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WELCOME TO TECHNICAL SESSION ON
“GST IMPLICATIONS ON TRADE AND
BUSINESS DEVELOPMENT”
Prof.Usha.N
WHAT IS GST
 GST is a comprehensive value added tax on goods
and services
 It is collected on value added at each stage of sale or
purchase in the supply chain
 No differentiation between goods and services as
GST is levied at each stage in the supply chain
 Seamless input tax credit through out the supply
chain
 At all stages of production and distribution ,taxes
area Pass through and tax is borne by the final
consumer
 All sectors are taxed exceptions/ exemptions
WHY DOES INDIA NEED GST
 The current indirect tax structure is full of
uncertainties due to multiple rates.
 Due to multiple rates there are multiple
forms.
HISTORY
 France is the first country in the world, which has implemented GST
in 1954.
 Feb, 2006 : First time introduced concept of GST and announced the
date of its implementation in2010
 Jan. 2007: First GST study released by Dr. Shome
 Feb. 2007: F.M. Announced introduction of GST from
1April2010inBudget
 The Government came out with a First Discussion
PaperonGSTinNovember,2009
 On June 14, 2016, the Ministry of Finance released draft Model law
on GST in public domain for views and suggestions.
 GST Bill Passed in Rajya Sabha on 3rd August 2016 (03-08-2016)
On August 03, 2016,
 In 2017 – GST Council finalizing the GST Rules and GST
Rates.
 Now GST is Applicable From 1st July 2017.
TAXES PROPOSED TO BE SUBSUMED IN GST
 Central Taxes
 Excise Duty
 Additional Excise duty
 Excise duty under medicinal and toilet preparation
Act
 Service Tax
 Additional Custom duty commonly known as
countervailing duty(CVD), special additional duty(
SAD)
 Surcharge
 CENVAT
TAXES PROPOSED TO BE SUBSUMED IN GST
State Taxes
 Value added tax(VAT)
 Entertainment tax levied by states
 Luxury Tax
 Tax on Lottery, betting and gambling
 Entry tax other than for local bodies (Octroi)
MODELS OF GST
GST CREDIT SETOFF CHAIN
GST COUNCIL
GST levy will be administered by
 1. Union finance minister(chairmen)
 2. Union minister in charge of state revenue
or finance
 3. Minister in charge of finance or taxation.
 4. Any other minister(finance minister of the
state) nominated by each state gvt would
constitute the council.
BENEFITS OF GST
 Transparent Tax System
 Uniform Tax system Across India
 Reduce Tax Evasion
 Export will be more competitive
 Eliminates cascading effect
 levied only at the final destination
 Reduction of prices of product
 Increase in employment opportunities
COMPOSITION LEVY SCHEME
 Composition scheme under the law is for small businesses. This is to bring relief
to small businesses so that they need not be burdened with the compliance
provisions under the law. Thus, an option has been provided where they can opt
to pay a fixed percentage of turnover as fees in lieu of tax and be relieved from
the detailed compliance of the provisions of law. Composition levy would be
generally opted by persons who are supplying goods & services or both to the
end consumer.
The conditions for opting Composition scheme under GST are as follows:
a) The person opting for composition levy should be a registered person.
b) Aggregate turnover of registered person should be below 1.5cr in in case of
himachal pradesh the limit is now Rs.75 lakh
c) In case of traders and manufacturers 1% and restaurants not serving alcohol at
5%
d) No input credit available to composition dealer
WHAT IS REVERSE CHARGE?
when the supplier supplies goods, the tax is
levied upon the supplier. In certain cases, the
tax is levied upon the buyer of the goods.
 Composite supply:- refers to a supply that
comprises of 2 or more goods or services
which are bundled and supplied together.
 A mixed supply :-refers when 2 or more
individual supplies of goods or services
are made together with each other by a
taxable person, for a single price
 Continuous supply:-When goods and
services are offered or supplied
periodically (that is every fortnight or every
month, etc.), and payments are also made
periodically.
WHAT IS A COMPLIANCE RATING?
