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GOODS AND
SERVICE TAX
(GST)
Dr. Khyati Vora &
Dr. Kuldeep Sharma
Objective of Symposia
To present an overview of GST
Content
• Introduction of GST
• Comparing Present Tax Structure and
GST
• GST Model
• Impact of GST
• Registration & Payment Procedures
• Challenges & Global Perspective
What is GST?
‘G’ – Goods
‘S’ – Services
‘T’ – Tax
“Goods and Service Tax (GST)” is a
comprehensive tax levied on manufacture,
sale and consumption of goods and service
at a national level.
Goods and Service Tax would be levied at
each stage of sale or purchase of goods or
services based on “input tax credit method.”
 Introduced by Vajpayee Government in 2000
 Union Budget 2006-07 announced application of
GST from 1st
April, 2010
 Bill passed in Lok Sabha on 6th
May, 2015
 Bill passed in Rajya Sabha on 3rd
August, 2016
 GST to be implemented by July 2017
History of GST
Features of GST
• Dual Indirect Tax Structure
• No Distinguish between goods and
services
• Applicable on supply of goods and services
• Paid to the accounts of Centre and State
Government separately
Features of GST
• Place and time of supply is crucial
• Paid on transaction value
• Input Tax Credit to the business houses
• Revenue Neutral Rate (RNR)
• Objective to remove multiplicity of taxes
Features of GST
• Single document for tax purpose and a
single return filed with central registry
• Tax payer to submit periodical return in
common format to both the Central and
State GST authority.
• GST a significant step in the reform of
indirect taxation in India
Features of GST
• Mitigate Cascading or double taxation,
facilitating a common national market
• Prices expected o come down in the long
run
• Dual GST will result in better revenue
collection for state with higher
JUSTIFICATION OF GST
Justification at the Central
Level
• At present excise duty paid on the raw material
consumed is being allowed as input credit only. For
other taxes and duties paid for post-manufacturing
expenses, there is no mechanism for input credit
under the Central Excise Duty Act.
• In order to give the credit of service tax paid in
respect of services consumed, it is necessary that
there should be a comprehensive system under
which both the goods and services are covered.
Justification at the State
Level
• State is charging VAT on the excise duty paid to
the Central Government, which goes against the
principle of not levying tax on taxes.
• As tax is being levied on inter-state transfer
of goods, there is no provision for taking
input credit on CST leading to additional
burden on the dealers.
• Many of the States are still continuing with
various types of indirect taxes, such as luxury tax,
entertainment tax, etc.
Comparing Present Tax
Structure and GST through
Case Study
Present Tax Structure in India
How much does it cost ???
Rs. 42.23
Cheaper !
!!
So, we saw that in a present tax
structure there is a cascading
burden of “tax on tax”
How would this be different in
GST regime ?
In GST regime tax due can be
offset against the tax paid at an
early stage.
Lets go back to the same example
to see how this will work
In effect, the tax reforms of
GST brings in a single
indirect tax regime. It will
lower tax rates & disincentives tax
evasion
Revised Tax Structure in GST
Four Tier Tax Structure
Goods / Service Rates Business Consumer
Revenue Neutral
Rate
(Manufacturers)
18 %
(Luxurious
Products)
Goods / services
which are basic
necessities
12%
Essential Goods
5 %
Demerit goods
- 28 % + some
cesses
GST MODELS
GST Models - Internationally
GST Model Main Features Applicable in
Countries
National GST Tax levied by Centre with
provisions for revenue
sharing
with Provinces/States
Australia, China
State GST Tax levied by
Provinces/States USA
USA
Non-concurrent
Dual GST
GST on Goods levied by
State & on Services levied
by Centre
Concurrent Dual
GST
Tax levied by Centre &
State on
both Goods & Services
Brazil & Canada
―India‘s Proposed
Model
Proposed GST Model for India
Concurrent Dual GST
Need for a Dual-GST Model
• The need for a Dual-GST model is based on the following
premise:
• At existing framework, both levels of Government i.e.
Centre and State, as per Constitution holds concurrent
powers to levy tax domestic goods and services;
• The proposed Concurrent Dual-GST model would be a dual
levy imposed concurrently by the Centre and the States, but
independently;
• Both the Centre and State will operate over a common
base, i.e. the base for levy and imposition of duty/tax
liability would be identical.
