Goods and Service Tax (GST)-Awareness Programme

1. CA Chandra Kishore Bajpai M.Com. FCA, DISA(ICAI), L.L.B. Certificate in International Taxation NEW DELHINEW DELHI 7599 03 7599 ,95600 37408 contact@cackbajpai.com kb lcackbajpai@gmail.com 1 Welcome to Mewar Group of Institutes

2. Goods and Service Tax -GSTGoods and Service Tax GST 1. Present Indirect Tax Structure of India 2. Why GST 3. Roadmap of GST in India Ch ll i GS i h4. Challenges in GST i.e. what next 5. What is GST and how it works 6. Proposed GST Model in India (Sub-contents in next slides)6. Proposed GST Model in India (Sub contents in next slides) 2 Welcome to Mewar Group of Institutes

3. Goods and Service Tax -GST GST Discussion started first time when FM announce it in Feb 2007 to 3 Welcome to Mewar Group of Institutes GST Discussion started first time when FM announce it in Feb 2007 to implement by April 2010

4. Goods and Service Tax -GST Present Indirect Tax Structure 4 Welcome to Mewar Group of Institutes

5. Goods and Service Tax -GST Present Indirect Tax Structure Excise Service VAT (Sale Custom Tax Central Excise (CENVAT) Service Tax Central State VAT (Sale Tax) Custom Duty Central Levied by Entry in C tit ti Entry 84 f Li t I f Central Govt. Central Govt. Residuary entry-97 of Entry 54 of List II & 92A State Govt. Central Govt Entry 83 f Li t I fConstituti on Taxable M f t of List I of Sch. VII entry 97 of List I of Sch.-VII Rendition S l List II & 92A of List I (CST) of Sch.-VII of List I of Sch.VII ImportTaxable Event Tax Rate Median Manufacture Rendition of Service Single 0% to 12 5% & Sale Import and Export Median 5 Welcome to Mewar Group of Institutes Tax Rate 12.5 % g Rate 15% 12.5% & 20% rate 24%

6. Goods and Service Tax -GST Why we dneed GST???GST??? 6 Welcome to Mewar Group of Institutes

7. Goods and Service Tax -GST  Overlapping of tax in various transactions i.e. multiplicity of taxes T C diTax Cascading Ineligibility of ITC for SPs & CENVAT for Traders  Complexity in determining the nature of transaction – S l SSale vs. Service  Lack of Uniformity in Provisions and Rates  Inability of States to levy tax on Service  Complex Tax Administration Interpretational issue  There is a saying in Kautilaya's Arthshastra, that the best taxation regime is the one which is "liberal in assessment and ruthless in collection". The proposed GST seems to be based on this very principle. 7 Welcome to Mewar Group of Institutes

8. Goods and Service Tax -GST Roadmap of GSTRoadmap of GST 8 Welcome to Mewar Group of Institutes

9. Goods and Service Tax -GST 9 Welcome to Mewar Group of Institutes

11. Goods and Service Tax -GST What Next 11 Welcome to Mewar Group of Institutes

12. Goods and Service Tax -GST Govt. outlines road-map for GST roll-out by April 2017 The entire process has been identified into three broad categories, i.e. Legal framework, IT infra and change management with tentative timeline against each of them.change management with tentative timeline against each of them. Challenges involved in the process of GST implementation were also highlighted. ► Ratification of the Constitution Amendment Bill by 16 States within 30 days ► Presenting all legislative bills in the winter session of the Parliament and the State assembliesand the State assemblies ► Constitution of GST Council within 60 days of enactment ► Establish GST Network and States IT back-end by November 2016 ► Testing of software with live transactions by January 2017 12 Welcome to Mewar Group of Institutes

13. Goods and Service Tax -GST Key challenges indicated are with reference to change management :g g ► GST rate structure ► Calculation of revenue base and the compensation ► List of exemptions ► Consensus on GST Law ► Consensus on threshold limit ► Administrative control over scrutiny cases by Centre and State Government seems keen to put all its effort to meet the deadline. 13 Welcome to Mewar Group of Institutes

14. Goods and Service Tax -GST What is GST 14 Welcome to Mewar Group of Institutes

15. Goods and Service Tax -GST What is GST  Goods & Service Tax (GST) as the name suggests, is a tax on supply of goods or service.  A tax only on value addition at each stage  Supplier at each stage is permitted to set-off Supplier at each stage is permitted to set off, through a tax credit mechanism, the GST paid on the is purchase.  The final consumer bear GST charged by the last dealer in the supply chain, with set-off benefits at all th i t 15 Welcome to Mewar Group of Institutes the previous stages.