 The GST compliance rating is a performance
rating that is given to all registered
taxpayers. This rating tells you how
complaint the supplier will be with respect to
GST provisions. This gives an option for the
buyer to choose the seller based on the GST
compliance rating
COMPARISION OF PRICES OF PRODUCT
UNDER NON-GST & GST REGIME
00000000000000000
WORKING OF DUAL MODEL AND IGST
MODEL
IMPACT OF GST
 Ease of starting business
 Reduction of tax burden on new business
 Improved logistics and faster delivery of services
 Elimination of distinction between goods and services
 Increased FDI
 Growth in revenue
 Single point taxation
 Simplified tax laws
 Transparency to customers
IMPACT OF GST ON DIFFERENT
SECTORS
AUTOMOBILE
 Impact under GST
Decrease in effective rate of tax from 25-40% to 18- 20%
Excise duty, VAT/ CST, Octroi, Entry tax to be subsumed
into GST
On-road price of vehicles could drop by 8%, Lower
prices can be caused as indirect stimulus to boost
automobile sales.
 Impact on Consumers : Automobiles will become
cheaper
CONSUMER DURABLES
 Fast Moving Consumer Good (FMCG) sector of India comprises
more than 50 percent of the food and beverage industry and
another 30 percent from personal and household care, thereby
spanning the entire rural and urban parts of the country. Reports
suggest the sector contributes a significant USD 6.5 billion in
direct and indirect taxes.
Impact under GST
Decrease in effective rate of tax from 25-27% to 18-20%
Excise duty, VAT/ CST, Octroi, Entry tax to be subsumed into GST
 Impact on Consumers : Price will decrease
MEDIA
 Impact under GST
Service tax (15%) and Entertainment tax (7%) to be subsumed
into GST (18-20%)
Multiplex chains will save on revenues as there will be a more
uniform tax, unlike current high rate of entertainment tax levied by
different states. It may lower the average ticket price.
GST will be a big boon to film producers and studios that currently
pay service tax on most of their cost, but cannot charge input
credit on creative services (payments to artists etc) as they fall
under the negative list.
 Impact on Consumers :Price will marginally decrease
TELECOM
 Impact under GST
Increase in effective rate from 15% to 18-
20%
The hike of the rate of taxes from 14.5 percent of service tax
currently to 18-20 percent ,would be a heavy burden on the
consumers because ultimately on the bills that the
consumers are paying, they would have to pay higher taxes.
Impact on Consumers Mobile Tariffs may increase
Cost of lap tops, Mobile may increase
BANKING
 Impact under GST
Increase in effective rate from 15% to 18-
20%
 Impact on Consumers : Marginal increase in prices
TridentBull Corporate Solutions LLP.
PHARMACEUTICALS
 Impact under GST
Excise duty (4-8%), VAT (5%)/ CST (2%) other state taxes
to be subsumed into GST
Currently, there is uncertainty whether the healthcare sector
as well as life-saving drugs and medical devices will
continue to be exempt from taxes and levies, once the GST
is rolled out.
 Impact on Consumers : Increase in price, if GST applied at
normal rate 18-20%
REAL ESTATE
 Impact under GST
Stamp duty to continue on Land and
constructed immovable property
Today, Real Estate industry has two primary
levies, Service tax and VAT, with overlap of tax
base and constant disputes on the rate of tax,
given the multiple options available for
discharge of taxes across States.
The GST will replace these multiple taxes with a
single tax.
 Impact on Consumers : Increase in price with stamp duty and
GST both being levied
LOGISTICS
 Impact under GST
Increase in effective rate from 15% to 18-
20%
 Impact on Consumers : Marginal increase in price
INSURANCE
 Impact under GST
Increase in effective rate from 14% to 18-20%
Insurance policies: life, health and motor will begin to
cost more from April 2017 as taxes will go up with
respect to the GST. From risk point of view, in today the
tax charge on insurance policy premium is around 14
percent then under GST, the rate could go up to the 18
percent. Therefore, overall insurance policies could
become costlier
 Impact on Consumers : Marginal increase in price
TridentBull Corporate Solutions LLP.
AIRLINES
 Currently, an airline needs to pay 6% service tax on
economy class tickets and 9% on business class, which is
transferred to the customer.
