GST - Changes and its impact

Webinar on GST
info@consultconstruction.com
www.consultconstruction.com
• Organised by Consult Construction
• Rendering specialised services to Construction
– Indirect Taxes
– ERP
– Management Audits
– Corporate Training
• We also release monthly E-bulletin on Indirect Taxes

Present Indirect Tax Structure of India
Present Tax
Structure
[ 4 Important
Constituents]
Excise Duty
Entry No. 84,
List I, Schedule
VII
Taxable Event is
Manufacture
Service Tax
Residuary Entry
No. 97, List I,
Schedule VII
Taxable Event is
Provision of
Service
Sales Tax
/ VAT/
CST
Entry No. 54 of
List II ( VAT) and
92A of List I
( CST)
Taxable Event is
Sale
Customs
Duty
Entry No. 83,
List I, Schedule
VII
Taxable Event is
Import & Export
Entry Tax/
Entertainment
Tax
Entry No. 52
&62 List II,
Schedule VII
Taxable Event is
Entertainment
& Entry of
Goods

Custom Duty
In Place of CVD and SAD,
IGST
will be charged
Proposed Indirect Tax Structure
Intra State
Taxable
Supply
Excise and Service Tax
will be known as CGST
Inter State
Taxable
Supply
CST will be
known as
Integrated GST
(IGST)
Approx. Sum
Total of CGST
and SGST
Local VAT & Other
taxes will be known as
SGST
Import From
Outside
India

Features of Proposed GST
 Destination based Taxation
 Apply to all stages of the value chain
 Apply to all taxable supplies of goods or services made for
a consideration except –
o Exempted goods or services – common list for CGST &
SGST
o Goods or services outside the purview of GST
o Transactions below threshold limits
 Dual GST having two concurrent components –
o Central GST levied and collected by the Centre
o State GST levied and collected by the States

Features of Proposed GST
 CGST and SGST on intra-State supplies of goods or
services in India.
 IGST ( Integrated GST) on inter-State supplies of goods or
services in India – levied
and collected by the Centre.
 IGST applicable to
o Import of goods and services
o Inter-state stock transfers of goods and services
 Export of goods and services – Zero rated.

Central Taxes to be subsumed under GST are –
Central Excise duty (CENVAT)
Additional duties of excise
Excise levied under Medical and
Toiletries Preparation Act
Additional duties of custom (CVD and SAD)
Service tax
Surcharge and cess

State Taxes to be subsumed
State Sales tax
State VAT
Purchase tax
Central sales tax
Entertainment tax (not levied by local bodies)
Tax on lottery, batting and gambling
Surcharges and cess

o Alcohol for human consumption
o Electricity Duty
o Real Estate – Stamp Duty plus Property Taxes
o Petroleum Products (to be brought under GST
from date to be notified on from recommendation
of GST Council)
o Tobacco Products under GST with Central Excise
duty
Out of GST

Rates under GST Regime
GST Rates to be based on RNR. Four rates are proposed -
o Merit rate for essential goods and services
o Standard rate for goods and services in general
o Special rate for precious metals
o NIL rate
Floor rate with a small band of rates for standard rated goods or
services for SGST
(This is similar to mandatory guidelines which will be issued by
GST Council in line with European Directive 12/ 2006)
Optional Threshold exemption in both components of GST.

Optional Compounding scheme for taxpayers having taxable
turnover threshold above the exemption.
HSN Code likely to be used for classification of goods.
Present Accounting codes likely to be used for Services.
Compounding and Classifications

Place of Supply Rules

• Discussion paper proposes government to clarify if a
transaction –
a)Is to be treated as supply and not service of goods
b)Is to be treated as supply of service and not goods
c) Is to be treated neither as supply of goods nor services

–Different Elements with Different Tax
Rates
–International Practice in developed countries–
 Remain Silent in Law
 Answers from Judicial Pronouncement
Identity - Composite Supplies

Rationalization of Warehouses

Transitional complexities viz a viz contractual
agreement variations

Issue - Liability in case of ongoing works/turnkey contracts and
leases
 Concern -
 Whether govt. will provide a remedy to industry by restricting GST
liability to the extent of tax payable under the existing system till
the completion of such on-going contracts/ agreements at least for
a specified duration of say 18-24 months ??
 Will the client reimburse

Concern -
How govt. will deal with the exemption
provided on on-going contracts?

Issue – Blockage of Working capital
Concern -
How industry would meet the interest cost
of additional working capital ?

Issue - Transitional Tax cost
Concern –
 How govt. is going to adjust to IT and Staff Training
cost on transition ?
 How govt. is going to compensate loss of profit
figures to high revenue generating states ?
 On what basis compensatory allowances will be
given to state ??

Issue - ERP
 Concern -
How industry is going to change in
accordance with the change in statue ??

Impact on some of the sectors
• D2H & Entertainment: May benefit indirectly once GST is implemented. Tax
evasion in the cable industry will come down forcing operators to raise tariffs.
Elimination of multiple taxes.
• Consumer Products: GST rate should be tax neutral for most FMCG players.
However, FMCG firms will benefit from lower warehouse costs, more efficient
supply-chain planning and inventory reduction.
• Auto sector would benefit from reduction in duties on large SUVs and cars as GST
rate is likely to be lower than the present excise plus VAT rate. Tractors may be
taxed at lower rate in GST.

Impact on some of the sectors
• Plastic Industry: Unorganized players, which account for a major share of the
plastic industry, will come under tax net and may not be able to pay the high
dealer margins they currently pay. This will help organised players.
• Transport: Demand for large warehouses will increase, which will benefit
Transport sector. Truck utilization will also go up. Overall efficiency of the
industry shall improve.
• Construction – Composite transactions may be treated as service
• IT Telecom: Increase in taxes under GST will be passed on to the consumers. End
of dispute on sim cards and software

Global Experience
• Only Brazil and Canada have opted for Dual GST
• Canada has planned a single administration authority to simplify the
management
• They had initially expected to combine into Single GST after some time,
but have not been able to do that 20 yrs down the line
• Australia implemented in 2000 – Single tax administered by centre –
Less number of states – Population equivalent to Mumbai
• They had 21 months after release of the draft GST Law
• Significant increase In number of tax disputes post implementation

GST - Changes and its impact

More Related Content

What's hot

Similar to GST - Changes and its impact

More from sandesh mundra

Recently uploaded

GST - Changes and its impact