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A Presentation by
CA Gaurav Mishra
1
CONTENTS
S. No Topics Page No.
I Introduction /Concepts of GST 3-4
II Existing & Proposed Tax Structure in India 5-6
III Model/Components of GST 7
IV Applicability & Rate in GST Regime 8-9
V GST Set off Chain & its methodology 10
VI Functioning of GST 11
VII Others Areas of GST 12-13
VIII Benefits under GST 14
IX Key Amendments in Bill 15
X Sector Wise Impacts 16-18
XI GST Rollout Stages 19
XII Flaws of the GST Model 20
XIII Conclusion 21-22
2
3
 It is a tax on Goods & Services with comprehensive & continuous Chain of
Set off benefit from producers to retailer point.
 In other words, GST is an Indirect tax which is levy on manufacture, sale &
consumption of all goods & services.
 It substitute mostly all the indirect taxes like excise, VAT, Service Tax,
Entertainment Tax, Luxury Tax, CVD as well as SAD.
 It is based on the VAT principles .
 It is supposed to be implemented w.e.f 1St April 2017.
 It is expected to be levied only at a destination level/Real Consumption Place
not at a various points.
 Taxation power lies with both in the hands of CG as well as SG also.
 There will be no distinction between goods & services.
 After Introduction of GST, all the traders including manufacturer will be
paying both the type of taxes (CGST & SGST).
Introduction/Concept of GST
 GST leads to immense scope, Opportunities as well as some
challenges also.
 Centre is empowered to levy GST on Goods & Services upon the
Production stage, while State have the power to tax on sale of goods.
 India is proposing to implement dual GST.
 GST law would emphasize on voluntary compliance .
 It is a comprehensive levy and envisages tax collection on both goods and
services at the same rate.
 It subsumes a large no. of central & state taxes into a single tax.
 It is also expected that GST will mitigate the cascading effect of taxes.
 In the mean time, it also helps in terms of uniformity like in case of
chargeability, definition of taxable services or person, measure of levy,
basis of classification etc.
5
Existing Tax structure in India
Existing
Tax
Structure
Direct Tax
Income Tax Wealth Tax
Indirect
Tax
Central Tax
Excise Service Tax Custom
State Tax
VAT
Entry Tax,
luxury tax,
Lottery Tax,
etc.
6
Proposed Tax structure in India
Proposed
Tax Structure
Direct Tax
Income Tax Wealth Tax
Indirect Tax =
GST (Except
customs)
Intra- state
CGST (Central) SGST (State)
Inter State
IGST (Central)
7
Model/Components of GST
CGST
(Central GST)
• Replace central Excise
Duty & service Tax.
• Cover Sale transaction
• Administered by CG
• Further it is expected
that the duty and tax
paid on closing stock
would be available as
credit.
• Levied on all intra-state
sale/supplies of goods
or services.
SGST
(State GST)
• Replace State Vat, Entry
Tax, Entertainment Tax,
& Luxury Tax.
• Cover taxing of Services
• Administered by SG
• Rate can be a bit higher
than CGST rate .
• It is expected that the
duty and tax paid on
closing stock would be
available as credit.
• Levied on all intra-state
sale/supplies of goods
or services.
IGST
(Inter-State
GST)
• Levied on all inter –
state supplies of goods
or services which are
sold or transferred.
• Applicable to imports of
goods or services.
• Expected to be equal to
CGST as well as SGST.
• It is expected that the
duty and tax paid on
closing stock would be
available as credit.
8
Applicability & Rate under GST Regime
 GST on Exports would be zero rated, but on the other hand in “import”
IGST will be levied.
 GST does not apply on Alcohol & petroleum products.
 But in the mean time tobacco products should be in the frame of GST.
 In fact, Gov. Can levy extra % of tax apart from GST .
 Basic threshold limit for Goods & Services shall be RS. 10 Lakh & for
North east Region (NER) Rs.5.00 Lakh.
 Full exemption is applicable on basic necessities goods like Flour, rice,
pulses, textiles, buildings, education & healthcare etc.
 Gross Turnover of Goods up to Rs. 1.50 cr may be assigned exclusively to
the states.