"A normal airline company would pay 15.5%, but airlines
get a 60% relaxation on economy class tickets and 40% on
business class, hence they have to pay 6%-9%. While the
government hasn't yet specified taxes for specific
industries, the normal GST is supposed to be at 18-20.So
Airlines might come under the 18-20 bracket (instead of
6%-9% now), which will lead to higher ticket prices.
 Impact on Consumers : Increase in price,
effectively doubling the tax rate.
E-COMMERCE
 Experts believe that GST may increase administrative costs
for e-commerce companies as GST makes obligation to
collect Tax Collection at source , this may disrupt the
relationship between sellers and e-commerce companies.
 Impact on Consumers : Marginal increase in price
ANALYTICAL STUDY ON IMPACT OF GST ON
TRADING AND BUSINESS DEVELOPMENT
POSITIVE IMPACT
 No dispute good Versus Service:
 Composition levy Increased
 Credit of Excise duty and Service tax
 No Margin to disclose
 No reversal of credit on goods sent to stock transfer
 Credit on CST
 State wise registration
 No assessment by multiple officers
 Electronic mode
NEGATIVE IMPACT
 Stock transfer made taxable
 No form “c”
 Job work taxable
 Increased compliance burden
POSITIVE IMPACT ON BUSINESS DEVELOPMENT
 One tax
 Rate of tax
 No concept of manufacture
 Reduction in cost
 Minimisation of classification issues
 Speedy movement of goods
 Cenvat credit
NEGATIVE IMPACT
 Time of supply
 Increase in working capital
 No credit on petroleum products
 Reverse charge on goods
 Matching returns of returns
 Denial of cenvat credit on purchases made from
unregistered person
 No complaince of form “f”
 Increased compliance burden
NOT COVERED UNDER THE GST
PURVIEW
1. Petroleum products
2. Tax on alcohol/liquor consumption
3. Tax on consumption and sale of electricity
TridentBull Corporate Solutions LLP.
WHAT IS GST REGISTRATION
 In the GST Regime, businesses whose
turnover exceeds Rs. 20 lakhs (Rs 10 lakhs
for NE and hill states) is required to register
as a normal taxable person. This process of
registration is called GST registration.
 For certain businesses, registration under
GST is mandatory. If the organization carries
on business without registering under GST, it
will be an offense under GST and heavy
penalties will apply.
 GST registration usually takes between 2-6
working days
WHO SHOULD REGISTER FOR GST?
 Individuals registered under the Pre-GST law (i.e.,
Excise, VAT, Service Tax etc.)
 Businesses with turnover above the threshold limit of
Rs. 20 Lakhs (Rs. 10 Lakhs for North-Eastern
States).
 Casual taxable person / Non-Resident taxable person
 Agents of a supplier & Input service distributor
 Those paying tax under the reverse charge
mechanism
 Person who supplies via e-commerce aggregator
 Person supplying online information and database
access or retrieval services from a place outside India
to a person in India, other than a registered taxable
person
WHAT IS A GSTIN?
 GSTIN refers to the unique GST
identification number that every business will
be allotted. Every taxpayer will be allotted a
state-wise, PAN-based 15-digit Goods and
Services Taxpayer Identification Number
(GSTIN).
PAYMENT SYSTEM
 Single threshold limit for goods and services. i.e. Rs.
10 Lakhs for normal category and Rs. 5 Lakhs for
Northern Eastern State including Sikkim.
 Three modes of payment of tax under GST regime
are proposed i.e. through internet banking / credit or
debit card, Over the Counter payment (upto Rs.
10,000 per challan) and payments through
NEFT/RTGS.
 The input tax credit as self-assessed in the return of
a taxable person shall be credited to his electronic
credit ledger to be maintained in the manner as may
be
REFUND
 Refund claim is available in case of Export
and deemed export Accumulated credit on
account of input tax rate being higher than
output tax rate
 Claim to be filed within 2 years from the
relevant date.
 Refund order to be issued within 90 days from
the date of receipt of application.
 Proper officer to release 80% of the claim of
refund provisionally and remaining 20% amount
after due verification of documents filed by the
applicant.
WHAT IS GST RETURN?