16. Goods and Service Tax -GST GST Model Internationally GST Model Feature Countryy National GST Tax levied by Centre with provisions for revenue sharing with Provinces/States Australia, China State GST Tax levied by Provinces/States USA Non-concurrent Dual GST GST on Goods levied by State & on Services levied by CentreDual GST on Services levied by Centre Concurrent Dual GST Tax levied by Centre & State on both Goods & Services ―India‘s Proposed Model Brazil & Canada ―India s Proposed Model Quebec Model Separate legislation for Federal/ Provinces –Tax collection, Administration, 16 Welcome to Mewar Group of Institutes Enforcements, etc. by Provinces

20. Goods and Service Tax -GST GST-Rate 20 Welcome to Mewar Group of Institutes

21. Goods and Service Tax -GST Revenue Neutral Rate The golden rule for collection of tax is given by world’s oldest economist Sage Kautilya alias Chanakya Muni more than 2000 H id h h Ki h ld ll f diffyears ago. He said that the King should collect tax from different persons as the humble bee collects honey from different flowers without making any harm to them. Thus, all efforts should be made to keep the GST rate as low as possiblemade to keep the GST rate as low as possible. It is the rate at which tax revenue remains the same despite giving credit of duty paid on inputs and other factorsgiving credit of duty paid on inputs and other factors. The success of GST will largely depend on the determination of ideal rate at Central level as well as State level which should be 21 Welcome to Mewar Group of Institutes acceptable to the public and revenue neutral to Government.

22. Goods and Service Tax -GST P b bl fProbable propose rate of tax Rate Goods and services Zero Rate Exports, Goods & service to SEZ or UNO or Foregion Diplomatic Mission etc Government supplies such as water services, drainage services etc. Health, education, religious supplies Financial Services and residential rentingrenting Vegetable, fruit, meat 1% to 2% Gold and Silver ornaments, precious and semi-precious stones 18% Standard GST rate on all goods and services (distributed in CGST & SGST) Without Tobacco, Cigarettes, Lottery tickets, betting and gambling etc Restriction To be covered in Future Petroleum and Petroleum products 22 Welcome to Mewar Group of Institutes Out of GST Alcoholic Liquor for Human Consumption

24. Goods and Service Tax -GST Levy in Goods and Service Tax (GST) Regime(GST) Regime 24 Welcome to Mewar Group of Institutes

25. Goods and Service Tax -GST Levy in Goods and Service Tax (GST) Regime(GST) Regime There shall be levied a tax called the Central/State Goods and Services TaxCentral/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the rateg / specified in the Schedule . . . to this Act and collected in such manner as may be ib dprescribed. 25 Welcome to Mewar Group of Institutes

26. Goods and Service Tax -GST m 26 Welcome to Mewar Group of Institutes

27. Goods and Service Tax -GST Goods Vs. Service 27 Welcome to Mewar Group of Institutes

28. Goods and Service Tax -GST Time Of SupplyTime Of Supply 28 Welcome to Mewar Group of Institutes

29. Goods and Service Tax -GST m 29 Welcome to Mewar Group of Institutes

30. Goods and Service Tax -GST Place Of SupplyPlace Of Supply GOODS SERVICE 30 Welcome to Mewar Group of Institutes

31. Goods and Service Tax -GST Place of Supply of Goods 31 Welcome to Mewar Group of Institutes

32. Goods and Service Tax -GST Place of Supply of SERVICEPlace of Supply of SERVICE Contd. 32 Welcome to Mewar Group of Institutes

