Overview on Goods & Service Tax [GST]

1. ABHISHEK SHANKAR AGARWAL & ASSOCIATES
CHARTERED ACCOUNTANTS
TAX TABLE
[1ST
EDITION]
CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|abhishek@caasa.org W| www.caasa.org
GOODS & SERVICE TAX
GST (Goods and services tax) is a broad based single comprehensive indirect tax levied
at each point of goods sale or provision of services. Under the model, the seller or service
provider can claim the input credit of tax which he has already paid while purchasing the
goods or procuring the service.
The proposed GST in India is a dual tax. The reference of GST was first made in Indian
Budget in 2006 by Mr. P Chidambaram as a single centralized indirect Tax in which tax
is to be collected by centre and then it is to be distributed between centre and States. This
was the standard format of Goods and service Tax.
In our country states have also right to collect indirect taxes on sale of goods hence this
“single centralized” form of GST was rejected by the states at the initial stage itself.
Hence a compromise is made on Dual GST in this respect in which both states and centre
will impose and collect tax on a single transaction of sale and service in the form of State
Goods and service tax "SGST" and Central Goods and service tax "CGST"
TAXES TO BE SUBSUMED
At the Central level, the following
taxes are being subsumed:
At the State level, the following
taxes are being subsumed:
a. Central Excise Duty a. State Value Added
Tax/Sales Tax(VAT)
b. Additional Excise Duty b. Entertainment Tax (other
than the tax levied by the
local bodies), Central Sales
tax (levied by the Centre
and collected by the
States),
c. Service Tax c. Octroi and Entry tax,

2. ABHISHEK SHANKAR AGARWAL & ASSOCIATES
CHARTERED ACCOUNTANTS
TAX TABLE
[1ST
EDITION]
CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|abhishek@caasa.org W| www.caasa.org
MODELS OF GST
 Central Goods & Service Tax (CGST)
 State Goods & Services Tax (SGST)
 Integrated Goods & Service Tax (IGST)
1. CGST: -
Under CGST framework, there will be a single GST and the Union would levy the
same. The Central Government would administer the tax and the States would be
having revenue sharing arrangement.
2. SGST:-
Under this model States alone levy GST and the Centre withdraws from the field
of GST completely.
Three Models Of GST
CGST SGST IGST
d. Additional Customs Duty
commonly known as
Countervailing Duty
d. Purchase Tax,
e. Special Additional Duty of
Customs.
e. Luxury tax
f. Taxes on lottery, betting
and gambling.
CGST levied and collected by
the Centre.
SGST levied and collected by
the State.
It is levied and collected by
the Centre.

3. ABHISHEK SHANKAR AGARWAL & ASSOCIATES
CHARTERED ACCOUNTANTS
TAX TABLE
[1ST
EDITION]
CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|abhishek@caasa.org W| www.caasa.org
3. IGST: - Transaction between States to have only one type of tax –IGST which
goes to the Centre.
GOODS & SERVICE TAX NETWORK (GSTN)
For the implementation of GST in the country, the Central and State Governments
have jointly registered Goods and Services Tax Network (GSTN) as a not-for-
profit, non-Government Company to provide shared IT infrastructure and services
to Central and State Governments, tax payers and other stakeholders.
The key objectives of GSTN are to provide a standard and uniform interface to the
taxpayers, and shared infrastructure re and services to Central and State/UT
governments.
GSTN is working on developing the common GST portal providing frontend
services:
• Registration,
• Returns, and
• Payments
to all taxpayers, as well as the backend IT modules for certain States that include
processing of:
• Returns,
• Registrations,
• Audits,
• Assessments,
• Appeals, etc.
All States, accounting authorities, RBI and banks, are also preparing their IT
infrastructure for the administration of GST.

