Understanding GST in India

Taxation
And
Financial Services
www.avconsultantshyd.com

GOODS AND SERVICE TAX
(GST)

 An Overview on Indian Economy
 Present TaxStructure in India & Problems thereon
 Concept of GST
 Features of GST
 Fundamentals of GST
 Supply Chain of GST
 GSTFAQs
 GSTRegistration Procedure
 GSTReturns and Periodicity
 Overall Benefits of GST
Presentation Contents

India’s Economy is the seventh largest economy in the world
measured by nominal GDP.
The country is classified as newly industrialized country , one of the G-
20 member, a member of BRICS and a developing economy with an
average growth rate of approximately 7% over the last two decades.
The Indian Economy has the potential to become the world’s 3rd
Largest Economy by the next decade.
Agriculture, Service and Industry are the major sector of Indian
Economy.
India has one of the fastest growing service sectors in the world which
contributed to more than 57% of GDP
An Overview on Indian Economy

Present
Tax
Structure
IndirectTax
Excise Duty
Taxable Event is
Manufacture
ServiceT
ax
Taxable Event is
Provision of Service
Sales T
ax/
VAT/CST
Taxable Event is
Sale
Customs Duty
Taxable Event is
Import & Export
Other Indirect
Taxes like
Entertainment
Taxes,Lottery
Taxes
Direct
Tax
Present Tax Structure in India

Complex Tax System and Lacking stability.
Multiplicity of Duties / Taxes
Cascading Effect of Taxes
Lack of uniformity of Provisions in State VAT Statues
Exclusion of Services from State Taxation
Problems with Present Indirect Tax Structure

GST – The Solution to India’s Tax Problems
A Common Tax on
Introduction of GST
Services
Goods
&


 GST is a single unified taxation system aiming to remove geographical
barriers for trading and transform the entire nation into “One Common
Market Place”.
GST is a tax on goods and services with comprehensive and continuous
chain to setoff benefits from the Producer’s Point and Service Provider’s
Point up to Retailer Level.
 It is a Destination Tax similar to consumption tax . It is applied on the
goods & services when a consumer buys them.
 It is based on duality concept of tax system. Under this system, tax is
administered, collected and shared by both the Central and State
Governments based on the nature of transaction i.e. inter state or intra
state.
Concept of GST

Features of GST
 Destination based Taxation
 Apply to all stages of the valuechain
 Apply to all taxable supplies of goods or services (as against manufacture, sale or provision of
service) made for a consideration except–
o Exempted goods or services –common list for CGST& SGST
o Goods or services outside the purview ofGST
o Transactions below thresholdlimits
 Dual GSThaving two concurrent components –
o Central GSTlevied and collected by the Centre
o State GSTlevied and collected by the States

Fundamentals of GST
CGST
• CGST stands for Central
GST.
• It is levied by the Center
through separate statute on
all transactions.
• Tax collected will be shared
to Central Government
• Input Tax Credit of CGST is
to be adjusted with CGST
and IGST.
SGST
• SGST stands for State GST.
• It is levied by the States.
• Tax collected will be shared
to State.
• Input Tax Credit of SGST is to
be adjusted with SGST and
IGST
IGST
• IGST stands for Integrated
GST.
• This is applicable on
interstate and import
transactions.
• Tax is levied by Central
Government & the tax
collected is shared between
Central and State
Government.
• Input Tax Credit of IGST is to
be adjusted with IGST, CGST,
IGST.

Subsuming of Existing Taxes
• Central Excise
• Service Tax
• Additional Custom Duty
(CVD) & SAD
• Surcharges and Cess
Central Taxes
• VAT/sales tax
• Entertainment Tax
• Luxury Tax
• Lottery Tax
• Entry Tax
• Purchase Tax
State Taxes
• CST
Inter State
Taxes

Taxes which are not to be subsumed
Basic Custom Duty
Road & Passenger Tax
Toll Tax
Stamp Duty
Electricity Duty
Exports Duty (export of certain goods which are not available in
India in abundance)