 Gross Turnover of Services up to Rs. 1.50 cr may be assigned exclusively
to the center.
 Assesse can have an option to pay tax as per composition scheme or may
join the GST law whose turnover is up to Rs. 1.50 cr .
 But, those assesse whose turnover is and above Rs. 1.50 Cr will need to be
within the framework of GST .
9
 As far as GST rate is concerned, it is not yet prescribed yet.
 CBEC has suggested the following rates for goods as well as services.
 GST rate on Gold Bullion/Jewelry might be 1%
 The opposition has sought an 18% rate in GST.
 The combined GST rate is being discussed by Government.
 The Finance minister has indicated that GST rate may be in the region of 18-
20%.
 Internationally , GST was first introduced in France & now more than 150
countries have already introduced GST.
 Most of the countries , depending on their socio-economic formation, have
introduced National level GST or Dual GST.
 Today the rate of GST in some other countries like Australia( 10%), Canada
(5%), Germany (19%), Japan (5%), Singapore (7%), Sweden (25%), New
Zealand (15%), France (19.60%), Pakistan (17%) & so on….
10
SGST
Input
SGST
Output
IGST
Output
IGST
Input
IGST
Output
CGST
Output
SGST
Output
CGST
Input
CGST
Output
IGST
Output
GST Set off chain & its methodology
11
Functioning of GST
12
Others Areas of GST
 As far as registration decision is concerned, a supplier of Goods & services
would be made when GST is payable.
 Then the supplier would have to necessarily register & he would have no
other option.
 The Place of supply would determine first as to whether the transaction is in
India or Outside India. If it is outside India it would not be liable to GST.
 The POT in GST is the Point of supply of Goods. In case of service , then it is
somehow based on the POT rules of Service tax.
 Under the GST structure , the tax would be collected by the states where the
goods or services are consumed .
 Hence there should be heavy losses for the producer states & so the center
would be required to compensate them for their revenue losses.
 Petroleum products, Alcohols/Liquor , Stamp/Custom duty, Consm. &
Sale of Electricity etc. are not covered under the GST purview.
13
 If a company is having four branches in four different states, then all the
four branches will be considered as Taxable Person.
 Importer have to register under both CGST & SGST as well.
 Apart from Export rate, similar benefit may be given to Special Economy
Zone.
 GST paid by exporter on the procurement of Goods & services will be
refunded later on if paid.
 Each taxpayer would be allotted a PAN linked taxpayer identification
number with a total of 13/15 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.
 The taxpayer would need to submit periodical returns to both the central &
state GST authorities.
 Common standardized return for all taxes (with different account heads for
CGST, SGST, IGST) can come into picture.
 Common standardized Challan for all taxes (with different account heads
for CGST, SGST,IGST) can come into picture.
 ITC credit can also be verified on the basis of the returns filed and revenues
reconciled against Challan data from banks.
14
Benefit under GST
 Reduces Transaction cost.
 Eliminates the cascading effect of taxes.
 Single taxation point.
 Reduces corruption.
 Uniform tax rate .
 Cheaper exports.
 Reduction in purchase price.
 Transparency.
 Increased collection of CGST & IGST.
 Increased FDI(Already Seen)
 Growth in overall Revenues.
 Simplified tax laws.
 Increase in exports & employments.
 GDP Growth Go Up by about 1%.
 International competitiveness Go Up by about 5%.
 Common market.
 Prevention of unhealthy competition among states.
 Increasing the tax base & raising compliance.
15
Key Amendments in GST Bill
 Dropping 1% Additional on Inter-State Supply of Goods.
 Full Compensation to States upto 5 Years.
 Apportionment of IGST i.e. ( States also shares IGST amt along with centre)
 IGST term to be replaced with GST on supplies in the course of inter-
state trade or commerce.
 Inclusion of CGST & IGST in tax devolution to states.
16
Sector wise impact of GST
After implementation of GST, it seems that there is going to be a positive impact on
various Industry.
Some Glimpse of GST Impact of various Industry :
Automobiles Industry
 Rate of Tax is expected b/w 20-22% as compared to 30-47% in current scenario.
 Drive overall demand & reduce cost for end user by about 10%.
