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Goods & Services Tax (GST) in India
By
Dr. Mohmed Amin Mir
Assistant Professor
Department of Commerce & Management
Studies
Islamia College of Science & Commerce
(Autonomous with CPE Status)
Srinagar - 190002, Jammu & Kashmir, India
GST: An Introduction
 Deficiency in the existing Law
 Dual levy by the Union & States
 Multiple registrations
 Other compliances
 GST implemented to overcome the defects of prevailing
indirect tax laws
 Paradigm shift in the structure and functioning of Indirect
taxes
 France was the first country (1954)
 More than 160 counties have adopted and implemented
 GST to raise revenue in the most transparent and neutral
manner
 In India, idea of GST was mooted in 2004 by Kelkar Task
Force
1
Major Milestones in Indirect Tax Reform in India
Year Type of Tax Introduced
1974 Report of L. K. Jha Committee suggested VAT should be introduced
1986 Introduction of a restricted VAT called MODVAT
2004 Kelkar Task Force floated the idea of Integrated national level GST & Strongly
recommended the introduction f GST in India
April 2005 VAT implemented
2007- 08 First GST stuffy released By Mr. P. Shome in January
Union F.M. Announced in his Budget Speech the introduction of GST from
April, 2010
CST phase out starts in April 2007
Joint Working Group formed and report submitted
2007 to 2014 Abeyance Period of GST (Many hurdles and problems burgeoned and GST could
not be implemented)
2014 NDA Govt tabled and passed 122nd Amendment Bill, 2014 on GST
2016 The Amendment Bill was passed in Rajya Sabha
When Ratified by more than 50% of States, the Constitutional 122nd
amendment Bill, 2014 received the consent of President of India
Became Constitutional 101st Amendment Act, 2016 which paved the way for
GST in India
2
Major Milestones in Indirect Tax Reform in India
Year Type of Tax Introduced
April, 2017 Four Central GST legislations received assent of President & Bills
turned into the following acts:
1. CGST At, 2017
2. IGST Act, 2017
3. UTGST Act, 2017
4. GST (Compensation to States) Act, 2017)
1st July, 2017  GST implemented across India
 Came into Force w.e.f. 8th July, 2017
3
The enactment of the Central GST Acts was followed by the enactment
of the States GST Laws by all State Legislative & 2 UTs (Delhi &
Pondicherry)
Telangana was the first State to enact State
CGST (Extension to J & K) Ordinance, 2017 and IGST (Extension to J & K)
Ordinance, 2017 were promulgated making necessary changes in CSGT
and IGST Act & declaring that the said acts shall be applicable to the state
of J & K also.
Constitutional Provisions on GST
 Article - 246A
 Power to Centre and State Govts to Levy/ make laws with respect
to GST
 Centre has exclusive power to make laws with respect to inter-
state supply of goods and/ or services
 Article - 269A: Levy & Collection of GST on Inter-state
supply
 GST on supplies in the course of inter-state trade shall
be levied and collected by the GOI
 Such tax shall be apportioned between the Union and
the States in manner as may be provided by Parliament
by law
 Import of goods or services will be deemed as in the
course of Inter-state trade & the Central Govt is
empowered to levy IGST on import Transactions
4
 Article-279A: Empowers the President to constitute a joint
forum of the centre and states namely GST Council
 Article - 366: GST means any tax on supply of Goods or services
or both except taxes on the supply of the alcoholic liquor for
human consumption.
 Goods include all materials, commodities and articles
 Services means anything other than goods
 States include a Union Territory with legislative power
5
Concept of GST
 Biggest and substantial indirect tax reform since 1947
 Goods and Service Tax: A tax on supply of goods or services or both
except taxes on supply of alcoholic liquor for human consumption
 Comprehensive tax structure under which the indirect tax is levied
not only on supply of goods but also on supply of services.
