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By: CA. Nikhil M. Jhanwar
nmjhanwar@gmail.com
+91-8860876960
GST Simplified Series#1
Concept, Scope, Applicability
 Current Indirect Tax Structure
 Challenges in Existing System
 Concept of GST
 Taxes to be subsumed
 Constitutional Amendment
 Why GST-Benefits
 Scope of GST
 GST Council
Structure
Existing Tax structure in India
Indirect Tax
Structure
Central Tax
Excise
Manufacture
Service Tax
Prov. Of Service
Customs
Import & Export
State Tax
VAT
Sale of Goods
Entry, luxury,
Lottery Tax etc
Entry /Entertainment
Challenges in Existing System
Why do we need GST ?
Multiple tax rates
Lack of
Automation &
Procedures
Lack of Cross
Verification with
other tax
administration
ComplexTax
Structure
Broken Credit
Chain
Cascading effect
ofTaxes
Imbalance in
Manufacturing &
Services sector
Entry barriers due
to differential
rates in States
GST- A Concept
CGST+SGSTIGST
Intra-StateInter-State
Supply of
Goods &
Services
Location of the supplier
and the place of supply
are in different States
Location of the supplier
and the place of supply
are in same State
What will be subsumed in GST ?
• StateVAT/SalesTax/CST
• PurchaseTax
• LuxuryTax
• Octroi
• Entertainment Tax
(Except if levied by local
bodies)
• EntryTax
• Taxes on
lotteries/betting &
gambling
• Surcharge & Cesses
StateTax
• Central Excise Duty
• Additional Duties of
Excise
• Additional duties of
Customs (CVD & SAD)
• ED under Medicinal &
Toiletries Preparation
Act
• ServiceTax
• Surcharge & Cesses
Central Tax
Note: BCD is out and non-creditable
Constitutional Amendment -Why
required
Present
Article 246, 7th Schedule of COI comprises
following 3 lists:
List I: Union List------> Can’t levy Sales Tax
List II: State List------> Can’t levy Service Tax
List III: Concurrent List
Post-Amendment
To pave the way for constitutionally valid GST
law, new Article 246A inserted to empower
both Centre & State to levy tax on goods and
services
Benefits
Benefits of GST
Creation of
Common
National
Market
Reduction in
multiplicity
of taxes &
Broadening
ofTax base
Seamless
flow of
Input
Credits
Transparency
& Automation
Parity in
Service and
Manufacturi
ng Sector
Mitigation
of Cascading
Effect
Reduced
Logistics
and
inventory
costs
Scope of GST- Items
In
• Tobacco products
with parallel power
to levy Central Excise
Duty also (by virtue
of CAA)
Out
• Electricity
• Property transaction
leviable to Stamp Duty /
Property Taxes
• Petroleum products*
(excluded as of now)
• Alcohol for human
consumption
• (*) petroleum Products to include 5 items- petroleum crude,
motor spirit (petrol), high speed diesel, natural gas and aviation
turbine fuel
• To impact Oil & Gas Companies engaged in manufacture of
multiple items like methane, LPG, kerosene, naptha, fuel oil
where common inputs are used for both products ‘out of GST’
and those in purview of GST.
• Compliance with dual tax regimes and non-creditable tax
costs.
10
GST Council-Role
• A Group of Representatives of Finance Ministers of all
States chaired by FM of India
• Union Minister of State also be member of GST Council
• Council to make recommendations on
• taxes, cesses, to be subsumed under the GST;
• Exemptions & Thresholds
• GST rates
• Band of GST rates
• Model GST law and procedures
• principles of levy, apportionment of IGST and that of
principles related to place of supply
• special provisions for North-Eastern States
• Levy of GST on petroleum products
• Council to also decide for dispute resolution arising out
of its recommendations
About Author
CA. Nikhil M. Jhanwar is practicing Chartered Accountant in
Delhi/NCR specialising in Indirect Tax, Start-up Advisory,
Corporate Finance. He is also GST Faculty of ICAI. He can be
reached at nmjhanwar@gmail.com/+91-8860876960.