 A return is a document containing details of
income which a taxpayer is required to file with
the tax administrative authorities. This is used
by tax authorities to calculate tax liability.
 Under GST, a registered dealer has to file GST
returns that include:
 Purchases
 Sales
 Output GST (On sales)
 Input tax credit (GST paid on purchases)
GST INVOICE
THANK YOU

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impact of GST on trade and business development

  • 1. WELCOME TO TECHNICAL SESSION ON “GST IMPLICATIONS ON TRADE AND BUSINESS DEVELOPMENT” Prof.Usha.N
  • 2. WHAT IS GST  GST is a comprehensive value added tax on goods and services  It is collected on value added at each stage of sale or purchase in the supply chain  No differentiation between goods and services as GST is levied at each stage in the supply chain  Seamless input tax credit through out the supply chain  At all stages of production and distribution ,taxes area Pass through and tax is borne by the final consumer  All sectors are taxed exceptions/ exemptions
  • 3. WHY DOES INDIA NEED GST  The current indirect tax structure is full of uncertainties due to multiple rates.  Due to multiple rates there are multiple forms.
  • 4. HISTORY  France is the first country in the world, which has implemented GST in 1954.  Feb, 2006 : First time introduced concept of GST and announced the date of its implementation in2010  Jan. 2007: First GST study released by Dr. Shome  Feb. 2007: F.M. Announced introduction of GST from 1April2010inBudget  The Government came out with a First Discussion PaperonGSTinNovember,2009  On June 14, 2016, the Ministry of Finance released draft Model law on GST in public domain for views and suggestions.  GST Bill Passed in Rajya Sabha on 3rd August 2016 (03-08-2016) On August 03, 2016,  In 2017 – GST Council finalizing the GST Rules and GST Rates.  Now GST is Applicable From 1st July 2017.
  • 5. TAXES PROPOSED TO BE SUBSUMED IN GST  Central Taxes  Excise Duty  Additional Excise duty  Excise duty under medicinal and toilet preparation Act  Service Tax  Additional Custom duty commonly known as countervailing duty(CVD), special additional duty( SAD)  Surcharge  CENVAT
  • 6. TAXES PROPOSED TO BE SUBSUMED IN GST State Taxes  Value added tax(VAT)  Entertainment tax levied by states  Luxury Tax  Tax on Lottery, betting and gambling  Entry tax other than for local bodies (Octroi)
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  • 11. GST COUNCIL GST levy will be administered by  1. Union finance minister(chairmen)  2. Union minister in charge of state revenue or finance  3. Minister in charge of finance or taxation.  4. Any other minister(finance minister of the state) nominated by each state gvt would constitute the council.
  • 12. BENEFITS OF GST  Transparent Tax System  Uniform Tax system Across India  Reduce Tax Evasion  Export will be more competitive  Eliminates cascading effect  levied only at the final destination  Reduction of prices of product  Increase in employment opportunities
  • 13. COMPOSITION LEVY SCHEME  Composition scheme under the law is for small businesses. This is to bring relief to small businesses so that they need not be burdened with the compliance provisions under the law. Thus, an option has been provided where they can opt to pay a fixed percentage of turnover as fees in lieu of tax and be relieved from the detailed compliance of the provisions of law. Composition levy would be generally opted by persons who are supplying goods & services or both to the end consumer. The conditions for opting Composition scheme under GST are as follows: a) The person opting for composition levy should be a registered person. b) Aggregate turnover of registered person should be below 1.5cr in in case of himachal pradesh the limit is now Rs.75 lakh c) In case of traders and manufacturers 1% and restaurants not serving alcohol at 5% d) No input credit available to composition dealer
  • 14. WHAT IS REVERSE CHARGE? when the supplier supplies goods, the tax is levied upon the supplier. In certain cases, the tax is levied upon the buyer of the goods.
  • 15.  Composite supply:- refers to a supply that comprises of 2 or more goods or services which are bundled and supplied together.  A mixed supply :-refers when 2 or more individual supplies of goods or services are made together with each other by a taxable person, for a single price  Continuous supply:-When goods and services are offered or supplied periodically (that is every fortnight or every month, etc.), and payments are also made periodically.