 Transportation time & overall cost will be reduced.
 Cost of Logistics will be curtailed by almost 30-40%.
Key beneficiaries : Maruti Suzuki, Hero MotoCorp, Bajaj Auto, Eicher Motors,
Ashok Leyland
17
Consumer Durables
 Reduction of the Price gap between organized & unorganized sector.
 Warehouse/logistics costs will be curtailed.
 Improve the operational profitability by almost 300-400 bps.
Key beneficiaries: Havells, Voltas, Blue Star, Bajaj Electricals, Hitachi
Logistics
 Boost demand for high tonnage trucks.
 Overall reduction in transportation costs.
 Improving growth opportunities for the organized players.
 Facilitate seamless inter-state flow of Goods.
Key beneficiaries : VRL Logistics, GATI Ltd, Blue Dart, Snowman Logistics
Cement
 Tax rate expected to decline to 18-20% as compared to 27-32%.
 Able to save their logistics costs/transportation costs.
Key beneficiaries : ACC, Ultratech, JK Cement, Shree Cement
18
Banking & Financial services
 Under GST , effective tax rate is expected to increase to 18-20% as 14% earlier.
 Moderate increase in the cost of financial services like loan processing fees,
debit/credit charges, insurance premium etc.
IT
 Tax Rate is expected to increase to 18-20%.
 Litigation around taxability of canned software will probably end under GST
Regime.
Textile /Garments
 May be negatively impacted in case the output tax rate is high.
 No clarity whether a lower rate will continue in the proposed Tax regime.
 No clarity about the duty drawback benefits.
Key Players : Arvind, Raymond, Page Industries
Media
 Tax rate of around 18-20% as compared to 20-21%.
 Post GST, we expect concessional rate in news & Print sector.
Key beneficiary : Dish TV
19
GST ROLLOUT
Here , we are now discuss about the 9 stages for GST Rollout which
depicts entire process from the Initial Approval from Parliament up to
the last stage of Implementation.
Can April 01, 2017 deadline be met ?
20
Flaws of the GST Model
 Major flaws of this model is that the local dealers have to pay CGST in
addition to SGST.
 Because of no differentiation between “goods & services” , services
supply within the state would attract SGST at each stage in the supply
chain ,but in the mean time Assesse have to pay CGST also.
 The issue which still needs to be resolved are the revenue sharing
between States & center & a framework for exemption , threshold limit
as well as composition scheme.
 Introduction of GST model could affect negatively (than positively) to
few Industries/sectors.
 Under the GST Model , the state should face heavy losses in terms of tax
collection but they also get compensated on the other hand by the states.
 Infact some states are of the view that there should not be any time –
frame for compensation scheme.
21
Conclusion
 GST being a dynamic & comprehensive legislation which shall replace most of
the Indirect Taxes of our Country.
 Since it is a major indirect tax reform in India, there would be new legislation
and procedures.
 Most concerns expressed about the implementation of GST can be divided into
3 categories :
i) Design Issues ii) Operational Issues iii) Infrastructure Issues
 For GST to be effective there should be identical GST laws /procedures across
states as well as the centre.
 Few state Govt. have recently indicated their opposition to the implementation
of GST at the present juncture.
 In the mean time ,those state who are not opposing against the implementation
of GST may want assurances that their existing revenues will be protected.
 So, it is now universally acknowledged and recognized that the GST , in
whatever form should be introduced at the earliest as a fundamental fiscal
reform measure.
 Now, on June 14,2016, the CG has put the Draft Model GST law on Public
domain.
22
 The long delayed GST Bill has finally got the nod of the Rajya Sabha as
well as in Lok Shabha in the 2nd week of August ,2016.
 The Rajya Sabha has unanimously passed the ambitious GST Bill with over 2/3
majority.
 All the Political Party had already given their consent provided their demand
had been considered except AIADMK party.
 The Draft GST model Law shall be referred as the Central/State GST Act, 2016.
 The availability of Draft Model GST Law enables the Trade & Industry to plan
the transition from the existing Indirect tax regime to the GST regime.
 The Government has already missed its pre decided deadline of 1st April 2016,
let’s hope that GST law will be effective from 1st April 2017.
