Serial No. Topic
1 What is GST?
2 History of GST in India
3 How GST works?
4 Components of GST
5 Who are liable to register under GST?
6 Rate Slabs under GST
7 Requirements to opt for Composition Scheme
8 Input Tax Credit
9 How user can avail Input Tax Credit
10 Advantages of GST
11 Disadvantages of GST
What is GST?
Indirect Tax which has replaced many indirect taxes in India.
Passed in the Parliament on 29th March 2017.
Came into effect on 1st July 2017.
Comprehensive, Multi Stage, Destination Based Tax levied on every
One Indirect Tax for the entire country.
History of GST in India
2000: PM Vajpayee set up
a Committee to draft GST
2004: Task Force
concludes GST must be
implemented to improve
2006: Finance Minister
proposes GST introduction
from 1st April 2010.
2007: CST to be phased
out. Rates reduced from
4% to 3%.
2008: EC finalizes dual GST
structure to have separate
2010: Project to
taxes launched but GST
Amendment Bill to enable
GST law introduced.
2012: Standing Committee
begins discussion on GST
but stalled it over clause
2013: Standing Committee
tables it report on GST.
2014: GST bill introduced
in Parliament by Finance
2015: GST bill passed in
Lok Sabha but not in Rajya
2016: GSTN goes live.
2016: Amended Model
GST law passed in both
houses. President gives
2017: Four supplementary
GST bills passed in Lok
Sabha and approved by
Rajya Sabha passes four
supplementary GST bills.
Final GST to be
implemented on July1,
GST is launched on July 1,
How GST Works?
GST is levied on each stage as the goods and services reaches from Manufacturer to Final Consumer
i.e. GST is levied on every value addition made in the goods and services at each stage.
Final Sale to
GST will be levied on every stage on the value made by each party in the supply chain i.e. monetary worth added
at each stage to achieve final sale to the customer.
COMPONENTS OF GST
Sale Within the State
Sale to Another State
Collected by Central Government on an Intra-State sale.
Collected by State Government on Intra-State sale.
Collected by Central Government for Inter-State sale.
Who is liable to register under GST?
• Any business whose turnover in a financial year exceeds Rs 20 lakhs.
• Every Person who is registered under earlier law (i.e. VAT, Excise,
Service Tax etc.).
• Anyone who drives inter-state supply of goods.
• Casual Taxable Person.
• Non-Resident taxable person.
• Agents of a supplier.
• E-commerce operator or aggregator.
• Person who supplies via e-commerce aggregator.
Rate Slabs under GST
The table below shows GST tax rate on some common items-
Tax Rates Products
Household necessities such as edible oil, sugar, spices, tea, and coffee (except
instant) are included. Coal, Mishti/Mithai(Indian Sweets) and Life saving drugs are
also covered under this GST slab.
12% This includes computers and processed food
18% Hair Oil, Toothpaste and Soaps, Capital goods and industrial intermediaries are
covered in this slab.
Luxury items such as small cars, consumer durable like AC and Refrigerators,
Premium Cars, Cigarettes and aerated drinks, High-end motorcycles are included
Requirements to opt for composition scheme
• Any Business having annual turnover up to Rs 1 crore.
• Only Manufacturers of goods, Dealers, and Restaurants(not serving alcohol)
can opt for composition scheme.
• No need to maintain detailed records.
• Cannot avail Input Tax Credit.
• Cannot issue Tax invoice but should issue Bill of Supply.
• Furnish only one return (GSTR-4) on quarterly basis and an annual return in
• Composition Dealer cannot collect GST from the buyer.
• Should be supplying goods Intra-State.
Composition Scheme- Applicable GST Rate
Type of Business CGST SGST Total
Manufacturer and Traders (Goods) 0.5% 0.5% 1%
Restaurants not serving alcohol 2.5% 2.5% 5%
Service Providers are not eligible for Composition Scheme
Input Tax Credit
Supplier at the time of paying GST to the government can avail benefit of GST
he paid at the time of purchasing inputs or raw material.
In simple words,
Input Tax Credit= GST collected at the from the consumer at the time of
sale (-) GST paid on the purchase of inputs and raw materials
Input Tax Credit= Tax collected by the supplier at the time of sale of goods or providing the services(-)
Tax paid at the time of purchase of inputs or raw materials
•Tax paid on
of A Rs 100
•Tax paid on
of B Rs 120
•Tax paid on
of C Rs 80
Tax on output Rs 450
Tax to be paid by manufacturer= Rs 450 less Tax paid on inputs (Rs 100 + Rs 120 + Rs 80)= Rs 150
Input Credit = Rs 300
How user can avail Input Tax Credit
• Use input tax credit from IGST,CGST,SGST paid
on purchases.To pay IGST
• Use input tax credit from CGST & IGST paid on
purchases.To pay CGST
• Use input tax credit from SGST & IGST paid on
purchases.To pay SGST
User cannot use CGST input tax credit to pay SGST liability.
User cannot use SGST input tax credit to pay CGST liability.
due to software
GST will mean
an Increase in
GST is an online
SMEs will have a
• Change is definitely never easy.
• Government is trying to smoothen the road to GST.
• Will benefit in the long run.
• Paper work has become less than previous tax regime as GST is online
• Unified Tax system and easy input tax credits.