Supply Chain of GST
Simple Structure of GST Chain
Supply of Goods GST Flow GST Collected
A manufacturer of Fabric Material
sells fabric to tailor for Rs. 100
The manufacturer pays GST of Rs. 10
(say)
10
The tailor purchases fabric at Rs.
100 and adds value of Rs.30 and
sell it to wholesaler at Gross Value
of Rs. 130
The tax on output will be 130*10%=13 but
the tailor has already paid tax of Rs. 10 so,
net GST payable is Rs. 3 (13-10)
3
The wholesaler buys shirt for Rs.
130 and adds value of (i.e. min
margin) Rs. 20 and sell it to
retailer for Rs. 150
The tax on output will be 150*10%=15 .
Net GST Payable = 15-13=2
2
In final stage , a retailer buys the
shirt from wholesaler for 150 and
adds his margin of Rs. 10 (say)
and sell to buyer at Rs. 160
The output tax will be 160*10%=16
Net GST payable=16-10-3-2=1
1
TheStbuutiyerbuys shirt at Rs. 160 T
otal GST payable by buyer=10+3+2+1=16 and no Credit is
available to him

GST Scenario At a Glance
Input Service Provider Output Service Provider Consumer
CGST = 10
CGST
ITC
= 11
= (10)
1
Tax Invoice (A)
Tax Invoice (B)
Cost = 100
Central Tax = 11
( 10 + 1)
State Tax = 11
( 10 + 1)
SGST = 10
SGST
ITC
= 11
= ( 10)
1
= 10%
= 10%
= Input Tax
Assumption
SGST
Value Addition
ITC
Credit
Value = 100 Gross Value =110
CGST = 10
SGST = 10 CGST = 11
120 SGST = 11
132

 How will GSTbenefitConsumers?
InGST,consumers will be benefitted mostly in two ways:-
Firstly, all taxes will be collected at the point of consumption and transparency on taxation
imposed.
Secondly, once the barrier between States are removed, consumers will not end up paying
“tax on tax”.
Why is Dual GSTrequired?
India is a federal country where both the Centre and the States have been assigned the
powers to levy and collect taxes through appropriate legislation. Both the levels of
Government have distinct responsibilities to perform according to the division of powers
prescribed in the Constitution for which they need to raise resources. So, Dual GST is
introduced with the Constitutional requirement of fiscal federation.
GST - FAQS

Who is liable to be registered under GST?
Under GST, every assessee shall be liable to be registered in the state from where he makes taxable
supply of Goods and Services if his aggregate turn over in a financial year exceeds RS. 20 Lakhs
(threshold exemption Rs. 10 Lakhs for NE states).
Irrespective of threshold exemption following categories of persons are required to be
compulsorily registered:-
o Persons making any inter state taxable supply;
o Casual Taxable Persons;
o Persons who are required to pay tax under reverse charge;
o Non-Resident Taxable Persons;
o Persons who supply goods/services on behalf of other taxable persons whether as agent or
otherwise;
o Input Service Distributer;
o Every Electronic Commerce Operator;
o Every Person supplying online information and database access or retrieval services from a
place outside India to a person in India, other than registered taxable person;
o Person who is required to deduct TDS u/s 37 of the ACT.
o Such other person or class of persons as may be notified by the Central Government or a State
Government on the recommendation of the Council
GST - FAQS

What is Aggregate Turnover under GSTACT?
Aggregate Turnover” means the aggregate value of :-
All supplies whether taxable or non-taxable, made by taxable person , whether on his
account or made on behalf of all his principals ; of a person having the same PAN.
Aggregate Turnover does not include value of all supplies on which tax is levied on
reverse charge basis and value of inward supplies.
What is the time limit for taking Registration?
Any person should take a Registration, within thirty days from the date on which he
becomes liable to registration, in such manner and subject to such conditions as may
be prescribed.
GST - FAQS

What are the tax rates in GST?
Tax Rates in GST:-
o Merit Rate: Essential Goods and Services
o Standard Rate:
o Special Rate:
Goods or Services in general
Precious Metals
o Nil Rate: Exempted Goods or Services
o Under Compounding Scheme
o Tax Rate is 1% (as decided by GST Council) and input tax credit is not claimable under
this scheme.
o There is ZERO RATE GST to exporters of Goods & Services.
GST - FAQS

