Goods & Servies Tax a Smart View

1. GOODS & SERVICES TAX - GSTGOODS & SERVICES TAX - GST
A PRESENTATIONA PRESENTATION
BYBY
CACA ANURAG JETHLIYAANURAG JETHLIYA

2. TAXATION POWERSTAXATION POWERS
OF CENTREOF CENTRE
 Income TaxIncome Tax – on income, other than agricultural income– on income, other than agricultural income
 Excise DutyExcise Duty – on goods manufactured or produced in India– on goods manufactured or produced in India
 Custom DutyCustom Duty – on imports and exports– on imports and exports
 Service TaxService Tax – on specified services– on specified services
 Central Sales TaxCentral Sales Tax – on inter-State sale of goods– on inter-State sale of goods
 Rates ofRates of Stamp DutyStamp Duty on 10 specified instrumentson 10 specified instruments
CONCURRENT LIST OF BOTHCONCURRENT LIST OF BOTH
 Stamp Duties, not including rates of stamp duty on 10 specifiedStamp Duties, not including rates of stamp duty on 10 specified
instruments.instruments.

3. TAXATION POWERS OF STATESTAXATION POWERS OF STATES
 VAT/Sales Tax - on purchase or sale of goods, other thanVAT/Sales Tax - on purchase or sale of goods, other than
newspapers, within a Statenewspapers, within a State
 Excise duty - on alcoholic liquor for human consumptionExcise duty - on alcoholic liquor for human consumption
 Rates of Stamp Duty – on other than 10 specified instrumentsRates of Stamp Duty – on other than 10 specified instruments
 Land RevenueLand Revenue
 Tax – on agricultural incomeTax – on agricultural income
 Toll taxToll tax
 􀂾􀂾 Taxes onTaxes on::
 Land and buildingsLand and buildings
 Entry of goods in a local Area (Entry Tax or Octroi)Entry of goods in a local Area (Entry Tax or Octroi)
 Consumption or sale of electricityConsumption or sale of electricity
 Goods and passengers carried by road or inland waterwaysGoods and passengers carried by road or inland waterways
 VehiclesVehicles
 Professions, Trades, Callings and EmploymentsProfessions, Trades, Callings and Employments
 Luxuries, including taxes on entertainment, betting andLuxuries, including taxes on entertainment, betting and
gamblinggambling

4. DRAWBACKS OFDRAWBACKS OF
CURRENT SYSTEMCURRENT SYSTEM
 Confusion and MistrustConfusion and Mistrust
 Complex and lacking in stabilityComplex and lacking in stability
 Hidden tax on exports, no state tax on importsHidden tax on exports, no state tax on imports
 High transaction costsHigh transaction costs
 Narrow baseNarrow base

6. What is GOODS AND SERVICE TAXWhat is GOODS AND SERVICE TAX
 Goods and Service Tax is a tax on goods and services.Goods and Service Tax is a tax on goods and services.
 It is leviable at each point of sale or provision of service.It is leviable at each point of sale or provision of service.
 At the time of sale of goods or providing the services theAt the time of sale of goods or providing the services the
seller or service provider can claim the input credit of taxseller or service provider can claim the input credit of tax
which he has paid while purchasing the goods or procuringwhich he has paid while purchasing the goods or procuring
the servicethe service
 This is simply very similar to VAT.This is simply very similar to VAT.
 It can be termed as National level VAT on Goods andIt can be termed as National level VAT on Goods and
Services.Services.
 Only difference in this system is that not only goods butOnly difference in this system is that not only goods but
also services are involved.also services are involved.
 The rate of tax on goods and services are generally theThe rate of tax on goods and services are generally the
same.same.

7. Why do we need GSTWhy do we need GST
todaytoday
 In Indian economy the service sectorIn Indian economy the service sector
contributes over 55%.contributes over 55%.
 Separate taxation of goods andSeparate taxation of goods and
services is neither viable nor desirableservices is neither viable nor desirable
 Value added in manufacture and saleValue added in manufacture and sale
of goods require inputs of both —of goods require inputs of both —
goods and services and goods and services and vice versavice versa,,
which is often not separablewhich is often not separable

8. GST- HOW IT WORKSGST- HOW IT WORKS
 The dealers registered under GST (Manufacturers,The dealers registered under GST (Manufacturers,
Wholesalers and retailers and service providers) willWholesalers and retailers and service providers) will
charge GST on the price of goods and services from theircharge GST on the price of goods and services from their
customers.customers.
 They will claim credits for the GST included in the priceThey will claim credits for the GST included in the price
of their own purchases of goods and services used byof their own purchases of goods and services used by
them.them.
 The sellers or service providers collect the tax from theirThe sellers or service providers collect the tax from their
customer, who may or may not be the ultimate customer,customer, who may or may not be the ultimate customer,
and before depositing the same to the exchequer, theyand before depositing the same to the exchequer, they
deduct the tax they have already paid.deduct the tax they have already paid.

