden is divided equitably between manufacturing and services, through a
lower tax rate by increasing the tax base and minimizing exemptions.
• However, the basic features of law such as chargeability, definition of taxable event and taxable
person, measure of levy including valuation provisions, basis of classification etc. would be uniform
across these statutes as far as practicable.
• The CST is discontinued. Instead, a new statute known as IGST come into place on the inter-state
transfer of the Goods and Services.
• By removing the cascading effect of taxes (CST, additional customs duty, surcharges, Luxury Tax,
Entertainment Tax, etc.), CGST & SGST is to be charged on same price.

5. GST SUBSUMED FOLLOWING TAX
•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

6. GENESIS OF GST IN INDIA
2004 The idea of GST was emerged in India from the recommendation of Kelkar Task Force.
2007 Union Finance Minister, Shri P. Chidambaram, while presenting the central Budget (2007-08) announced the GST would be
introduced in India.
2014 NDA government tabled the Constitution (122nd Amendment) Bill
2016 It got assent of the president on 8th September, 2016 and became Constitution (101st amendment) Act, 2016, which
paved the way for the introduction of GST in India.
2017 (March) Central Goods and Services Tax Bill, 2017, Integrated Goods and Services Tax Bill, 2017, Union Territory Goods and Services
Tax Bill, 2017 and Goods and Services Tax (Compensation to States) Bill, 2017 were introduced and passed these bills in
Lok Sabha and receipt of President Assent on 12th April, 2007 became enacted. Subsequently State GST laws have been
enacted by respective state Government.
2017 (July) w.e.f 1st July 2017 GST has implemented across India

7. CONSTITUTIONAL AMENDMENT FOR GST
Constitution (101st amendment) Act, 2016 was enacted on 8.09.2016 for the following significant
amendments.
• Concurrent (simultaneously) power on Parliament and State legislatures to make laws for imposing taxes
on goods and services.
• GST is levied on all supply of goods and services except alcoholic liquor for human consumption.
• Parliament has exclusive power to make laws with respect to goods and services tax of inter-state (from
one state to another state) supply.
• Parliament shall decide principles for determining the place of supply and when supply takes place in
course of inter-State trade and commerce.
• The explanation to Articles 269A of Constitution of India provides that the import of goods and services
will be deemed as a supply takes place in course of inter-State trade and commerce.

8. • For the following items Central Excise duty will be imposed on their production and respective States will impose Sales tax on
their sales:
i. Petroleum crude
ii. High speed diesel
iii. Motor spirit (commonly known as petrol)
iv. Natural gas
v. Aviation turbine fuel
vi. Tobacco and tobacco products
• Article 279A of the Constitution of India empowers the President of India to constitute Goods and Service tax Council (GST
Council) under the chairmanship of the Union Finance Minister to recommend about (Article 279A):
i. the GST rate
ii. Valuation and other fundamental rules
iii. Exemption
iv. Future changes
v. Return
vi. Registration

9. LEGISLATIVE FRAMEWORK
• 1- The Central Goods and service Tax Act, 2017 for imposing CGST on intra-State supply of
goods and services.
• 31- State Goods and service Tax Act, 2017 for imposing SGST by respective state on intra-State
supply of goods and services.
• 1 – The Union Territory Goods and Services Tax Act, 2017 for levying UTGST in 5 union
Territories without State Legislatures on intra-Territory supply of goods and services.
(Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and
Chandigarh)
• 1 – The Integrated Goods and Service Tax Act, 017 for levying IGST and
• 1 – The Goods and services Tax (Compensation to states) Act, 2017 for levying GST
Compensation Cess.

10. FEATURES OF GST
• Destination based consumption tax: Tax is collected where the goods or services are supplied.
• Concurrent Dual GST: Both govts. have power to levy and collect tax.
• Components of GST: CGST, SGST, UTGST & IGST
• Legislative Framework of GST: Already discussed
• GST Rate Structure: Four tier structure (Lower rate 5% on household necessities, sweets etc., 12% on computers &
processed food, Standard rate 18% on hair oil, toothpaste, soaps etc. Higher rate 28% on luxury items.)
• Taxes subsumed under GST: Already discussed
• Input Tax Credit chain: The tax paid at each stage will be available as ITC for other stage.
• Utilisation of ITC: IGST for IGST, CGST, SGST; CGST for CGST, IGST; SGST for SGST, IGST & UTGST for UTGST, IGST.
• Taxable event: is supply of goods or services.
• Threshold limit for registration: For Goods/Services: Aggregate Turnover exceeds 40/20 lakhs (incase of normal
category states) & For Goods/Services: Aggregate Turnover exceeds 20/10 lakhs (incase of special category states)
• Classification of goods & services: is based on HSN.

11. BENEFITS OF GST
GST is a win-win situation for the entire country. It provides benefits to all the stakeholders of industry, Government and
customers. It is expected that it will reduces cost of goods and services and make them globally competitive. The significant
benefits of GST are discussed hereunder:
• Creation of unified national market: GST aims to make India a common market with common tax rates and compliances
(procedures) and remove the economic barriers to form an integrated economy at national level.
• Mitigation of ill effects of cascading: GST subsume most of the Central and states indirect Taxes into a single taxes and
allow the credit of tax paid from the output tax for the transaction across the entire value chain process. Eradication of
“tax on tax” gives the benefit to the industry.
• Boost to ‘Make in India’ initiative: GST will give major boost to the ‘Make in India’ initiative of government of India by
making goods and services produced in India competitive in the national as well as international market.
• Increase in government revenue: GST is expected to increase the Government revenue by widening the tax base and
improving the taxpayer compliances.