GST Registration Procedure

Whether all assessees/dealers who are already registered under
existing Central Excise, Service Tax, VAT, will have to obtain fresh
registration of GST?
 No, GSTN shall migrate all such existing tax payers to the GSTN network
and department shall issue GSTIN and password.
 Existing tax payers is an entity currently registered under acts as
specified below;
 Central Excise
 Service Tax
 VAT (except exclusive liquor dealers if registered under VAT)
 Entry Tax
 Luxury Tax
 Entertainment Tax (except levied by the local bodies)

GSTIN
Format of GSTIN
22 AAAAA0000A 1 Z 5
STATE CODE
PAN
Entity
Number of
the same
PAN holder
in a state
By default Check Digit
Each Tax Payer will be allotted a State wise PAN based 15-digit Goods and Services Tax
Payer Identification Number (GSTIN).
During Migrating Process (Enrollment) to GSTN the data of existing tax payers is
validated.
For the purpose of enrollment, GST System portal has been created and after
enrolment Assessee will be enabled as a registrant for GST Compliance requirement viz
return filing, tax payment etc.

Information Required for Enrollment with GST System Portal:-
Provisional ID received from State/ CentralAuthorities
Password received from the State/CentralAuthorities
Valid Email Address
Valid Mobile Number
Bank Account Number
Bank IFSC
Documents Required for Enrollment with GST System Portal:-
Proof of Constitution of Business (Deed/RegistrationCertificate)
Photograph of Promoters/Partners/Karta of HUF
Proof of Appointment ofAuthorized Signatory
Photograph of Authorized Signatory
Opening page of Bank Passbook/ Statement containing Bank A/c Number, BranchAddress,Address
of Account
holder and few transaction details
Note:
DSC is mandatory for enrollment of Companies, LLPs and for other tax payers DSC is optional.
After enrollment Final Registration Certificate will be provided to the assesee after verification of
documents (within 6 months) by proper officer center/state of concerned jurisdiction after appointed
date.
One Pan allows one GST Registration in a state and if assessee has multiple businesses in one state
then assesee may register one business entity at first and for remaining verticals within the State
assessee has to get in touch with JurisdictionalAuthority.

GST Returns
Who needs to file Return in GST Regime?
Every registered person is required to file return for the prescribed tax period.
A return needs to be filed even if there isno business activity (i.e. Nil Return)
during the said tax period of return.
It does not matter whether you are atrader, manufacturer, reseller or a service
provider, you only need to file GST returns.
What are the features of GST Returns?
o Filing of returns would only be through online mode.
oFacilities of offline generation and preparation of returns will also be available but
the returns prepared in offline mode will have to be uploaded.
o There will be a common e- return for CGST, SGST, IGST and Additional Tax.
oThere would be no revision of Returns. Changes to be done in subsequent
returns and all unreported invoice and ITC
revision will have to be corrected using
debit/credit note. These credit/debit notes would be

GST Returns and Periodicity
 There are 19 forms for filing returns of GST by tax payers.
 For Regular Dealer
Form Type Frequency Due Date Details to be Furnished
Form GSTR-1 Monthly 10th of succeeding month Furnish details of outward
supplies of taxable and /or
services affected
Form GSTR-2A Monthly 11th of succeeding month Auto-populated details of
inward supplies made
available to the recipient on
the basis of Form GSTR-1
furnished by the supplier
Form GSTR-2 Monthly 15th of succeeding month Details of inward supplies of
taxable goods and/or
services claiming input tax
credit. Addition (Claims) or
modification in Form GSTR-
2A should be submitted in
Form GSTR- 2.
Form GSTR-1A Monthly 20th of succeeding month Details of outward supplies
as added, corrected or

Form Type Frequency Due Date Details to be Furnished
Form GSTR-3 Monthly 20th of succeeding month Monthly return on the basis
of finalization of details of
outward supplies and inward
supplies along with the
payment of amount of tax
Form GST-ITC-1 Monthly 11th of succeeding month Communicationof
acceptance, discrepancy
or duplication of input tax
credit claim
Form GST-3A Monthly 15th of succeeding month Notice to a registered
taxable person who fails
to furnish return under
section 27 and section
31
Form GSTR-9 Annually 31st December of Next
Fiscal
Annual Return – furnish
the details of ITC availed
and GST paid which
includes local, interstate

Tax Deductor
Form Type Frequency Due Date Details to be
Furnished
Form GSTR-7 Monthly 10th of succeeding
month
Furnish details of
TDS Deducted
Form GSTR-7A Monthly TDS Certificate to be
made available for
download
TDS Certificate –
capture details of
value on which TDS
is deducted and
deposit on TDS
deducted into
appropriate Govt.