Tax/Taxes Which Shall Be Levied
As Per Place Of Supply
Within the State
(Intra-State)
Inter-State (i.e. Outside the State OR
from one state to another state)
Taxes to be subsumed
• Central Indirect Taxes
1) Central Excise Duty
2) Additional Excise Duties
3) Service tax
4) Central Sales Tax (CST)
5) Additional Customs Duty
(CVD)
6) Special Additional Duty of
Customs (SAD)
7) Central Surcharges and
Cesses in so far as they
relate to supply of goods
and services
• State Taxes
1) State VAT/Sales Tax
2) Entertainment Tax (other
than that levied by local
bodies)
3) Octroi and Entry Tax
4) Purchase Tax
5) Luxury Tax
6) Taxes on lottery, betting
and gambling
7) State Surcharges and
Cesses in so far as they
relate to the supply of
goods and services
Registration and Payment
Procedures Under Model
GST Law
Need of Registration
o Crossing Turnover asCrossing Turnover as
specifiedspecified
o Legally Recognition asLegally Recognition as
supplier/receiversupplier/receiver
o Claiming Input tax creditClaiming Input tax credit
o Pass on Input tax creditPass on Input tax credit
o VoluntarilyVoluntarily
Section-19-Registration
 Mandatory for person liable to be registered under Schedule III.
 State wise registration to be taken.
 Registration within 30 days from the date liable to registration.
 Already registered under an earlier law – No need to apply fresh
registration other then Input Service Distributor.
 May take seperate registration for multiple business verticals in a
State. (Either separate address or separate business segment)
 A person may take voluntarily registration irrespective of his
turnover.
Section-19-Registration
o Section 2(18) -“business vertical” shall have the meaning assigned to
a ‘business segment’ in Accounting Standard 17 issued by ICAI;
Business Segment:- A business segment is a distinguishable
component of an enterprise that is engaged in providing an
individual product or service or a group of related products or services
and that is subject to risks and returns that are different from those
of other business segments.
Section 2(6)-“aggregate turnover” means aggregate value of
-all taxable supplies;
-non-taxable supplies;
-exempted supplies and
-exports of goods and/or services of a person having the same PAN,
to be computed on all India basis and excludes taxes, if any, charged
under the CGST Act, SGST Act and the IGST Act, as the case may be;
Schedule-III
 Supplier liable to take registration in that State from where he
makes a taxable supply of goods and/or services if aggregate turnover
exceeds the limit prescribed.
 No registration required if person dealing in non -taxable goods and/or
services ONLY.
 After job-work, supply of goods by a registered job worker shall be
treated as the supply of goods by the “principal”, and the value of such
goods shall not be included in the aggregate turnover of the registered
job worker.
 Person registered or holds a license under an earlier law, shall be
liable to be registered subjected to aggregate turnover.
Schedule-III
SCHEDULE III
LIABILITY TO BE REGISTERED
Person
liable to
Registered
(Summery)
With Conditions of
aggregate turnover
Without Any Condition of
aggregate turnover(Para 5 of
Schedule III)
Every supplier making
taxable supply having
aggregate turnover
exceeding ;
-Rs. 4 Lakhs in NE State
including sikkim;
-Rs. 9 Lakhs in any
other State.
Person registered under
any earlier law;
Inter-State Taxable Supply
Causal Taxable Persons-Sec 2(21)
Under reverse charge mechanism
Non-resident taxable persons-Sec
2(69)
Deductor as defined u/s 37
On behalf of another registered
persons such as agent
Input Service Distributors
Through Electronic commerce
operator(other than branded
services)
Every electronic commerce
operator
An aggregator
Persons as notify by CG/SG.
Transferee, in case of succession
Transferee in case of amalgamation,
merger etc.
Provision for Casual taxable person
and Non-Resident taxable person
Section-2(21)-“casual taxable person” means a person who
occasionally undertakes transactions involving supply of goods and/or
services in the course or furtherance of business whether as
principal, agent or in any other capacity, in a taxable territory where he
has no fixed place of business;
Section-2(69)-“non-resident taxable person” means a taxable person
who occasionally undertakes transactions involving supply of goods
and/or services whether as principal or agent or in any other capacity but
who has no fixed place of business in India;
oRegistration certificate valid for 90 days or further extended period not
exceeding 90 days;
oAdvance deposit of tax equivalent to estimated tax liability;
oAmount credited in the electronic cash ledger.