 Comprehensive GST as a substitute for a multi-tax regime
 ‘One Nation - One Tax – One Market’
 Unique feature is the integration of taxes on Goods and taxes on
services as well
 GST has been introduced simultaneously at both Central & the state
level
 GST is a destination based single tax on the supply of goods and
services from the manufacturer to the consumer, which has replaced
multiple indirect taxes levied by the Central and the state
governments, thereby converting the country in to a unified market
6
Concept of GST
 Generally, the dealers registered under GST (Manufacturers,
Wholesalers and retailers and service providers) charge GST on
the price of goods and services from their customers and claim
credits for the GST (ITC) included in the price of their own
purchases of goods and services used by them
 Each good or services will be taxed at one of the following four
rates: 5%, 12%, 18% and 28% or it could be exempted from tax
 Special rate of 0.25% on rough precious and semi-precious
stones and 3% on gold
 Exports and supplies to SEZs are zero rated
 Align the Indian taxation system with the global standards and
norms particularly with Europe and USA, the main trading
partners
7
Indirect Taxes Subsumed by GST
S.No. Taxes Levied by Central Government Taxes Levied by State
Governments
1. Central Excise Duty State VAT
2. Duties of Excise (Medicinal and Toilet
Preparations)
Sales Tax
3. Additional Duties of Excise (Goods of Special
Importance)
Luxury Tax
4. Additional Duties of Excise (Textiles and
Textile Products)
Entry Tax (all forms)
5. Additional Duties of Customs (CVD) Entertainment and Amusement Tax
(Except when levied by local
bodies)
6. Special Additional Duty of Customs (SVD) Taxes on Advertisements
7. Service Tax Purchase Tax
8. Central Surcharge and Cesses (so far they
relate to supply of goods and services)
Taxes on Lotteries, Betting and
Gambling
9. - State Surcharge and Cesses (so far
as they relate to Supply of goods
and services)
Special Features of GST
1. Single Tax
 Single consumption tax
 Replaced/Subsumed 17 indirect taxes (8 Central and 9 State Levels) and 23 Cesses of the
Centre and States
 Eliminating the need for filing multiple returns and assessments
 Rationalised the tax treatment of goods and services along the supply chain from producers to
consumers.
2. Applicability
 Apply to all goods & Services except alcohol for human cunsumption
 GST on five specified petroleum products (Crude,petrol, diesel, avaition turbine oil & natural
gas) would be applicable from a date to be recommended by the GST Council
 Extends to whole of India including J & K State
3. Supply as the Base
 GST would be applicable on “Supply” of goods or services as against the erstwhile concept of
tax on the manufacture of goods or on sale of goods or on provision of services
4. Destination based Consumption Tax
 As opposed to previous principle of Origin-based taxation
5. Registration for Dealers
 Dealers include the suppliers, manufacturers, service providers, wholesalers and retailers
6. Four Tax Slabs and Charging Tax
 In India, GST is a four tier tax structure of 5%, 12%, 18% and 28%
 with lower rates for essential items and the highest for luxury and de-merit goods that also
attracts an additional cess to compensate states for any loss in indirect tax revenue
9
Special Features of GST
7. Input Tax Credit (ITC)
 ITC is set-off against any GST (Out Put), which the dealer charges on goods and
services, which he supplies, to his customers. Since the CGST and SGST are to be
treated individually
 Taxes paid against the CGST shall be allowed to be taken as ITC for the CGST and could
be utilized only against the payment of CGST.
 Cross utilization of ITC between the CGST and the SGST would not be permitted except
in the case of inter-State supply of goods and services.
8. Ultimate Burden of Tax on Last Customer
 The net effect is that dealers charge GST but do not keep it, and pay GST but get a
credit for it
 Dealers as collecting agents for the Government
9. IGST on Inter-State Supplies
 In addition to CGST & SGST, Inter-state supplies of goods and/or services are subject to
Integrated Goods and Service Tax (IGST) called ass Integrated Tax.