12
Thank You

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GST Simplified Series#1: Concept, Scope, Levy & Applicability

  • 1. One Stop Solution for your auditing, finance, tax, & business needs By: CA. Nikhil M. Jhanwar nmjhanwar@gmail.com +91-8860876960 GST Simplified Series#1 Concept, Scope, Applicability
  • 2.  Current Indirect Tax Structure  Challenges in Existing System  Concept of GST  Taxes to be subsumed  Constitutional Amendment  Why GST-Benefits  Scope of GST  GST Council Structure
  • 3. Existing Tax structure in India Indirect Tax Structure Central Tax Excise Manufacture Service Tax Prov. Of Service Customs Import & Export State Tax VAT Sale of Goods Entry, luxury, Lottery Tax etc Entry /Entertainment
  • 4. Challenges in Existing System Why do we need GST ? Multiple tax rates Lack of Automation & Procedures Lack of Cross Verification with other tax administration ComplexTax Structure Broken Credit Chain Cascading effect ofTaxes Imbalance in Manufacturing & Services sector Entry barriers due to differential rates in States
  • 5. GST- A Concept CGST+SGSTIGST Intra-StateInter-State Supply of Goods & Services Location of the supplier and the place of supply are in different States Location of the supplier and the place of supply are in same State
  • 6. What will be subsumed in GST ? • StateVAT/SalesTax/CST • PurchaseTax • LuxuryTax • Octroi • Entertainment Tax (Except if levied by local bodies) • EntryTax • Taxes on lotteries/betting & gambling • Surcharge & Cesses StateTax • Central Excise Duty • Additional Duties of Excise • Additional duties of Customs (CVD & SAD) • ED under Medicinal & Toiletries Preparation Act • ServiceTax • Surcharge & Cesses Central Tax Note: BCD is out and non-creditable
  • 7. Constitutional Amendment -Why required Present Article 246, 7th Schedule of COI comprises following 3 lists: List I: Union List------> Can’t levy Sales Tax List II: State List------> Can’t levy Service Tax List III: Concurrent List Post-Amendment To pave the way for constitutionally valid GST law, new Article 246A inserted to empower both Centre & State to levy tax on goods and services
  • 8. Benefits Benefits of GST Creation of Common National Market Reduction in multiplicity of taxes & Broadening ofTax base Seamless flow of Input Credits Transparency & Automation Parity in Service and Manufacturi ng Sector Mitigation of Cascading Effect Reduced Logistics and inventory costs
  • 9. Scope of GST- Items In • Tobacco products with parallel power to levy Central Excise Duty also (by virtue of CAA) Out • Electricity • Property transaction leviable to Stamp Duty / Property Taxes • Petroleum products* (excluded as of now) • Alcohol for human consumption • (*) petroleum Products to include 5 items- petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel • To impact Oil & Gas Companies engaged in manufacture of multiple items like methane, LPG, kerosene, naptha, fuel oil where common inputs are used for both products ‘out of GST’ and those in purview of GST. • Compliance with dual tax regimes and non-creditable tax costs.
  • 10. 10 GST Council-Role • A Group of Representatives of Finance Ministers of all States chaired by FM of India • Union Minister of State also be member of GST Council • Council to make recommendations on • taxes, cesses, to be subsumed under the GST; • Exemptions & Thresholds • GST rates • Band of GST rates • Model GST law and procedures • principles of levy, apportionment of IGST and that of principles related to place of supply • special provisions for North-Eastern States • Levy of GST on petroleum products • Council to also decide for dispute resolution arising out of its recommendations
  • 11. About Author CA. Nikhil M. Jhanwar is practicing Chartered Accountant in Delhi/NCR specialising in Indirect Tax, Start-up Advisory, Corporate Finance. He is also GST Faculty of ICAI. He can be reached at nmjhanwar@gmail.com/+91-8860876960.