4. ABHISHEK SHANKAR AGARWAL & ASSOCIATES
CHARTERED ACCOUNTANTS
TAX TABLE
[1ST
EDITION]
CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|abhishek@caasa.org W| www.caasa.org
There would no manual filing of returns. All taxes can also be paid online. All
miss-matched returns would be auto-generated, and there would be no need for
manual interventions. Most returns would be self-assessed.
THRESHOLD LIMIT UNDER GST
The threshold limit under central excise is 1.50 Crore and in service tax it is Rs.10
Lakhs. Further in case of Vat the limit in most of the states is also Rs.10 Lakhs but
in some of the states it is still Rs. 5 Lakhs.
The proposed threshold limit under GST is Rs.10 Lakhs under both the formats
i.e. SGST and CGST though there was a demand of higher.
Generally it is called that GST will make a financially strong Centre than state and
this is based on firstly, threshold and secondly, the fact that now centre will get the
tax up to selling stage instead of manufacturing stage which it is getting under
Central Excise.
REGISTRATION
Existing dealers
 VAT/Central excise/Service Tax
payers will not have to apply
afresh for registration under GST.
New dealer
 Single application to be filed
online for registration under GST.
 The registration number will be
PAN based and will serve the
purpose for Centre and State.
 Unified application to both tax

5. ABHISHEK SHANKAR AGARWAL & ASSOCIATES
CHARTERED ACCOUNTANTS
TAX TABLE
[1ST
EDITION]
CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|abhishek@caasa.org W| www.caasa.org
authorities.
 Each dealer to be given unique ID
GSTIN.
 Deemed approval within three
days.
 Post registration verification in risk
based cases only.
RETURN FILING
There are eight forms provided for in the GST business processes for filing for returns.
Filing of returns shall be completely online. All taxes can also be paid online.

6. ABHISHEK SHANKAR AGARWAL & ASSOCIATES
CHARTERED ACCOUNTANTS
TAX TABLE
[1ST
EDITION]
CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|abhishek@caasa.org W| www.caasa.org
WILL GST REDUCE TAX EVASION?
As we can see, all the distributors will prefer to purchase with invoice, because it gives
them a better profit margin as he can claim taxes paid at the previous stage.
In the present scenario, the distributor has to bear the burden of excise duty that results in
avoiding the tax payments.
Hence, introduction of GST can create a scenario in which the customer will insist on
having a bill, resulting in overall decline in tax evasion incidences.

7. ABHISHEK SHANKAR AGARWAL & ASSOCIATES
CHARTERED ACCOUNTANTS
TAX TABLE
[1ST
EDITION]
CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|abhishek@caasa.org W| www.caasa.org
CST VS. IGST
When Vat was introduced in India in 2006 the CST was considered as the biggest hurdle
and it was promised that CST will be reduced by 1% every year and ultimately it will be
abolished. After reducing from 4 to 3 and 3 to 2% this promise was not followed and
since last several years it is there with 2%. The practical problems attached with “C
forms” are the result of this broken promise. Here it should be noted that the collection
from CST i.e. tax on interstate sales is the part of revenue of the supplier stage or
Manufacturer stage.
Now what will happen with CST in GST may be a question. In GST there will be no
place for CST hence manufacturing states which are generating huge revenue in this
respect will lose the same. There will be a mechanism in GST to control the trade
between two states and that mechanism will be called IGST- “Integrated Goods and
Service Tax” and through this mechanism ultimate tax will go to the consumer state.
IGST will not be a another (Third Tax) but it will be a complex mechanism that will
ensure that one part of tax is received by Centre and other part of tax to consumer state
and that will make GST a perfect destination based tax.
Now the revenue loss of the states will have to be compensated by the Central
Government.
RNR- REVENUE NEUTRAL RATE
The basic question which generally asked in case of GST is that what will be the rate of
tax. There will be two rates. One for states i.e. rate of SGST and second one is for centre
i.e. rate of CGST.
The Law makers want to fix a rate where Government can get at least the same tax which
both states and centre are getting under the present set up i.e. under VAT/CENTRAL
EXCISE/SERVICE TAX etc.This is called RNR and getting exact that rate is practically
very difficult since multiplicity of taxes and cascading effect will not be there under GST.
The GST council which will be established as per the provisions of the GST constitution
Bill will decide the final rate of tax as per their discussion and decision power.
Whatever may be the rate trade industry and consumers will find it too high but even in
that case Government will get same revenue, it is uncertain. The rate of tax will play a
major role in the success of GST but it will not be easy task for lawmakers to ascertain
and fix it.