Aggregate Turnover Exceeds 1 Crore
Aggregate Turnover Exceeds 1 Crore
Furnished
Form GSTR-9B Annually Annual, 31st Dec of Reconciliation
Statement – audited
annual accounts and
a reconciliation
statement, duly
certified.
next fiscal
E-Commerce
Furnished
Form GSTR-8 Monthly 10th
month
of succeeding Details of supplies
effected through e-
commerce operator
and the amount of tax
collected on supplies

Foreign Non-Resident Tax Payer
Furnished
month
Details of inward
supplies to be
furnished by a person
having Unique
Identification number
Furnished
Form GSTR-5
Governmen
Monthly
t Departments and
20th of succeeding
month or within 7 days
after the expiry of
registration
UN Bodies
Furnish details of
imports, outward
supplies, ITC availed,
tax paid, and closing
stock.

 Composite Tax Payer
Furnished
Form GSTR-4A Quarterly 10th of succeeding
month
Details of inward
supplies made
available to the
recipient registered
under composition
scheme on the basis
of Form GSTR-
1 Furnished by the
supplier
Form GSTR-4 Quarterly 18th of succeeding
month
Furnish all outward
supply of goods and
services. This includes
auto populated details
from Form GSTR-4A,
tax payable and

Input Service Distributor
Furnished
month
Details of inward
supplies to be
furnished by a person
having Unique
Identification number
Furnished
Form GSTR-5
Governmen
Monthly
t Departments and
20th of succeeding
month or within 7 days
after the expiry of
registration
UN Bodies
Furnish details of
imports, outward
supplies, ITC availed,
tax paid, and closing
stock.

Final Return
For Taxable Person Whose Registration has been surrendered or
cancelled
Furnished
Form GSTR-10 Monthly Within 3 months of
cancellation of
registration
Furnish details of
inputs and capital
goods held, tax paid
and payable.

How to File Your GST Returns???
Bill No. Customer
Bill 1 A B Ltd
Bill 2 Q P Ltd.
Bill 3 C-02 Ltd.
Bill 4 J K Ltd.
Let Us take Example of a Dummy Company
Out Ward and Inward Supply Details of Furniture Ltd. ForApril
Bill No. Supplier
Bill 25 R J Ltd
Bill 45 D Ltd.
Bill 02 Z Ltd.
Bill 50 D Ltd.

On 10th May – F Ltd. Uploads GSTR-1
with its outward supply bills .
Also the suppliers RJ, D and Z also
uploaded GSTR-1

On 11th May, F Ltd.
bills through
View their inward
Form
GSTR-2A which is
auto populated

On 11th to 15th of May, F Ltd reconciles the bills shown in
Form GSTR-2A by his suppliers, with their books
During Verification, F Ltd finds that Bill 50 (purchase from
D Ltd. ) is not reflecting in Form GSTR-2A

On 15th May, F Ltd.
Uploads the missed
out bill (Bill No.50) in
Form GSTR-2 which
will be made available
to D Ltd. In GSTR-1A

Between 16 to 20 May, D Ltd. Verifies and accepts
Bill 50.
The accepted bill will be amended in Form GSTR-
1accordingly

On 20th May, Automated Return Form GSTR-3 is
available to F Ltd. For Submission and Payment

In overall what Benefits we are going to achieve by application
of GST???
 Easy Compliance
 Simple to Administer
 Uniformity of tax rates and structures
 Removal of Cascading
 Better Control on Leakage
 Improved Competitiveness
 Gain to Manufacturers and Exporters
 Relief in overall tax burden of consumers

CONTACT US
AJAY KUMAR VHAVLE
040-40060025 / 8074716673
avconsultantshyd@gmail.com

Understanding GST in India

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