  • 16. WHAT IS A COMPLIANCE RATING?  The GST compliance rating is a performance rating that is given to all registered taxpayers. This rating tells you how complaint the supplier will be with respect to GST provisions. This gives an option for the buyer to choose the seller based on the GST compliance rating
  • 17. COMPARISION OF PRICES OF PRODUCT UNDER NON-GST & GST REGIME
  • 19. WORKING OF DUAL MODEL AND IGST MODEL
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  • 22. IMPACT OF GST  Ease of starting business  Reduction of tax burden on new business  Improved logistics and faster delivery of services  Elimination of distinction between goods and services  Increased FDI  Growth in revenue  Single point taxation  Simplified tax laws  Transparency to customers
  • 23. IMPACT OF GST ON DIFFERENT SECTORS
  • 24. AUTOMOBILE  Impact under GST Decrease in effective rate of tax from 25-40% to 18- 20% Excise duty, VAT/ CST, Octroi, Entry tax to be subsumed into GST On-road price of vehicles could drop by 8%, Lower prices can be caused as indirect stimulus to boost automobile sales.  Impact on Consumers : Automobiles will become cheaper
  • 25. CONSUMER DURABLES  Fast Moving Consumer Good (FMCG) sector of India comprises more than 50 percent of the food and beverage industry and another 30 percent from personal and household care, thereby spanning the entire rural and urban parts of the country. Reports suggest the sector contributes a significant USD 6.5 billion in direct and indirect taxes. Impact under GST Decrease in effective rate of tax from 25-27% to 18-20% Excise duty, VAT/ CST, Octroi, Entry tax to be subsumed into GST  Impact on Consumers : Price will decrease
  • 26. MEDIA  Impact under GST Service tax (15%) and Entertainment tax (7%) to be subsumed into GST (18-20%) Multiplex chains will save on revenues as there will be a more uniform tax, unlike current high rate of entertainment tax levied by different states. It may lower the average ticket price. GST will be a big boon to film producers and studios that currently pay service tax on most of their cost, but cannot charge input credit on creative services (payments to artists etc) as they fall under the negative list.  Impact on Consumers :Price will marginally decrease
  • 27. TELECOM  Impact under GST Increase in effective rate from 15% to 18- 20% The hike of the rate of taxes from 14.5 percent of service tax currently to 18-20 percent ,would be a heavy burden on the consumers because ultimately on the bills that the consumers are paying, they would have to pay higher taxes. Impact on Consumers Mobile Tariffs may increase Cost of lap tops, Mobile may increase
  • 28. BANKING  Impact under GST Increase in effective rate from 15% to 18- 20%  Impact on Consumers : Marginal increase in prices TridentBull Corporate Solutions LLP.
  • 29. PHARMACEUTICALS  Impact under GST Excise duty (4-8%), VAT (5%)/ CST (2%) other state taxes to be subsumed into GST Currently, there is uncertainty whether the healthcare sector as well as life-saving drugs and medical devices will continue to be exempt from taxes and levies, once the GST is rolled out.  Impact on Consumers : Increase in price, if GST applied at normal rate 18-20%
  • 30. REAL ESTATE  Impact under GST Stamp duty to continue on Land and constructed immovable property Today, Real Estate industry has two primary levies, Service tax and VAT, with overlap of tax base and constant disputes on the rate of tax, given the multiple options available for discharge of taxes across States. The GST will replace these multiple taxes with a single tax.  Impact on Consumers : Increase in price with stamp duty and GST both being levied
  • 31. LOGISTICS  Impact under GST Increase in effective rate from 15% to 18- 20%  Impact on Consumers : Marginal increase in price
  • 32. INSURANCE  Impact under GST Increase in effective rate from 14% to 18-20% Insurance policies: life, health and motor will begin to cost more from April 2017 as taxes will go up with respect to the GST. From risk point of view, in today the tax charge on insurance policy premium is around 14 percent then under GST, the rate could go up to the 18 percent. Therefore, overall insurance policies could become costlier  Impact on Consumers : Marginal increase in price TridentBull Corporate Solutions LLP.