 It is Levied by the centre on all Inter-state supplies.
 Import treated as Inter-state supply & Charged IGST (in addition to Customs duty)
 The rate of IGST is approximately the sum total of CGST and SGST/UTGST
10. Tax Period
 The tax period will have to be decided by the respective law and normally it is monthly
and/or quarterly 10
Special Features of GST
11. GST PAN Linked System
 Each taxpayer would be allotted a PAN-linked taxpayer identification number (TIN) with a
total of 14/15 digits
 This would bring the GST PAN-linked system in line with the prevailing PAN-based system for
Income tax
 facilitating data exchange and taxpayer compliance.
12. Refunds
 If for a tax period, the input credit of a dealer is more than the output credit then he is
eligible for refund subject to the provisions of law applicable
 Refund can be sought within 2 years from the relevant date
 Refund granted within 60 days from the date of receipt of applications and interest is
payable if refund is not sanctioned within 60 days
 The excess may be carried forward to next period or may be refunded immediately
depending upon the provision of law.
13. Exempted Goods and Services: Certain goods and services have been declared as exempted
goods and services and in that case the input credit cannot be claimed on the GST paid for
purchasing the raw material in this respect or GST paid on services used for providing such goods
and services
14. Exports or Zero Rated Goods and Services
 Generally, all export and supplies to SEZs/SEZ units are zero-rated
 GST paid by the exporters of these goods and services is refunded. This is the basic
difference between Zero rated goods and services and exempted goods and services.
11
Special Features of GST
15. Tax Invoice
 Tax invoice is the basic and important document in the GST
 Dealer registered under GST can issue a tax invoice
 Basis for claiming credit (Input)
 Tax invoice must bear a tax invoice number, name of supplying dealer, address, Tax Identification
Number (TIN) coupled with the name and address of the purchasing dealer, TIN and description of
goods sold or service provided.
16. Two Components - CGST and SGST: Dual GST
 Imposed concurrently by the Centre (CGST) & States (SGST)
 The GST is ‘dual’ in nature and has two components: one levied by the Centre (referred to as CGST)
and the other levied by the States including UTs with legislatures (referred to as SGST)
 UTs without legislature would levy UTGST
 The CGST and the SGST would be applicable to all transactions of goods and services
 The Central GST and State GST are to be paid to the accounts of the Centre and the States individually.
17. Threshold & Compounding Scheme for GST
 Are optional
 Common threshold exemption for both CGST & SGST with an annual turnover of Rs. 20 Lacs (Rs. 10
Lacs for special category states)
 Compounding Option (i.e. To pay tax at a flat rate without credits) would be available to small
taxpayers having an annual turnover of upto Rs. 1 Crore (Rs. 75 Lacs for special category states)
18. Anti-Profiteering Measure/Clause
 These measures prevent entities from making excessive profits due to the GST. Since the GST,
alongwith ITC, is eventually expected to bring down prices, a National Anti-profiteering Authority
(NAA) has been set up to ensure that the benefits that accrue to entities due to reduction in costs is
passed on to the consumers
12
Special Features of GST
19. Tax Deduction on Payment Made
 Obligatory for certain persons including govt depts., local authorities & govt
agencies who are recipients of supply, to deduct tax at the rate of 1% from
the payment made or credited to the supplier where total value of supply
under Contract exceeds Rs. 2, 50,000
20. Submission of Periodical Returns (e-filing) and Easier Compliance
 The taxpayer would need to submit periodical returns, in common format as
far as possible, to both the Central GST authority and to the concerned State
GST authorities.
 In the previous tax regime, business had to file several returns for multiple
taxes, face multiple authorities and suffer long bureaucratic delays for
assessment of different indirect taxes.
 GST, by merging all indirect taxes into one single tax, has made the
compliance much easier
 Using GSTN taxpayers can register, file, make payments (internet banking,
debit/credit card, NEFT/RTGS) and claim refunds online at anytime from
anywhere without having to interface with tax officials.
