Can understand about GST,History,Model,Need

1. GST
(Goodsand Services Tax)
Biggest Tax Reform Since Independence…..
By Dr.V.Vidhya

2. GST Meaning
• Goods and service tax (GST) is a comprehensive tax
levy on manufacture, sale and consumption of goods
and service at anational level.
• Gst is a tax on goods and services with value
addition at eachstage.
• Gst willinclude many state and central level
indirect taxes.
• It overcomesdrawback present tax system

3. TAXSTRUCTUREIN INDIA
• Direct Tax :
e.g.:Income Tax, Corporate Tax, Wealth Tax
• Indirect Tax :
e.g.:Exciseduty, custom duty, ServiceTax, Octrai
Tax, VAT.

4. METHOD OFTAXATION
Progressive Tax :
Increasing rate of tax for Increasing Value or
Volume.
Regressive Tax :
Decreasing rate tax for Increasing Value or
Volume
Proportional Tax :
Fixed rate of tax for every level of income or
production

5. Short comings in current
Tax System
 Tax Cascading (Tax on Tax)
 Complexity
 Taxation at Manufacturing Level
 Exclusion of Services
 Tax Evasion
 Corruption

6. Cascading Effect of
Present Tax system

7. VAT
(VALUEADDED TAX)
Implemented in April-1/2005
It is replacement to complex SalesTax
It overcomes aCascading Effect of Tax
It applied on "ValueAdded Portion" in sales
price

8. ILLUSTRATIONOFVAT
• In the previous
example, ‘value
added’by Bis only
Rs.50 (150–100)
• tax on producer B
would be only Rs.5
(i.e., 10 %of Rs. 50)
while
• the tax paid in
previous system
wasRs.15 (10 %of
Rs.150).
In Old Tax SystemConsumerhasto pay Rs220
In VATsystemConsumerActually Paid Rs205

9. PROBLEMS WITHVAT
 It is not uniform in nature
 VATis different for different states
Different rates of taxation for different
good

10. TAXONOMY OFINDIANTAXATION
vat / salestax on saleof goods,other than
newspapers
Stamp duty on other than 10 specified
instruments
tax on agricultural income
Toll tax on utilities
Other taxes on land and buildings, entryof
goodsin local area(entry tax),
consumption or saleof electricity,
vehicles, luxuries including taxes
on entertainment, betting and
gambling, alcoholic liquor, narcotic
drugs and opium

11. WHAT ISGST
GSTis acomprehensive value added tax on goods
and services
It is collected on value added at each stageof sale
or purchase in the supplychain
No differentiation between goodsand services asGST
is levied at each stagein the supply chain
Seamlessinput tax credit throughout the supplychain
a
At all stagesof production and distribution, taxesare
Passthrough and tax is borne by the final consumer
All sectors are taxed with veryfew
exceptions / exemptions

12. HIS
TORY
 Feb, 2006 : First time introduced concept of GSTand
announced the date of its implementation in 2010
 Jan.2007: First GSTstudy byASSOCHAMreleased
by Dr. Shome
 Feb. 2007: F.M. Announced introduction of GSTfrom
1 April 2010 in Budget
The Government came out with a First Discussion
Paperon GSTin November, 2009
Introduced the 115th Constitution Amendment (GST)
Bill in the year 2011.

13. MODEL OFGST
GST Structure
centre GST
GST to be levied
by the
Centre
State GST
GST to be levied
by the State
Dual GST
GST to be levied by the Centre andthe
States concurrently

14. PROPOSEDGSTRATE
Presently it is (26.5 %,CENVAT-14 %and
StateVAT12.5% )
Items Total GST
rates (in %)
Centre State
Goods 20 12 8
Services 16 8 8
Essential
Goods
12 6 6

15. Taxesproposed to be
subsumedin GST
Central Taxes
Excise Duty
Additional Excise duty
Exciseduty under medicinal and toilet
preparationAct
Service Tax
Additional Custom duty commonly known as
countervailing duty (CVD), special additional duty(
SAD)
Surcharg
e CENVAT

16. Taxesproposed to be
subsumedin GST
State T
axes
Value added tax (VAT)
Entertainment tax levied by states
Luxury Tax
Taxon Lottery, betting and gambling
Entry tax other than for local bodies
(Octroi)