Amendment of Registration
-Inform changes to the proper officers(PO) in
prescribed manner;
-PO approve or reject the same;
-In prescribed cases, no approval of PO is required
- Approval/Rejection under CGST/SGST deemed to
be approval/rejection under SGST/CGST.
Structure of Registration
Number
 State wise PAN-based registration Number
 Registration number will be 15-digit
 Known as Goods and Services Taxpayer Identification Number (GSTIN).
 1-2 digit would be state code as defined under the Indian Census 2011.
 Next 10 digit would be PAN number of the registraint
 13th digit would be alpha-numeric (1-9 and then A-Z) represent number of
registrations a legal entity (having the same PAN) has within one State.
 14th digit of GSTIN would be kept BLANK for future use.
 15th
digit is check digit enable department to verify the GSTIN as entered by
person.
GSTIN
State PAN Entity
Code
Blank Check
Digit
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Procedure for obtaining Registration
Submit online application through GST Common
Portal;
Seeking confirmation through message on e-mail and SMS to
the authorized signatory of the applicant
After confirmation, acknowledgement number would be
generated and intimated to the applicant.
Once the application is approved and GSTIN is generated,
the same along with Log-in ID and temporary password will
be sent to the authorized signatory
Documents Required
S.No Particulars Documents to be uploaded
1 Constitution of Business -Relevant documents which
are not captured through
PAN and online validation.
2 Details of the Principal Place
of business
Own premises-
Ownership Documents
Rented or Leased
premises
Rent / Lease Agreement
with ownership documents
3
Details of Bank Account (s) Complete details.i.e cancel
cheque
4 Details of Authorised
Signatory
Letter of Authorisation or
copy of Resolution
5 Photograph For Authorised person
Types of Ledgers Types of Ledgers 
Date of credit to Government A/c =Date of depositDate of credit to Government A/c =Date of deposit
The Electronic Cash Ledger, Electronic Credit Ledger and Tax LiabilityThe Electronic Cash Ledger, Electronic Credit Ledger and Tax Liability
Register are unique features of the model GST law.Register are unique features of the model GST law.
Utilization of AmountUtilization of Amount
Cash Ledger Credit Ledger
Tax
Tax
Interest
Penalty
Fees
Any other
amount
 Amount available in different ledgerAmount available in different ledger
may be usedmay be used for making any paymentfor making any payment
towardstowards
CGST InputCGST Input
IGST InputIGST Input
SGST InputSGST Input
Forms prescribed
Application for
registration under GST
Amendment
Form
Surrender of
Registration
Composition
Scheme
Opt out
Composition Scheme
Thank
You

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Basic introduction of GST

  • 1. GOODS AND SERVICE TAX (GST) Dr. Khyati Vora & Dr. Kuldeep Sharma
  • 2. Objective of Symposia To present an overview of GST
  • 3. Content • Introduction of GST • Comparing Present Tax Structure and GST • GST Model • Impact of GST • Registration & Payment Procedures • Challenges & Global Perspective
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  • 5. What is GST? ‘G’ – Goods ‘S’ – Services ‘T’ – Tax “Goods and Service Tax (GST)” is a comprehensive tax levied on manufacture, sale and consumption of goods and service at a national level. Goods and Service Tax would be levied at each stage of sale or purchase of goods or services based on “input tax credit method.”
  • 6.  Introduced by Vajpayee Government in 2000  Union Budget 2006-07 announced application of GST from 1st April, 2010  Bill passed in Lok Sabha on 6th May, 2015  Bill passed in Rajya Sabha on 3rd August, 2016  GST to be implemented by July 2017 History of GST
  • 7. Features of GST • Dual Indirect Tax Structure • No Distinguish between goods and services • Applicable on supply of goods and services • Paid to the accounts of Centre and State Government separately
  • 8. Features of GST • Place and time of supply is crucial • Paid on transaction value • Input Tax Credit to the business houses • Revenue Neutral Rate (RNR) • Objective to remove multiplicity of taxes
  • 9. Features of GST • Single document for tax purpose and a single return filed with central registry • Tax payer to submit periodical return in common format to both the Central and State GST authority. • GST a significant step in the reform of indirect taxation in India
  • 10. Features of GST • Mitigate Cascading or double taxation, facilitating a common national market • Prices expected o come down in the long run • Dual GST will result in better revenue collection for state with higher
  • 12. Justification at the Central Level • At present excise duty paid on the raw material consumed is being allowed as input credit only. For other taxes and duties paid for post-manufacturing expenses, there is no mechanism for input credit under the Central Excise Duty Act. • In order to give the credit of service tax paid in respect of services consumed, it is necessary that there should be a comprehensive system under which both the goods and services are covered.
