This document provides information about taxes in India, including Goods and Services Tax (GST). It defines different types of taxes such as direct and indirect taxes. It explains how GST works as an indirect tax collected from customers by businesses and paid to the government. It outlines the taxes that were merged into GST and how it aims to reduce the tax burden through a unified market. It also gives examples of tax calculations under GST.

2. TAX
A tax (from the Latin tax) is a mandatory financial charge or some
other type of levy imposed upon a taxpayer (an individual or other
legal entity) by a governmental organization in order to fund
various public expenditures.
• Education
• Defence
• Agriculture
• Law and Safety
• Administration
A failure to pay, along with evasion of or resistance to taxation, is
punishable by law.

3. Types of Tax
Direct Taxes are the taxes that are levied on the income of
individuals or organisations. They include Income tax,
corporate tax, wealth tax and inheritance tax.
Indirect taxes are those paid by consumers when they buy
goods and services. These include excise, service tax (or
GST) and customs duties.
GST is levied on Goods and Services

4. GST
GST is an Indirect Tax which flow like this…
Customer > Business > Government
Customers will pay
the tax to the
Businessman
Businessman will
collect and pay tax
to Govt.
Govt. will get Tax
from Businessman.
It is an income.

5. Before GST
SI No. Business Tax
1 Manufacturer Excise duty
2 Traders CST (Central Sales Tax)
3 Service Providers Service Tax
And there were various other taxes such as Luxury Tax, Entertainment tax etc.
GST Implemented on July 1st 2017.

6. Central Taxes merged into GST
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a. Central Excise duty
b. Duties of Excise (Medicinal and Toilet Preparations)
c. Additional Duties of Excise (Goods of Special Importance)
d. Additional Duties of Excise (Textiles and Textile Products)
e. Additional Duties of Customs (commonly known as CVD)
f. Special Additional Duty of Customs (SAD)
g. Service Tax
h. Central Surcharges and Cesses so far as they relate to supply of
goods and services

7. State Taxes merged into GST
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a. State VAT
b. Central Sales Tax
c. Luxury Tax
d. Entry Tax (all forms)
e. Entertainment and Amusement Tax (except when levied by the
local bodies)
f. Taxes on advertisements
g. Purchase Tax
h. Taxes on lotteries, betting and gambling
i. State Surcharges and Cesses so far as they relate to supply of
goods and services

8. Change in Constitution
 GST Law empower the Centre and the States to levy and
collect tax on both goods and services.
 The Constitution of India has been amended by the
Constitution (one hundred and first amendment) Act, 2016
recently for this purpose. Article 246A of the Constitution
empowers the Centre and the States to levy and collect the
GST.
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9. Benefits
 Removal of Cascading effect - Allowing set-off of
prior-stage taxes will be available.
 Common National market.
 For the consumers - Reduction in the overall tax burden
on goods, which is currently estimated at 25%-30%.
 Indian products will be competitive in the International and
domestic markets - Economic Growth.
 Benefit for Centre and the States – Easy Administration, Widening of
the tax base etc.
 Transparent and Easier Tax Compliance System.
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10. Removal of Cascading Effect
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In GST Scenario, all Indirect taxes merged into GST.
So Input Tax Credit is available for Goods and Services without limit.

11. Common National Market
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GST removed Check Posts.
In Developed Countries, a Truck was moving 700-800 Kms in a Day.
In India it was only about 200-250Kms.
GST brought E-way Bill for smooth movement of Goods.
One Vehicle cannot be stopped for more than 30 minutes.
Before GST After GST

12. Indian Products in Intnl. Market
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• GST is not applicable on Exports.
• Input Tax Credit (Tax Paid on Goods and Services purchased) is
refundable.
• Price of Indian goods will be cheaper.
• Indian Products will be competitive in International Market.

13. Reduction in the Tax Burden
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14. Easy for Govt. and Businessmen
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• Widened Tax base – On
Goods and Services.
• More Tax Payers – More
Revenue.
• Better Tax System.
• Less Tax Evasion.
• Reduction in cost of
Administration
• Single Tax – Managing
will be easy.
• Input Tax Credit
available.
• Less Returns – Now
Single Return coming…
• Removed Headache of
managing more taxes.