17. PRODUCTEXCLUDEDFROM
GST
Petroleum Product
Alcohol
Tobacco Product

18. ILLUSTRATIONOFGST
Product A VAT System GSTSystem
BasePrice 100 100
+12% Excise duty 12 NA
+12.5% VAT 14 NA
State GST NA 8
centre GST NA 12
Total Tax Burden 26 20
Value Of Product to
Consumer
126 120

19. WHY DOESINDIA NEEDGST
• GSTis being introduced majorly due to 2reason
1. Thecurrent indirect tax structure is fullof uncertainties due to
multiple rates.
2. Due to multiple rates there are multiple forms.
• GSTthe tax complexity in the prevailing tax regime.

20. GSTCOUNCIL
• GSTlevy will beadministered by
1. Union finance minister(chairmen)
2. Union minister in charge of staterevenue or finance
3. Minister in charge of finance ortaxation.
4. Any other minister(finance minister of the state)
nominated by eachstategvt would constitute the
council.

21. DISPUTESETTLEMENT
AUTHORITY(DSA)
• Dispute between state and centre will behandled by
the DSA.
• Appeal from dsawould bedealt with supreme court.
• Example: if astate receives lessrevenue in comparison
with its previous onethan it can appeal this caseto
the dsa.

22. IMPORTANCEOFARTICLE
246(A)
• There is resistance by the SGasVATis the main source of
revenue for the SG.
• In 246(a) certain powers are allocated to thestate
government.
• Theparliament & legislature of every statewill have the
power to make law with respect to goods and service tax
imposed by union(gvt) or by the state.

23. BENEFITSOFGST
Transparent Tax System
Uniform Tax systemAcrossIndia
ReduceTaxEvasion
Export will bemore competitive

24. HURDLESIN IMPLEMENTATION
Dispute between centre and Tax over Tax
Sharing
Highly sophisticated IT infrastructure required
.
Issueof taxing e-commerce is to be
appropriately addressedand integrated.
Political Imbalace

25. GSTGlobal Scenario
More than 140 countries have already
introduced GST/NationalVAT.
Francewas the first country to introduce GST
systemin 1954.
Typically it is asingle rate systembut
two/three rate systemsare also prevalent.
Canada and
Brazil alone have adual VAT.
Standard GSTrate in most countries
ranges between 15-20%.

26. INDIA'S GSTSTRUCTUREIS
COMPLEX,SAYSIMF
• Report saysthe proposed GSTstructure will require the centre to
coordinate with 30 states,which is an administrativechallenge.
• Evenasthe international monetary fund (imf) saysthe proposed goods
and servicestax (gst) will improve tax compliance and enhance
economic growth by 1-1.5 per cent over time, it finds the structure of
the indirect tax regime in indiacomplex.
• “The gstdesign being contemplated is...Fairly complex, with adual
administration arrangement that involves the tax authorities ofboth
the centre and states separately taxing a single transaction,”says the
fund in areport onindia.

27. GST– ADVANTAGES
& unambiguous tax
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• Acomplex tax structure with multiple rates of taxes
• Multiple taxesacrossthe supply chain
• High transaction costin the hands of the tax payers
• Increased tax collections due to wider tax baseand bettercompliance
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elist i.e.All goodsand services are subject toGST
•

28. GST– ADVANTAGES
• Nature of complexities i.e. Classification to
valuation regarding taxability, exist in the present
structure.
Someof such burning issuesare:
 Exciseon MRP
 Excise,VATand service tax on software,
VAT& service tax on:
• Works contracts
• Right to use

29. GST:PROPOSEDKEY
FEATURES
Dual GST:central GST& stateGST
Destination basedstate GST
Uniform classification
Uniform forms – returns, challans ( in electronic
mode)
No cascading of central and state taxes
Crosscredit between centre and state not allowed
Tax levied from production to consumption

30. KNOWING MOREABOUT GST
• We all will pay GST on every product or service we buy/
consume .
• An indirect tax levied by state and central in past is difficult to
understand.
• The sales or service providers collect the tax from
their customers.
• The excess of GST would rest upon efficiency, equity
and

31. Thank You