  • 13. Justification at the State Level • State is charging VAT on the excise duty paid to the Central Government, which goes against the principle of not levying tax on taxes. • As tax is being levied on inter-state transfer of goods, there is no provision for taking input credit on CST leading to additional burden on the dealers. • Many of the States are still continuing with various types of indirect taxes, such as luxury tax, entertainment tax, etc.
  • 14. Comparing Present Tax Structure and GST through Case Study
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  • 19. How much does it cost ??? Rs. 42.23 Cheaper ! !!
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  • 29. So, we saw that in a present tax structure there is a cascading burden of “tax on tax” How would this be different in GST regime ?
  • 30. In GST regime tax due can be offset against the tax paid at an early stage. Lets go back to the same example to see how this will work
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  • 40. In effect, the tax reforms of GST brings in a single indirect tax regime. It will lower tax rates & disincentives tax evasion
  • 42. Four Tier Tax Structure Goods / Service Rates Business Consumer Revenue Neutral Rate (Manufacturers) 18 % (Luxurious Products) Goods / services which are basic necessities 12% Essential Goods 5 % Demerit goods - 28 % + some cesses
  • 44. GST Models - Internationally GST Model Main Features Applicable in Countries National GST Tax levied by Centre with provisions for revenue sharing with Provinces/States Australia, China State GST Tax levied by Provinces/States USA USA Non-concurrent Dual GST GST on Goods levied by State & on Services levied by Centre Concurrent Dual GST Tax levied by Centre & State on both Goods & Services Brazil & Canada ―India‘s Proposed Model
  • 45. Proposed GST Model for India Concurrent Dual GST
  • 46. Need for a Dual-GST Model • The need for a Dual-GST model is based on the following premise: • At existing framework, both levels of Government i.e. Centre and State, as per Constitution holds concurrent powers to levy tax domestic goods and services; • The proposed Concurrent Dual-GST model would be a dual levy imposed concurrently by the Centre and the States, but independently; • Both the Centre and State will operate over a common base, i.e. the base for levy and imposition of duty/tax liability would be identical.
  • 47. Tax/Taxes Which Shall Be Levied As Per Place Of Supply
  • 49. Inter-State (i.e. Outside the State OR from one state to another state)
  • 50. Taxes to be subsumed • Central Indirect Taxes 1) Central Excise Duty 2) Additional Excise Duties 3) Service tax 4) Central Sales Tax (CST) 5) Additional Customs Duty (CVD) 6) Special Additional Duty of Customs (SAD) 7) Central Surcharges and Cesses in so far as they relate to supply of goods and services • State Taxes 1) State VAT/Sales Tax 2) Entertainment Tax (other than that levied by local bodies) 3) Octroi and Entry Tax 4) Purchase Tax 5) Luxury Tax 6) Taxes on lottery, betting and gambling 7) State Surcharges and Cesses in so far as they relate to the supply of goods and services
  • 51. Registration and Payment Procedures Under Model GST Law
  • 52. Need of Registration o Crossing Turnover asCrossing Turnover as specifiedspecified o Legally Recognition asLegally Recognition as supplier/receiversupplier/receiver o Claiming Input tax creditClaiming Input tax credit o Pass on Input tax creditPass on Input tax credit o VoluntarilyVoluntarily
  • 53. Section-19-Registration  Mandatory for person liable to be registered under Schedule III.  State wise registration to be taken.  Registration within 30 days from the date liable to registration.  Already registered under an earlier law – No need to apply fresh registration other then Input Service Distributor.  May take seperate registration for multiple business verticals in a State. (Either separate address or separate business segment)  A person may take voluntarily registration irrespective of his turnover.