 Compliance process easier, transparent, faster and paperless and sets the
stage for enhanced productivity and efficiency of business going forward.
13

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GST in India

  • 1. Goods & Services Tax (GST) in India By Dr. Mohmed Amin Mir Assistant Professor Department of Commerce & Management Studies Islamia College of Science & Commerce (Autonomous with CPE Status) Srinagar - 190002, Jammu & Kashmir, India
  • 2. GST: An Introduction  Deficiency in the existing Law  Dual levy by the Union & States  Multiple registrations  Other compliances  GST implemented to overcome the defects of prevailing indirect tax laws  Paradigm shift in the structure and functioning of Indirect taxes  France was the first country (1954)  More than 160 counties have adopted and implemented  GST to raise revenue in the most transparent and neutral manner  In India, idea of GST was mooted in 2004 by Kelkar Task Force 1
  • 3. Major Milestones in Indirect Tax Reform in India Year Type of Tax Introduced 1974 Report of L. K. Jha Committee suggested VAT should be introduced 1986 Introduction of a restricted VAT called MODVAT 2004 Kelkar Task Force floated the idea of Integrated national level GST & Strongly recommended the introduction f GST in India April 2005 VAT implemented 2007- 08 First GST stuffy released By Mr. P. Shome in January Union F.M. Announced in his Budget Speech the introduction of GST from April, 2010 CST phase out starts in April 2007 Joint Working Group formed and report submitted 2007 to 2014 Abeyance Period of GST (Many hurdles and problems burgeoned and GST could not be implemented) 2014 NDA Govt tabled and passed 122nd Amendment Bill, 2014 on GST 2016 The Amendment Bill was passed in Rajya Sabha When Ratified by more than 50% of States, the Constitutional 122nd amendment Bill, 2014 received the consent of President of India Became Constitutional 101st Amendment Act, 2016 which paved the way for GST in India 2
  • 4. Major Milestones in Indirect Tax Reform in India Year Type of Tax Introduced April, 2017 Four Central GST legislations received assent of President & Bills turned into the following acts: 1. CGST At, 2017 2. IGST Act, 2017 3. UTGST Act, 2017 4. GST (Compensation to States) Act, 2017) 1st July, 2017  GST implemented across India  Came into Force w.e.f. 8th July, 2017 3 The enactment of the Central GST Acts was followed by the enactment of the States GST Laws by all State Legislative & 2 UTs (Delhi & Pondicherry) Telangana was the first State to enact State CGST (Extension to J & K) Ordinance, 2017 and IGST (Extension to J & K) Ordinance, 2017 were promulgated making necessary changes in CSGT and IGST Act & declaring that the said acts shall be applicable to the state of J & K also.