33. Goods and Service Tax -GST Place of Supply of SERVICE 33 Welcome to Mewar Group of Institutes

34. Goods and Service Tax -GST Valuation of Supplypp y 34 Welcome to Mewar Group of Institutes

35. Goods and Service Tax -GST Transaction Sole Unrelated Value ofTransaction Value Considera tion Unrelated Party Value of Supply 35 Welcome to Mewar Group of Institutes

36. Goods and Service Tax -GST i lTransaction Value Shall Include Shall not Include •Amount paid by recipient instead of supplier and not included in price •Value of goods / services supplied by the recipient free of charge or at •Post supply discount known before supply and linked to invoices the recipient free of charge or at reduced cost •Royalties and License fees related to and as a condition to supply •Any discount allowed before or at the time of supply as recorded •Taxes and duties other than GST •Incidental costs/ expenses (such as commission, packing, royalties etc.) •Subsidies linked to the supply in invoice •Subsidies linked to the supply •Reimbursable expenses incurred on behalf of the supplier •Discount or incentive allowed after 36 Welcome to Mewar Group of Institutes the supply

37. Goods and Service Tax -GST Input Tax Creditp i.e. Credit Mechanism 37 Welcome to Mewar Group of Institutes

39. Goods and Service Tax -GST Credit Mechanism under GST Law CGST CGST SGSTSGST IGSTIGST 39 Welcome to Mewar Group of Institutes

41. Goods and Service Tax -GST N 41 Welcome to Mewar Group of Institutes

43. Goods and Service Tax -GST Tax Administration  A uniform procedure for registration, payment of taxes and filing of returns would be prescribed in the respective legislations governingreturns would be prescribed in the respective legislations governing IGST, CGST & SGST  CGST and SGST are to be paid to the accounts of the Central and the State separately, though may be through a single Challan using thep y g y g g g respective codes.  A national level Information Technology Infrastructure under the name of GSTNET is proposed to be established  The assessee in GST regime may be required to file periodic returns for The assessee in GST regime may be required to file periodic returns for all the three legislation namely IGST, CGST and SGST  PAN-linked Taxpayers Identification Number (TIN) i.e GSTIN 43 Welcome to Mewar Group of Institutes

44. Goods and Service Tax -GST RegistrationRegistration is required if aggregate turnover in a financial year exceeds Rupees Nine Lakhs Rupees Four Lakhs if a taxable person conducts hisRupees Nine Lakhs. Rupees Four Lakhs if a taxable person conducts his business in any of the North Eastern States including Sikkim, No threshold limit for the person: making any inter-State taxable supply;making any inter-State taxable supply; casual taxable persons; who are required to pay tax under reverse charge; non-resident taxable persons who are required to deduct tax under section 37 (TDS);who are required to deduct tax under section 37 (TDS); who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise; input service distributor; persons who supply goods and/or services, other than branded services,p pp y g / , , through electronic commerce operator; every electronic commerce operator; an aggregator who supplies services under his brand name or his trade name; and h h l f b f d b h /such other person or class of persons as may be notified by the CG/SG on the recommendations of the council. 44 Welcome to Mewar Group of Institutes

45. Goods and Service Tax -GST f h Separate Registration for each State the taxable person will have to take a separate registration  Application for registration shall be d i hi 30 d f h dmade within 30 days from the date when he becomes liable for registration 45 Welcome to Mewar Group of Institutes

47. Goods and Service Tax -GST Return under GST Model law Description Return Form Due Date Monthly Statement of Outward Supply GSTR-1 10th of Next month Monthly Statement of Inward Supply GSTR-2 15th of Next month Monthly return GSTR-3 20th of Next month Return for Composite Dealer GSTR-4 18th of Next month Return for Input Service distributor GSTR-6 15th of Next month TDS Return GSTR-7 10th of Next month Annual return GSTR-8 By 31st Dec of Next Financial Year Final Return (no Prescribed Form) within 3 Months from the date of cancellation or order of cancellation whichever is Later 47 Welcome to Mewar Group of Institutes or order of cancellation whichever is Later Foreign Non-Resident Taxpayer (GSTR-5)