15. Features of GST
Levied at all stages right from manufacture up to final consumption.
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16. B2B and B2C Transactions
Business to Business Transactions. (B2B)
Input Tax Credit is Available to each Business.
GST is calculated only on the Value Addition.
Govt. is only Custodian of Tax.
Business to Consumer (B2C)
Burden of Tax is on the Customer
Govt. gets Income only on this point.
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17. Input Tax Credit
Business (Buyer) Business (Seller)
Tax Paid by the Registered Person can be
claimed as Input Tax Credit.
Tax Collected in B2B Transaction is
liability for the government.
Tax Paid by the Buyer is Asset for him.
Tax Paid by the Buyer to the Seller
with Price
Goods / Services supplied

18. Tax Liability
TAX LIABILITY = OUTPUT TAX – INPUT TAX
Input
Goods
Capital
Goods
Input
Services

19. Payment of Tax collected from Customers
Customer (Buyer) Business (Seller)
Tax Paid by the Buyer to the Seller
with Price
Goods / Services supplied

20. Intra-state (Within the State)
CGST and SGST will apply.
Interstate (Outside the State)
IGST will apply.
Dual GST
 India is a federal country where both the Centre and the States
have been assigned the powers to levy and collect taxes.
CGST = Central Govt. SGST = State Govt. IGST = Central Govt. + State Govt.
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21. Example
Suppose you went to a Hotel with your friend.
Had 2 Coffee. The Rate is Rs. 40/-. Total Value is Rs. 80/-.
GST is 12%.
SGST = 6% = Rs. 4.80/- = To be paid to State Govt.
CGST = 6% = Rs. 4.80/- = To be paid to Central Govt.
Here Total rounded off to Rs. 90/-
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22. Destination based tax on consumption
 GST - Destination based tax on consumption of goods and
services.
 The tax would accrue to the Tax Authority which has
jurisdiction over the place of consumption which is also termed
as place of supply.
Tax goes to the Government –
Place of Consumption
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23. Example
Good sold by Mr. Arun (Tamilnadu) to Mr. Hari (Karnataka).
Here the Tax Paid by Mr. Hari will be paid to Karnataka Govt. and
Central Govt.
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Goods
Price + Tax Rs. 100/-
IGST
IGST = CGST + SGST
CGST = 50 = Central Government
SGST = 50 = Karnataka Govt.
Supplier
Tamilnadu
Customer
Karnataka

24. Intra-State Supply
 For any intra-state supply, GST has to be paid.
 GST has two components.
 Central GST (going into the account of the Central Govt.)
 State GST (going into the account of the State Govt.)
Both places are in Maharashtra State

25. Inter State Supply
For any inter-state supply, tax to be paid is
 Integrated GST (IGST) – Paid to the Central Govt.
 will have components of both CGST and SGST.
From One State to another State

26. Calculation of GST
The Central GST and the State GST would be levied simultaneously
on every transaction of supply of goods and services
GST is not applicable on…
 Exempted goods and services
 Goods which are outside the purview of GST and
 the transactions which are below the prescribed threshold
limits.
Tax Rates are – 5% 12% 18% and 28%
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27. Commodities outside the purview of GST
 Alcohol for human consumption
 Petroleum Products viz. petroleum crude, motor spirit
(petrol), high speed diesel, natural gas and Aviation turbine
fuel
 Electricity.
The existing taxation system - VAT & Central Excise will
continue in respect of the above commodities.

28. Tobacco and Tobacco products
Tobacco and tobacco products would be subject to GST.
In addition, the Centre would have the power to levy Central
Excise duty on these products.

29. Actionable Claims, Land and Buildings
GST Law specifically provides that Actionable Claims other than
Lottery, Betting and Gambling will not attract GST.
Land and Completed Buildings also will not attract GST.

30. General Category
Tax is payable by the taxable person on the supply of goods
and/or services.
Special Category States include Arunachal Pradesh, Assam,
Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim,
Himachal Pradesh, Uttarakhand and J&K*.
SI No. Category Annual Turnover
1 Normal States 20 Lakhs
2 North Eastern States 10 Lakhs
If Daily Sales is more than Rs. 6,000/-
Need Registration.

32. ACCOUNTANT MUST KNOW…
 How to register the Business in GST.
 Identification of Tax Rates for Goods
 Calculation of Tax
 Tax Payment
 Return Filing
 Maintaining Accounts & Records
 Tax Invoice, Credit and Debit Notes
 Raise E-way Bill
 Refund of Tax
 Dealing with Consultant / CAs

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