  • 5. Constitutional Provisions on GST  Article - 246A  Power to Centre and State Govts to Levy/ make laws with respect to GST  Centre has exclusive power to make laws with respect to inter- state supply of goods and/ or services  Article - 269A: Levy & Collection of GST on Inter-state supply  GST on supplies in the course of inter-state trade shall be levied and collected by the GOI  Such tax shall be apportioned between the Union and the States in manner as may be provided by Parliament by law  Import of goods or services will be deemed as in the course of Inter-state trade & the Central Govt is empowered to levy IGST on import Transactions 4
  • 6.  Article-279A: Empowers the President to constitute a joint forum of the centre and states namely GST Council  Article - 366: GST means any tax on supply of Goods or services or both except taxes on the supply of the alcoholic liquor for human consumption.  Goods include all materials, commodities and articles  Services means anything other than goods  States include a Union Territory with legislative power 5
  • 7. Concept of GST  Biggest and substantial indirect tax reform since 1947  Goods and Service Tax: A tax on supply of goods or services or both except taxes on supply of alcoholic liquor for human consumption  Comprehensive tax structure under which the indirect tax is levied not only on supply of goods but also on supply of services.  Comprehensive GST as a substitute for a multi-tax regime  ‘One Nation - One Tax – One Market’  Unique feature is the integration of taxes on Goods and taxes on services as well  GST has been introduced simultaneously at both Central & the state level  GST is a destination based single tax on the supply of goods and services from the manufacturer to the consumer, which has replaced multiple indirect taxes levied by the Central and the state governments, thereby converting the country in to a unified market 6
  • 8. Concept of GST  Generally, the dealers registered under GST (Manufacturers, Wholesalers and retailers and service providers) charge GST on the price of goods and services from their customers and claim credits for the GST (ITC) included in the price of their own purchases of goods and services used by them  Each good or services will be taxed at one of the following four rates: 5%, 12%, 18% and 28% or it could be exempted from tax  Special rate of 0.25% on rough precious and semi-precious stones and 3% on gold  Exports and supplies to SEZs are zero rated  Align the Indian taxation system with the global standards and norms particularly with Europe and USA, the main trading partners 7
  • 9. Indirect Taxes Subsumed by GST S.No. Taxes Levied by Central Government Taxes Levied by State Governments 1. Central Excise Duty State VAT 2. Duties of Excise (Medicinal and Toilet Preparations) Sales Tax 3. Additional Duties of Excise (Goods of Special Importance) Luxury Tax 4. Additional Duties of Excise (Textiles and Textile Products) Entry Tax (all forms) 5. Additional Duties of Customs (CVD) Entertainment and Amusement Tax (Except when levied by local bodies) 6. Special Additional Duty of Customs (SVD) Taxes on Advertisements 7. Service Tax Purchase Tax 8. Central Surcharge and Cesses (so far they relate to supply of goods and services) Taxes on Lotteries, Betting and Gambling 9. - State Surcharge and Cesses (so far as they relate to Supply of goods and services)
  • 10. Special Features of GST 1. Single Tax  Single consumption tax  Replaced/Subsumed 17 indirect taxes (8 Central and 9 State Levels) and 23 Cesses of the Centre and States  Eliminating the need for filing multiple returns and assessments  Rationalised the tax treatment of goods and services along the supply chain from producers to consumers. 2. Applicability  Apply to all goods & Services except alcohol for human cunsumption  GST on five specified petroleum products (Crude,petrol, diesel, avaition turbine oil & natural gas) would be applicable from a date to be recommended by the GST Council  Extends to whole of India including J & K State 3. Supply as the Base  GST would be applicable on “Supply” of goods or services as against the erstwhile concept of tax on the manufacture of goods or on sale of goods or on provision of services 4. Destination based Consumption Tax  As opposed to previous principle of Origin-based taxation 5. Registration for Dealers  Dealers include the suppliers, manufacturers, service providers, wholesalers and retailers 6. Four Tax Slabs and Charging Tax  In India, GST is a four tier tax structure of 5%, 12%, 18% and 28%  with lower rates for essential items and the highest for luxury and de-merit goods that also attracts an additional cess to compensate states for any loss in indirect tax revenue 9
