GST in India, shortcomings of existing tax system and reason of delay in applicability of the tax

1. Goods & Service
Tax

2. GST
• ‘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. Current Tax structure in India
Tax Structure
Direct Tax
Income Tax
Wealth Tax
Indirect Tax
Central Tax
Excise Service Tax Custome
State Tax
VAT
Entry Tax,
luxury tax,
Lottery Tax, etc.

4. Shortcomings in Current Tax System
• Tax Cascading (Tax on Tax)
• Complexity
• Taxation at Manufacturing Level
• Exclusion of Services
• Tax Evasion
• Corruption

5. Tax Structure
Direct Tax
Income Tax
Wealth Tax
Indirect Tax =
GST (Except
customs)
Intra- state
CGST
(Central)
SGST (State)
Inter State
IGST (Central)
Proposed Tax Structure in India

6. Taxes proposed to be subsumed in GST
Central Taxes
• Excise Duty
• Additional Excise duty
• Excise duty under medicinal
and toilet preparation Act
• Service Tax
• Additional Custom duty
commonly known as
countervailing duty (CVD),
special additional duty( SAD)
• Surcharge
• CENVAT
State Taxes
• Value added tax (VAT)
• Entertainment tax levied by
states
• Luxury Tax
• Tax on Lottery, betting and
gambling
• Entry tax other than for local
bodies (Octroi)

7. ADVANTAGES
OF GST

8. Eduction in prices: Due to removal of cascading effect in existing tax
system, amount of tax included in the price is reduced.

9. Increase in Government Revenues: The government is planning to
introduce GST at a Revenue Neutral Rate around 14-16% in which case
the revenues of government might increase.

10. Less compliance and procedural cost: Instead of maintaining big
records, returns and reporting under various different statutes, all
assesses will find comfortable under GST as the compliance cost will be
reduced.

11. Move towards a Unified GST: Internationally, the GST is always
preferred in a unified form.

15. Why GST is not implemented yet ???
• The Constitution Amendment Bill on GST is stuck in Rajya Sabha as the opposition Congress is
seeking three key amendments in the proposed law, derailing the government's plans to roll out
GST from April 2016.
• The ruling party does not enjoy majority of its own in the upper house. Congress, the main
opposition party in the house, wants three amendments in the bill.

16. • Its three demands are a cap on the GST rate in the Constitution itself, removal of the
proposed one per cent additional tax on inter-state movement of goods and setting up a
judicial panel to adjudicate disputes among states.
• Finance Minister Arun Jaitley had said he hopes the Congress would "see reason" and
help in passage of GST legislation in the Budget Session of Parliament.
• In budget too, GST could not be implemented. It is estimated to be in practice from 1st
April, 2017.