  • 33. AIRLINES  Currently, an airline needs to pay 6% service tax on economy class tickets and 9% on business class, which is transferred to the customer. "A normal airline company would pay 15.5%, but airlines get a 60% relaxation on economy class tickets and 40% on business class, hence they have to pay 6%-9%. While the government hasn't yet specified taxes for specific industries, the normal GST is supposed to be at 18-20.So Airlines might come under the 18-20 bracket (instead of 6%-9% now), which will lead to higher ticket prices.  Impact on Consumers : Increase in price, effectively doubling the tax rate.
  • 34. E-COMMERCE  Experts believe that GST may increase administrative costs for e-commerce companies as GST makes obligation to collect Tax Collection at source , this may disrupt the relationship between sellers and e-commerce companies.  Impact on Consumers : Marginal increase in price
  • 35. ANALYTICAL STUDY ON IMPACT OF GST ON TRADING AND BUSINESS DEVELOPMENT POSITIVE IMPACT  No dispute good Versus Service:  Composition levy Increased  Credit of Excise duty and Service tax  No Margin to disclose  No reversal of credit on goods sent to stock transfer  Credit on CST  State wise registration  No assessment by multiple officers  Electronic mode
  • 36. NEGATIVE IMPACT  Stock transfer made taxable  No form “c”  Job work taxable  Increased compliance burden
  • 37. POSITIVE IMPACT ON BUSINESS DEVELOPMENT  One tax  Rate of tax  No concept of manufacture  Reduction in cost  Minimisation of classification issues  Speedy movement of goods  Cenvat credit
  • 38. NEGATIVE IMPACT  Time of supply  Increase in working capital  No credit on petroleum products  Reverse charge on goods  Matching returns of returns  Denial of cenvat credit on purchases made from unregistered person  No complaince of form “f”  Increased compliance burden
  • 39. NOT COVERED UNDER THE GST PURVIEW 1. Petroleum products 2. Tax on alcohol/liquor consumption 3. Tax on consumption and sale of electricity TridentBull Corporate Solutions LLP.
  • 40. WHAT IS GST REGISTRATION  In the GST Regime, businesses whose turnover exceeds Rs. 20 lakhs (Rs 10 lakhs for NE and hill states) is required to register as a normal taxable person. This process of registration is called GST registration.  For certain businesses, registration under GST is mandatory. If the organization carries on business without registering under GST, it will be an offense under GST and heavy penalties will apply.  GST registration usually takes between 2-6 working days
  • 41. WHO SHOULD REGISTER FOR GST?  Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.)  Businesses with turnover above the threshold limit of Rs. 20 Lakhs (Rs. 10 Lakhs for North-Eastern States).  Casual taxable person / Non-Resident taxable person  Agents of a supplier & Input service distributor  Those paying tax under the reverse charge mechanism  Person who supplies via e-commerce aggregator  Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person
  • 42. WHAT IS A GSTIN?  GSTIN refers to the unique GST identification number that every business will be allotted. Every taxpayer will be allotted a state-wise, PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN).
  • 43. PAYMENT SYSTEM  Single threshold limit for goods and services. i.e. Rs. 10 Lakhs for normal category and Rs. 5 Lakhs for Northern Eastern State including Sikkim.  Three modes of payment of tax under GST regime are proposed i.e. through internet banking / credit or debit card, Over the Counter payment (upto Rs. 10,000 per challan) and payments through NEFT/RTGS.  The input tax credit as self-assessed in the return of a taxable person shall be credited to his electronic credit ledger to be maintained in the manner as may be
  • 44. REFUND  Refund claim is available in case of Export and deemed export Accumulated credit on account of input tax rate being higher than output tax rate  Claim to be filed within 2 years from the relevant date.  Refund order to be issued within 90 days from the date of receipt of application.  Proper officer to release 80% of the claim of refund provisionally and remaining 20% amount after due verification of documents filed by the applicant.
  • 45. WHAT IS GST RETURN?  A return is a document containing details of income which a taxpayer is required to file with the tax administrative authorities. This is used by tax authorities to calculate tax liability.  Under GST, a registered dealer has to file GST returns that include:  Purchases  Sales  Output GST (On sales)  Input tax credit (GST paid on purchases)
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