  • 54. Section-19-Registration o Section 2(18) -“business vertical” shall have the meaning assigned to a ‘business segment’ in Accounting Standard 17 issued by ICAI; Business Segment:- A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. Section 2(6)-“aggregate turnover” means aggregate value of -all taxable supplies; -non-taxable supplies; -exempted supplies and -exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be;
  • 55. Schedule-III  Supplier liable to take registration in that State from where he makes a taxable supply of goods and/or services if aggregate turnover exceeds the limit prescribed.  No registration required if person dealing in non -taxable goods and/or services ONLY.  After job-work, supply of goods by a registered job worker shall be treated as the supply of goods by the “principal”, and the value of such goods shall not be included in the aggregate turnover of the registered job worker.  Person registered or holds a license under an earlier law, shall be liable to be registered subjected to aggregate turnover.
  • 56. Schedule-III SCHEDULE III LIABILITY TO BE REGISTERED Person liable to Registered (Summery) With Conditions of aggregate turnover Without Any Condition of aggregate turnover(Para 5 of Schedule III) Every supplier making taxable supply having aggregate turnover exceeding ; -Rs. 4 Lakhs in NE State including sikkim; -Rs. 9 Lakhs in any other State. Person registered under any earlier law; Inter-State Taxable Supply Causal Taxable Persons-Sec 2(21) Under reverse charge mechanism Non-resident taxable persons-Sec 2(69) Deductor as defined u/s 37 On behalf of another registered persons such as agent Input Service Distributors Through Electronic commerce operator(other than branded services) Every electronic commerce operator An aggregator Persons as notify by CG/SG. Transferee, in case of succession Transferee in case of amalgamation, merger etc.
  • 57. Provision for Casual taxable person and Non-Resident taxable person Section-2(21)-“casual taxable person” means a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business; Section-2(69)-“non-resident taxable person” means a taxable person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India; oRegistration certificate valid for 90 days or further extended period not exceeding 90 days; oAdvance deposit of tax equivalent to estimated tax liability; oAmount credited in the electronic cash ledger.
  • 58. Amendment of Registration -Inform changes to the proper officers(PO) in prescribed manner; -PO approve or reject the same; -In prescribed cases, no approval of PO is required - Approval/Rejection under CGST/SGST deemed to be approval/rejection under SGST/CGST.
  • 59. Structure of Registration Number  State wise PAN-based registration Number  Registration number will be 15-digit  Known as Goods and Services Taxpayer Identification Number (GSTIN).  1-2 digit would be state code as defined under the Indian Census 2011.  Next 10 digit would be PAN number of the registraint  13th digit would be alpha-numeric (1-9 and then A-Z) represent number of registrations a legal entity (having the same PAN) has within one State.  14th digit of GSTIN would be kept BLANK for future use.  15th digit is check digit enable department to verify the GSTIN as entered by person. GSTIN State PAN Entity Code Blank Check Digit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
  • 60. Procedure for obtaining Registration Submit online application through GST Common Portal; Seeking confirmation through message on e-mail and SMS to the authorized signatory of the applicant After confirmation, acknowledgement number would be generated and intimated to the applicant. Once the application is approved and GSTIN is generated, the same along with Log-in ID and temporary password will be sent to the authorized signatory
  • 61. Documents Required S.No Particulars Documents to be uploaded 1 Constitution of Business -Relevant documents which are not captured through PAN and online validation. 2 Details of the Principal Place of business Own premises- Ownership Documents Rented or Leased premises Rent / Lease Agreement with ownership documents 3 Details of Bank Account (s) Complete details.i.e cancel cheque 4 Details of Authorised Signatory Letter of Authorisation or copy of Resolution 5 Photograph For Authorised person
  • 62. Types of Ledgers Types of Ledgers  Date of credit to Government A/c =Date of depositDate of credit to Government A/c =Date of deposit The Electronic Cash Ledger, Electronic Credit Ledger and Tax LiabilityThe Electronic Cash Ledger, Electronic Credit Ledger and Tax Liability Register are unique features of the model GST law.Register are unique features of the model GST law.
  • 63. Utilization of AmountUtilization of Amount Cash Ledger Credit Ledger Tax Tax Interest Penalty Fees Any other amount  Amount available in different ledgerAmount available in different ledger may be usedmay be used for making any paymentfor making any payment towardstowards CGST InputCGST Input IGST InputIGST Input SGST InputSGST Input
  • 64. Forms prescribed Application for registration under GST Amendment Form Surrender of Registration Composition Scheme Opt out Composition Scheme