The document discusses India's taxation system and the introduction of Goods and Service Tax (GST). It notes that GST is a comprehensive indirect tax that will be applied at all stages of production and distribution. GST subsumes many existing indirect taxes and is expected to provide benefits like reducing costs and shifting trade towards the organized sector. The taxation system in India involves both direct and indirect taxes imposed by central and state governments. GST laws were passed in 2017 and its implementation from July 2017 is expected to have impacts like corporate restructuring, lower inflation, and long-term economic growth.

2. ‘G’ – GOODS
‘S’ – SERVICES
‘T’ – TAX
• Goods and Service Tax (GST) is a comprehensive tax levy on
manufacture, sale and consumption of goods and service at
a national level.
• GST is a tax on goods and services with value addition at
each stage.
• GST will include many state and central level indirect taxes
• It overcomes drawback present tax system

3. TAX
STRUCTURE &
TAXATION
SYSTEM IN
INDIA
• India offers a well-structured tax system
for its population. Taxes are the largest
source of income for the government.
This money is deployed for various
purposes and projects for the
development of the nation.
• Taxes are determined by the Central and
State Governments along with local
authorities like municipal corporations.
The government cannot impose any tax
unless it is passed as a law.

4. ROLE OF THE CENTRAL AND STATE GOVERNMENT
• The entire system is clearly demarcated with specific roles for the
central and state government. The Central Government of India
levies taxes such as customs duty, income tax, service tax, and
central excise duty.
• The taxation system in India empowers the state governments to
levy income tax on agricultural income, professional tax, value
added tax (VAT), state excise duty, land revenue and stamp duty.
The local bodies are allowed to collect octroy, property tax, and
other taxes on various services like drainage and water supply.

5. Type of taxes
Direct taxes
Indirect
taxes
Goods and
Service Taxes

6. DIRECT TAXES
Direct taxes are levied on individuals and corporate entities and cannot
be transferred to others.
e.g.: Income Tax, Corporate Tax, Wealth Tax
Indirect taxes
Indirect taxes are not directly paid by the assesse to the government
authorities. These are levied on goods and services and collected by
intermediaries (those who sell goods or offer services). Here are the most
common indirect taxes in India.
e.g.: Excise duty, custom duty, Service Tax, Octroy Tax, VAT, CENVAT.

7. GOODS AND SERVICE TAX (GST)
• As a significant step towards the reform of indirect taxation in India, the
Central Government has introduced the Goods and Service Tax (GST).
GST is a comprehensive indirect tax on manufacture, sale and
consumption of goods and services throughout India and will subsume
many indirect taxes levied by the Central and State Governments. GST
will be implemented through Central GST (CGST), Integrated GST (IGST)
and State GST (SGST).
• Four laws (IGST, CGST, UTGST & GST (Compensation to the States), Act)
have received President assent. All the States & UT expected to pass
State GST Act, by end of May 2017. GST law is expected to take effect
from July 1, 2017.

8. METHOD OF TAXATION
Progressive Tax :
Increasing rate of tax for Increasing Value or Volume.
Regressive Tax :
Decreasing rate tax for Increasing Value or Volume
Proportional Tax :
• Fixed rate of tax for every level of income or production

9. REFORM IN TAX SYSTEM
VAT (Value Added Tax)
• Implemented in April-1/2005
• It is replacement to complex Sales Tax
• It overcomes a Cascading Effect of Tax
• It applied on “ Value Added Portion “ in sales
price

10. ILLUSTRATION OF VAT

11. WHAT IS GST ?
• GST is a comprehensive value added tax on goods and services
• It is collected on value added at each stage of sale or purchase in
the supply chain
• No differentiation between Goods and Services as GST is levied
at each stage in the supply chain
• At all stages of production and distribution, taxes are a pass
through and tax is borne by the final consumer
• All sectors are taxed with very few exceptions / exemptions

12. HISTORY
• Feb, 2006 : First time introduced concept of GST and announced
the date of its implementation in 2010
• Jan. 2007: First GST study by ASSOCHAM released by Dr. Shome
• Feb. 2007: F.M. Announced introduction of GST from 1 April 2010
in Budget
• The Government came out with a First Discussion Paper on GST in
November, 200
• Introduced the 115th Constitution Amendment (GST) Bill in the
year 2011.

13. GST IMPACT ON ECONOMY
• 1.Shaking up corporate operations
“While the impact on companies varies following existence of production units in the
excise exempted zones, implementation of GST should result in cost savings in the
supply chain network and expedite a shift from unorganized to organized trade,” foreign
brokerage firm Jefferies said in a note.
• 2.Passing on the benefit of lower tax
“We believe that while corporates would pass on the direct benefits of GST (like a lower
tax rate), they would aim to retain partly (if not fully) the indirect benefits from the
saving in logistics costs, streamlining of business processes and the seamless flow of
input credits,” Nomura said in a report.

14. • 3.Inflation may remain low
“Services sector component in CPI is around 20%, whereas they account
for almost 50% of the total consumption basket in the economy,” says
Soumya Kanti Ghosh, chief economic adviser at State Bank of India
• 4.RBI may not cut rates in June
“RBI will watch out for the monsoon progress as also how the GST pans
out,” said Sinha of India Ratings.
• 5.Economic growth may not jump immediately
“The GST implementation will be disruptive as there will be a major
change in the supply chain,” India Ratings’ Sinha said but added the tax
reform will be beneficial to the economy in the medium to long term

15. -NIMISHA MISHRA