  • 11. Special Features of GST 7. Input Tax Credit (ITC)  ITC is set-off against any GST (Out Put), which the dealer charges on goods and services, which he supplies, to his customers. Since the CGST and SGST are to be treated individually  Taxes paid against the CGST shall be allowed to be taken as ITC for the CGST and could be utilized only against the payment of CGST.  Cross utilization of ITC between the CGST and the SGST would not be permitted except in the case of inter-State supply of goods and services. 8. Ultimate Burden of Tax on Last Customer  The net effect is that dealers charge GST but do not keep it, and pay GST but get a credit for it  Dealers as collecting agents for the Government 9. IGST on Inter-State Supplies  In addition to CGST & SGST, Inter-state supplies of goods and/or services are subject to Integrated Goods and Service Tax (IGST) called ass Integrated Tax.  It is Levied by the centre on all Inter-state supplies.  Import treated as Inter-state supply & Charged IGST (in addition to Customs duty)  The rate of IGST is approximately the sum total of CGST and SGST/UTGST 10. Tax Period  The tax period will have to be decided by the respective law and normally it is monthly and/or quarterly 10
  • 12. Special Features of GST 11. GST PAN Linked System  Each taxpayer would be allotted a PAN-linked taxpayer identification number (TIN) with a total of 14/15 digits  This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax  facilitating data exchange and taxpayer compliance. 12. Refunds  If for a tax period, the input credit of a dealer is more than the output credit then he is eligible for refund subject to the provisions of law applicable  Refund can be sought within 2 years from the relevant date  Refund granted within 60 days from the date of receipt of applications and interest is payable if refund is not sanctioned within 60 days  The excess may be carried forward to next period or may be refunded immediately depending upon the provision of law. 13. Exempted Goods and Services: Certain goods and services have been declared as exempted goods and services and in that case the input credit cannot be claimed on the GST paid for purchasing the raw material in this respect or GST paid on services used for providing such goods and services 14. Exports or Zero Rated Goods and Services  Generally, all export and supplies to SEZs/SEZ units are zero-rated  GST paid by the exporters of these goods and services is refunded. This is the basic difference between Zero rated goods and services and exempted goods and services. 11
  • 13. Special Features of GST 15. Tax Invoice  Tax invoice is the basic and important document in the GST  Dealer registered under GST can issue a tax invoice  Basis for claiming credit (Input)  Tax invoice must bear a tax invoice number, name of supplying dealer, address, Tax Identification Number (TIN) coupled with the name and address of the purchasing dealer, TIN and description of goods sold or service provided. 16. Two Components - CGST and SGST: Dual GST  Imposed concurrently by the Centre (CGST) & States (SGST)  The GST is ‘dual’ in nature and has two components: one levied by the Centre (referred to as CGST) and the other levied by the States including UTs with legislatures (referred to as SGST)  UTs without legislature would levy UTGST  The CGST and the SGST would be applicable to all transactions of goods and services  The Central GST and State GST are to be paid to the accounts of the Centre and the States individually. 17. Threshold & Compounding Scheme for GST  Are optional  Common threshold exemption for both CGST & SGST with an annual turnover of Rs. 20 Lacs (Rs. 10 Lacs for special category states)  Compounding Option (i.e. To pay tax at a flat rate without credits) would be available to small taxpayers having an annual turnover of upto Rs. 1 Crore (Rs. 75 Lacs for special category states) 18. Anti-Profiteering Measure/Clause  These measures prevent entities from making excessive profits due to the GST. Since the GST, alongwith ITC, is eventually expected to bring down prices, a National Anti-profiteering Authority (NAA) has been set up to ensure that the benefits that accrue to entities due to reduction in costs is passed on to the consumers 12
  • 14. Special Features of GST 19. Tax Deduction on Payment Made  Obligatory for certain persons including govt depts., local authorities & govt agencies who are recipients of supply, to deduct tax at the rate of 1% from the payment made or credited to the supplier where total value of supply under Contract exceeds Rs. 2, 50,000 20. Submission of Periodical Returns (e-filing) and Easier Compliance  The taxpayer would need to submit periodical returns, in common format as far as possible, to both the Central GST authority and to the concerned State GST authorities.  In the previous tax regime, business had to file several returns for multiple taxes, face multiple authorities and suffer long bureaucratic delays for assessment of different indirect taxes.  GST, by merging all indirect taxes into one single tax, has made the compliance much easier  Using GSTN taxpayers can register, file, make payments (internet banking, debit/credit card, NEFT/RTGS) and claim refunds online at anytime from anywhere without having to interface with tax officials.  Compliance process easier, transparent, faster and paperless and sets the stage for enhanced productivity and efficiency of business going forward. 13