 Further , the Chartered Accountants & the Allied Professionals are going to play
the leading role in helping the business houses as well as corporate also.
 GST will be the best example of cooperative federalism.
 Together we will take India to new heights of progress.
 In Nutshell , it is a biggest tax reform till date in our country.
23

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GST PRESENTATION

  • 1. A Presentation by CA Gaurav Mishra 1
  • 2. CONTENTS S. No Topics Page No. I Introduction /Concepts of GST 3-4 II Existing & Proposed Tax Structure in India 5-6 III Model/Components of GST 7 IV Applicability & Rate in GST Regime 8-9 V GST Set off Chain & its methodology 10 VI Functioning of GST 11 VII Others Areas of GST 12-13 VIII Benefits under GST 14 IX Key Amendments in Bill 15 X Sector Wise Impacts 16-18 XI GST Rollout Stages 19 XII Flaws of the GST Model 20 XIII Conclusion 21-22 2
  • 3. 3  It is a tax on Goods & Services with comprehensive & continuous Chain of Set off benefit from producers to retailer point.  In other words, GST is an Indirect tax which is levy on manufacture, sale & consumption of all goods & services.  It substitute mostly all the indirect taxes like excise, VAT, Service Tax, Entertainment Tax, Luxury Tax, CVD as well as SAD.  It is based on the VAT principles .  It is supposed to be implemented w.e.f 1St April 2017.  It is expected to be levied only at a destination level/Real Consumption Place not at a various points.  Taxation power lies with both in the hands of CG as well as SG also.  There will be no distinction between goods & services.  After Introduction of GST, all the traders including manufacturer will be paying both the type of taxes (CGST & SGST). Introduction/Concept of GST
  • 4.  GST leads to immense scope, Opportunities as well as some challenges also.  Centre is empowered to levy GST on Goods & Services upon the Production stage, while State have the power to tax on sale of goods.  India is proposing to implement dual GST.  GST law would emphasize on voluntary compliance .  It is a comprehensive levy and envisages tax collection on both goods and services at the same rate.  It subsumes a large no. of central & state taxes into a single tax.  It is also expected that GST will mitigate the cascading effect of taxes.  In the mean time, it also helps in terms of uniformity like in case of chargeability, definition of taxable services or person, measure of levy, basis of classification etc.
  • 5. 5 Existing Tax structure in India Existing Tax Structure Direct Tax Income Tax Wealth Tax Indirect Tax Central Tax Excise Service Tax Custom State Tax VAT Entry Tax, luxury tax, Lottery Tax, etc.
  • 6. 6 Proposed Tax structure in India Proposed Tax Structure Direct Tax Income Tax Wealth Tax Indirect Tax = GST (Except customs) Intra- state CGST (Central) SGST (State) Inter State IGST (Central)
  • 7. 7 Model/Components of GST CGST (Central GST) • Replace central Excise Duty & service Tax. • Cover Sale transaction • Administered by CG • Further it is expected that the duty and tax paid on closing stock would be available as credit. • Levied on all intra-state sale/supplies of goods or services. SGST (State GST) • Replace State Vat, Entry Tax, Entertainment Tax, & Luxury Tax. • Cover taxing of Services • Administered by SG • Rate can be a bit higher than CGST rate . • It is expected that the duty and tax paid on closing stock would be available as credit. • Levied on all intra-state sale/supplies of goods or services. IGST (Inter-State GST) • Levied on all inter – state supplies of goods or services which are sold or transferred. • Applicable to imports of goods or services. • Expected to be equal to CGST as well as SGST. • It is expected that the duty and tax paid on closing stock would be available as credit.
  • 8. 8 Applicability & Rate under GST Regime  GST on Exports would be zero rated, but on the other hand in “import” IGST will be levied.  GST does not apply on Alcohol & petroleum products.  But in the mean time tobacco products should be in the frame of GST.  In fact, Gov. Can levy extra % of tax apart from GST .  Basic threshold limit for Goods & Services shall be RS. 10 Lakh & for North east Region (NER) Rs.5.00 Lakh.  Full exemption is applicable on basic necessities goods like Flour, rice, pulses, textiles, buildings, education & healthcare etc.  Gross Turnover of Goods up to Rs. 1.50 cr may be assigned exclusively to the states.  Gross Turnover of Services up to Rs. 1.50 cr may be assigned exclusively to the center.  Assesse can have an option to pay tax as per composition scheme or may join the GST law whose turnover is up to Rs. 1.50 cr .  But, those assesse whose turnover is and above Rs. 1.50 Cr will need to be within the framework of GST .