9. GST- WHAT ALL ITGST- WHAT ALL IT
INCLUDESINCLUDES
1.1. A sale or supply includes a sale of goodsA sale or supply includes a sale of goods
2.2. Lease of premisesLease of premises
3.3. Hire of equipmentHire of equipment
4.4. Giving adviceGiving advice
5.5. Export of goods and supply of other things.Export of goods and supply of other things.
6.6. A purchase includes an acquisition of goods orA purchase includes an acquisition of goods or
services such as trading stock a lease, consumablesservices such as trading stock a lease, consumables
and other things.and other things.

10.  China - 17%China - 17%
 Indonesia - 10%Indonesia - 10%
 Philippines -10%Philippines -10%
 Taiwan (Chinese Taipei) - 5%Taiwan (Chinese Taipei) - 5%
 UK -17.5%UK -17.5%
 Australia -10%Australia -10%
 France -19.6%France -19.6%
 Germany -16%Germany -16%
 Denmark -25%Denmark -25%
GST- RATES WORLDGST- RATES WORLD
WIDEWIDE
No. of Countries : 140No. of Countries : 140

11.  Central TaxesCentral Taxes
Excise DutyExcise Duty
Additional Excise dutyAdditional Excise duty
Service TaxService Tax
CVD, SADCVD, SAD
SurchargeSurcharge
 State TaxesState Taxes
VATVAT
Entertainment tax levied by statesEntertainment tax levied by states
Luxury TaxLuxury Tax
Tax on LotteryTax on Lottery
Entry tax other than for local bodiesEntry tax other than for local bodies
TAXES Proposed TO BETAXES Proposed TO BE
SUBSUMED IN GSTSUBSUMED IN GST

12.  Central TaxesCentral Taxes
Specific CessSpecific Cess
Excise duty on tobacco productsExcise duty on tobacco products
 State TaxesState Taxes
Items containing alcoholItems containing alcohol
Entertainment tax (Local Bodies)Entertainment tax (Local Bodies)
Entry tax for local bodiesEntry tax for local bodies
Electricity dutyElectricity duty
TAXES NOT BE INCLUDEDTAXES NOT BE INCLUDED
IN GSTIN GST

13.  Exempted products :Exempted products :
 Food Grains, Bread, Salt, Milk, Vegetable, Meat, FishFood Grains, Bread, Salt, Milk, Vegetable, Meat, Fish
 Goods at Lower Rate :Goods at Lower Rate :
 Tea, Milk Powder, Coffee beans, Toy, Beedi, BicyclesTea, Milk Powder, Coffee beans, Toy, Beedi, Bicycles
 Govt. aided public health and education exemptedGovt. aided public health and education exempted
INDICATIVE GSTINDICATIVE GST
RATESRATES

14. User Charges likely to beUser Charges likely to be
out of GSTout of GST
It has also suggested keeping levies like the toll tax, environment taxIt has also suggested keeping levies like the toll tax, environment tax
and road tax outside the GST ambit, as these are user chargesand road tax outside the GST ambit, as these are user charges
Likely Rate – 16 percent TotalLikely Rate – 16 percent Total
 It is envisaged that the framework of dual GST would embodyIt is envisaged that the framework of dual GST would embody
multiple rate of taxes for goods , but a single rate for servicesmultiple rate of taxes for goods , but a single rate for services
within a state . There are indications that the rate could be in thewithin a state . There are indications that the rate could be in the
range of 16-20 per cent. The government is expected to comerange of 16-20 per cent. The government is expected to come
out with a white paper on the transition to GST shortly .out with a white paper on the transition to GST shortly .

15. GST- IT’S SYSTEMGST- IT’S SYSTEM
Invoice System:Invoice System:
 In this system, the credit of GST paid is claimed on theIn this system, the credit of GST paid is claimed on the
basis of invoice.basis of invoice.
 It is claimed when the invoice is received.It is claimed when the invoice is received.
 It is immaterial whether payment is made or not.It is immaterial whether payment is made or not.
 The GST (Output) is accounted for when invoice isThe GST (Output) is accounted for when invoice is
raised.raised.
 The time of receipt of payment is immaterial.The time of receipt of payment is immaterial.
 The advantage of invoice system is that the input creditThe advantage of invoice system is that the input credit
can be claimed without making the payment.can be claimed without making the payment.
 The disadvantage of the invoice system is that theThe disadvantage of the invoice system is that the GSTGST
has to be paid without receiving the payment.has to be paid without receiving the payment.

16. ISSUES YET TO BEISSUES YET TO BE
DECIDEDDECIDED
 Constitutional amendment authorizing state toConstitutional amendment authorizing state to
collect and retain tax on services.collect and retain tax on services.
 Integration of certain Central & State taxesIntegration of certain Central & State taxes
(Various Cess, Electricity duty, Entertainment tax(Various Cess, Electricity duty, Entertainment tax
etc.)etc.)
 Taxation of inter state services and their method ofTaxation of inter state services and their method of
taxationtaxation
 Stock transferStock transfer
 Road permits and check postsRoad permits and check posts

17. QuestionQuestion
 For CA Profession this is beneficialFor CA Profession this is beneficial
or not ?or not ?

18. THANK YOUTHANK YOU
You were good audienceYou were good audience