GST,pros and cons its features impact on various sector and segments

1. Goods and Services Tax
PRESENTERS:
ESHA GUPTA
GAURAV KUMAR
MANISH THAREJA
RAJAT BHANDARI
RISHNITA BHANDARI

2. Streamlining of all the different type of taxes
(entertainment tax, central sales tax, Value Added Tax
etc.) together and implementing a single taxation system
which is Goods and service tax (GST).
GST: Meaning

3. • GST is a single unified consumption tax and broad based tax on supply of
goods and services.
• GST is a Destination Based Tax.
• There is no scope for multiple taxation on Goods & Services such as Sales
Tax, Entry Tax, Entertainment Tax, Luxury Tax, etc.
• It will increase tax collections due to the wide coverage of Goods &
Services.
• Goods and Service tax will reduce the tax burden on the assessee’s since it
will avoid the cascading effect.
• In GST tax, there is no scope to levy for resale tax, special tax, additional
tax, turnover tax, etc.
• It has only two components which are central GST and state GST.
Important Features of GST

4.  Alcohol for human consumption
Alcohol for human consumption does not fall under the purview of GST in India at
present. The taxes imposed to Alcohol for human consumption are continued as per the
structure before GST implementation.
 Petroleum Products
viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation
turbine fuel.
 Electricity
The category, Electricity has been kept aside under the purview of GST at present. So,
electricity does not fall under GST at present. Hence, GST is not applicable for electricity.
However, the taxes applicable at present for electricity is continued as before.
Items not covered under GST

5. VAT or sales tax on petroleum products contributes to nearly 33 percent of state
revenues, and Centre also earns significant excise duty income on the
generation of petroleum products from crude oil. To protect these significant
revenue interests, both the Governments want GST to first stabilize before they
allow the GST Council to consider their inclusion.
Similarly, for alcohol, states don’t want to lose the significant revenue currently
earned from state excise duty. In many states, the revenue from state excise
taxes imposed on alcohol brings in 25 percent of total revenue. For this reason,
the state excise tax on alcohol has been kept out of the constitutional mandate
for levying GST.
Why This Exclusion?

6. • Levy of Excise Duty on Manufacturing Point:
The CENVAT levied on goods manufactured in India right at the
manufacturing point increases the prices of the goods.
• Tax Cascading:
The most significant contributing factor to tax cascading is the partial
coverage by Central and State, and double taxation!
• Complexity of determining the nature:
It was difficult to analysis the nature of the sale,
Either Goods or Service, especially in Bundled Services.
• Varied Exemptions & Concessions
Exemptions and Concessions break the chain of VAT and thus, create
distortion.
Shortcomings in the Earlier Tax System

7. • Lack of Transparency:
There existed no mechanism to cross verify the claims of CENVAT
credit made by the manufacturer/service provider.
• Narrow Base:
Due to different threshold, different laws, numerous exemptions and
concessions under the earlier system,
The earlier tax system was narrow as compared to other countries.
• Different Tax Authorities:
Existence of varied taxes meant various tax authorities, which is now
summarized into one big authority to handle all major indirect taxes.
Which is why a summarized tax, Goods & Services Tax had to be
implemented.
Shortcomings in the Earlier Tax System

8. Advantages
 Increased efficiency in Logistics
 Regulating the unorganized sector
 Removing Cascading Tax Effects
 Ease of Doing Business
 Defined treatment for e- commerce
 Increase in GDP

9. Disadvantages
 Online Procedures
 Changes in Business Software
 Policy change in the middle of the year
 Increase in Operating Cost
 Higher Tax Burden for Manufacturing SMEs
 No Clarity on Tax Holidays and Concessions

10. Slabs New GST rates Current rates Products
1 5% Up to 9% Edible oil, spices, tea, coffee
2 12% 9% - 15% Computers, processed food
3 18% 15% - 21% Soaps, oil, shaving sticks
4 28% 21% Luxury goods
(luxury cars, tobacco, aerated drinks)
Some of the products which could get cheaper once GST comes into play include:
• Wood articles and Plyboards
• Online Shopping
• Fast moving consumer goods (FMCG) goods like processed foods, shampoos,
chocolates, etc.
• Pharma products
• Branded apparel
• Movie tickets
• Paint, cement and several construction materials
• Air coolers, fans, water heaters, TVs, and other electronic items
• Solar panels, and fingerprint scanners.
How will GST impact the common man

11. Categorizing House Hold Expenses In 5 Buckets i.e.
Food
Entertainment
Personal Care
Transportation
And
Communication Services.
 Food items:- earlier Tax – 12.5%, New tax under GST 5% (positive).
 Entertainment :- earlier Tax – 30%, New tax under GST 28% (positive).
 Transportation :- earlier Tax – 15%, New tax under GST 18% (negatve).
 Personal care:- earlier Tax – 28%, New tax under GST 18% (positive).
 communication:- earlier Tax – 15%, New tax under GST 18% (negative).
GST Rates for House Hold Expenses

12. Some Of The Things Which Could Get Costlier with the implementation
of Goods and Services tax:
 Restaurant and hotel bills
 Mobile bills and internet packs
 Transportation services including railways, air travel, and cab
services
 Jewellery and precious metals
 Luxury cars
 Cigarettes and other tobacco related products
 Aerated drinks
 Courier and DTH services.

13. GST on Textiles/Garments

14. Textile sector plays a very
important part in the
development of the India
economy with regard to
GDP , Export promotion ,
employment , etc.
It is one of the oldest
manufacturing industry in
India . The textile industry is
the second largest industry
which provides skilled and
unskilled employment
Implication of GST on Textile Sector

15. In this sector , 100% FDI is
allowed by the Government
under the Automatic Route ,
Textile Industry offers more than
10% in Total Export.
Mainly Two types of Indirect
Taxes are Central Excise Duties
or cenvat and Service Tax.
Taxes on Textile Sector

16. Hosiery
Most of the industry to fall under tax net for the first time
Sarees
Saree industry to fall under tax net for the first time.
Saree to be classified as fabric and NOT readymade apparel
APPLICABLE GST rate = 5%
Textile Printing and processing
Was exempt under service tax Now taxable at a GST rate of
18%
Textile Subgroups – Some Insights

17. All other
Fibre and
all
Natural
Yarns is
5%
NILL & 5%
ON Silk
and jute
Fibre is
NILL
ON Fabric
is 5%5% & 12%
ON
Manmade
Yarns is
12%
ON Readymade
Garments above
RS. 1000 is
12%
5% & 12%
ON Readymade
Garments up to
RS. 1000 is 5%
GST Rates on Textiles