  • 9. 9  As far as GST rate is concerned, it is not yet prescribed yet.  CBEC has suggested the following rates for goods as well as services.  GST rate on Gold Bullion/Jewelry might be 1%  The opposition has sought an 18% rate in GST.  The combined GST rate is being discussed by Government.  The Finance minister has indicated that GST rate may be in the region of 18- 20%.  Internationally , GST was first introduced in France & now more than 150 countries have already introduced GST.  Most of the countries , depending on their socio-economic formation, have introduced National level GST or Dual GST.  Today the rate of GST in some other countries like Australia( 10%), Canada (5%), Germany (19%), Japan (5%), Singapore (7%), Sweden (25%), New Zealand (15%), France (19.60%), Pakistan (17%) & so on….
  • 12. 12 Others Areas of GST  As far as registration decision is concerned, a supplier of Goods & services would be made when GST is payable.  Then the supplier would have to necessarily register & he would have no other option.  The Place of supply would determine first as to whether the transaction is in India or Outside India. If it is outside India it would not be liable to GST.  The POT in GST is the Point of supply of Goods. In case of service , then it is somehow based on the POT rules of Service tax.  Under the GST structure , the tax would be collected by the states where the goods or services are consumed .  Hence there should be heavy losses for the producer states & so the center would be required to compensate them for their revenue losses.  Petroleum products, Alcohols/Liquor , Stamp/Custom duty, Consm. & Sale of Electricity etc. are not covered under the GST purview.
  • 13. 13  If a company is having four branches in four different states, then all the four branches will be considered as Taxable Person.  Importer have to register under both CGST & SGST as well.  Apart from Export rate, similar benefit may be given to Special Economy Zone.  GST paid by exporter on the procurement of Goods & services will be refunded later on if paid.  Each taxpayer would be allotted a PAN linked taxpayer identification number with a total of 13/15 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.  The taxpayer would need to submit periodical returns to both the central & state GST authorities.  Common standardized return for all taxes (with different account heads for CGST, SGST, IGST) can come into picture.  Common standardized Challan for all taxes (with different account heads for CGST, SGST,IGST) can come into picture.  ITC credit can also be verified on the basis of the returns filed and revenues reconciled against Challan data from banks.
  • 14. 14 Benefit under GST  Reduces Transaction cost.  Eliminates the cascading effect of taxes.  Single taxation point.  Reduces corruption.  Uniform tax rate .  Cheaper exports.  Reduction in purchase price.  Transparency.  Increased collection of CGST & IGST.  Increased FDI(Already Seen)  Growth in overall Revenues.  Simplified tax laws.  Increase in exports & employments.  GDP Growth Go Up by about 1%.  International competitiveness Go Up by about 5%.  Common market.  Prevention of unhealthy competition among states.  Increasing the tax base & raising compliance.
  • 15. 15 Key Amendments in GST Bill  Dropping 1% Additional on Inter-State Supply of Goods.  Full Compensation to States upto 5 Years.  Apportionment of IGST i.e. ( States also shares IGST amt along with centre)  IGST term to be replaced with GST on supplies in the course of inter- state trade or commerce.  Inclusion of CGST & IGST in tax devolution to states.