48. Present VsPresent Vs ProposedProposed

49. Goods and Service Tax -GST Practical Example 51 Welcome to Mewar Group of Institutes

50. Goods and Service Tax -GST Particulars Under Present Proposed (I) Manufacturer (D1) to Wholesaler (D2) Cost of Production 90,000 90,000 90000 90000 Input Tax Credit (Assuming nil) ‐ ‐ 0 Add : Profit Margin 10,000 10,000 10000 10000 Producers Basic Price 1 00 000 1 00 000 100000 100000Producers Basic Price 1,00,000 1,00,000 100000 100000 Add: Central Excise Duty @ 12% 12000 0 Total 112000 Add : Value Added Tax @ 14.5% 16240 Add : Central GST @ 12% 12000 Add : State GST @ 12% 12000 Sale Price 128240 124000 (II) Wholesaler (D2) to Retailer (D3) Cost of Goods to D2 1,12,000 1,00,000 112000 100000 Available Input Tax Credit for set off Rs.16,240, Rs.24,000 Add : Profit Margin 5,000 5,000 5000 5000 Total 1,17,000 1,05,000 117000 105000, , , , Add : Value Added Tax @ 14.5% 16965 Add : Central GST @ 12% 12600 Add : State GST @ 12% 12600 Total Price to the Retailer 133965 130200 (III) Retailer (D3) to Final Consumer (C) Cost of Goods to D3 1 17 000 1 05 000 117000 105000Cost of Goods to D3 1,17,000 1,05,000 117000 105000 Input Tax Credit Rs.16,965, Rs.25,200 Add : Profit Margin 5,000 5,000 5000 5000 Total 1,22,000 1,10,000 122000 110000 Add : Value Added Tax @ 14.5% 17690 Add : Central GST @ 12% 13200 52 Welcome to Mewar Group of Institutes Add : State GST @ 12% 13200 Total Price to the Consumer 139690 136400

51. Goods and Service Tax -GST Ill t ti 2 I t St t ( t id th t t ) T di f G dIllustration 2: Inter State (outside the state) Trading of Goods Particulars Present Scenario GST Scenario Input Manufacture Cost 9000 9000 Margin 1000 1000 Value 10000 10000Value 10000 10000 Excise @10% 1000 CGST@10% 1000 VAT @10% 1100 SGST @10% 1000 Total 12100 12000 Output Manufacturer Cost 10000 10000 Margin 2000 2000 Value 120 Value 120 12000 12000 Excise @10% 1200 IGST@20% 2400 CST @ 2% 264 Sale Price 13464 14400 Dealer Dealer Purchase Cost 13464 12000 E t T 3 60 E t T Nil 364Entry Tax 3.60 Entry Tax Nil 364 Landed cost 13828 12000 Margin 10 Margin 10 1000 1000 Value 14828 13000 VAT @10% 1482.8 CGST@10% 1300 53 Welcome to Mewar Group of Institutes CGST@10% 1300 SGST @ 10% 1300 Total amount Paid by Customer 31139 28600 B A C K

54. Goods and Service Tax -GST Sector Specific Impact 56 Welcome to Mewar Group of Institutes

58. Welcome to Mewar Group of Institutes 60

59. For further information and our services, lplease contact: CA Chandra Kishore Bajpai M.Com. LLB. FCA. Certificate in International Taxation Supertech Livingston Crossing Republik Ghaziabad (U P )Crossing Republik, Ghaziabad (U.P.) 9560037408,7599037599 contact@cackbajpai.com, cackbajpai@gmail.com • Purpose of this presentation is to give a highlights of the proposed GST regime in India . • Prior professional advice is recommended before implementation of the t d d thi t tiaspects covered under this presentation • The instant presentation is just sharing information based on compilation from different sources for benefit of readers. • We are under no obligation to update this presentation for future changes. Welcome to Mewar Group of Institutes 61

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