  • 16. 16 Sector wise impact of GST After implementation of GST, it seems that there is going to be a positive impact on various Industry. Some Glimpse of GST Impact of various Industry : Automobiles Industry  Rate of Tax is expected b/w 20-22% as compared to 30-47% in current scenario.  Drive overall demand & reduce cost for end user by about 10%.  Transportation time & overall cost will be reduced.  Cost of Logistics will be curtailed by almost 30-40%. Key beneficiaries : Maruti Suzuki, Hero MotoCorp, Bajaj Auto, Eicher Motors, Ashok Leyland
  • 17. 17 Consumer Durables  Reduction of the Price gap between organized & unorganized sector.  Warehouse/logistics costs will be curtailed.  Improve the operational profitability by almost 300-400 bps. Key beneficiaries: Havells, Voltas, Blue Star, Bajaj Electricals, Hitachi Logistics  Boost demand for high tonnage trucks.  Overall reduction in transportation costs.  Improving growth opportunities for the organized players.  Facilitate seamless inter-state flow of Goods. Key beneficiaries : VRL Logistics, GATI Ltd, Blue Dart, Snowman Logistics Cement  Tax rate expected to decline to 18-20% as compared to 27-32%.  Able to save their logistics costs/transportation costs. Key beneficiaries : ACC, Ultratech, JK Cement, Shree Cement
  • 18. 18 Banking & Financial services  Under GST , effective tax rate is expected to increase to 18-20% as 14% earlier.  Moderate increase in the cost of financial services like loan processing fees, debit/credit charges, insurance premium etc. IT  Tax Rate is expected to increase to 18-20%.  Litigation around taxability of canned software will probably end under GST Regime. Textile /Garments  May be negatively impacted in case the output tax rate is high.  No clarity whether a lower rate will continue in the proposed Tax regime.  No clarity about the duty drawback benefits. Key Players : Arvind, Raymond, Page Industries Media  Tax rate of around 18-20% as compared to 20-21%.  Post GST, we expect concessional rate in news & Print sector. Key beneficiary : Dish TV
  • 19. 19 GST ROLLOUT Here , we are now discuss about the 9 stages for GST Rollout which depicts entire process from the Initial Approval from Parliament up to the last stage of Implementation. Can April 01, 2017 deadline be met ?
  • 20. 20 Flaws of the GST Model  Major flaws of this model is that the local dealers have to pay CGST in addition to SGST.  Because of no differentiation between “goods & services” , services supply within the state would attract SGST at each stage in the supply chain ,but in the mean time Assesse have to pay CGST also.  The issue which still needs to be resolved are the revenue sharing between States & center & a framework for exemption , threshold limit as well as composition scheme.  Introduction of GST model could affect negatively (than positively) to few Industries/sectors.  Under the GST Model , the state should face heavy losses in terms of tax collection but they also get compensated on the other hand by the states.  Infact some states are of the view that there should not be any time – frame for compensation scheme.
  • 21. 21 Conclusion  GST being a dynamic & comprehensive legislation which shall replace most of the Indirect Taxes of our Country.  Since it is a major indirect tax reform in India, there would be new legislation and procedures.  Most concerns expressed about the implementation of GST can be divided into 3 categories : i) Design Issues ii) Operational Issues iii) Infrastructure Issues  For GST to be effective there should be identical GST laws /procedures across states as well as the centre.  Few state Govt. have recently indicated their opposition to the implementation of GST at the present juncture.  In the mean time ,those state who are not opposing against the implementation of GST may want assurances that their existing revenues will be protected.  So, it is now universally acknowledged and recognized that the GST , in whatever form should be introduced at the earliest as a fundamental fiscal reform measure.  Now, on June 14,2016, the CG has put the Draft Model GST law on Public domain.
  • 22. 22  The long delayed GST Bill has finally got the nod of the Rajya Sabha as well as in Lok Shabha in the 2nd week of August ,2016.  The Rajya Sabha has unanimously passed the ambitious GST Bill with over 2/3 majority.  All the Political Party had already given their consent provided their demand had been considered except AIADMK party.  The Draft GST model Law shall be referred as the Central/State GST Act, 2016.  The availability of Draft Model GST Law enables the Trade & Industry to plan the transition from the existing Indirect tax regime to the GST regime.  The Government has already missed its pre decided deadline of 1st April 2016, let’s hope that GST law will be effective from 1st April 2017.  Further , the Chartered Accountants & the Allied Professionals are going to play the leading role in helping the business houses as well as corporate also.  GST will be the best example of cooperative federalism.  Together we will take India to new heights of progress.  In Nutshell , it is a biggest tax reform till date in our country.
  • 23. 23

Hinweis der Redaktion

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