GST is regarded as the major reform in the field of Indian Indirect Taxation. This presentation will help in understanding the likely framework of GST, its impact and some challenges in its implementation.

1. Goods and Service Tax (GST)
DEVALYAADVISORY LLP.
CA Raman Singla
(Partner – Indirect Tax Professionals)

2. What is GST
Goods and Service Tax (GST) is a tax on goods and services, which is levied at each point of sale or
provision of services. The goods and services tax shall replace a number of indirect taxes being levied by
the Union and the State Governments and is intended to remove cascading effect of taxes and provide for
a common national market for goods and services.
The proposed Central and State goods and services tax will be levied on all transactions involving supply
of goods and services, except those which are kept out of the purview of the goods and services tax.
The GST is beneficial for the consumers as it reduces the final burden of taxation. For Government it leads
to reduction of tax compliance efforts and administrative costs and it leads to transparency, complete set-
off and removal of cascading effect of taxation from trade & industry point of view.
DEVALYA ADVISORY LLP.

3. Models of GST
Central GST State GST Dual GST
• Two levels of governments would
combine their levies in the form of a
single National GST.
• States alone levy GST, and the centre
withdraws completely from GST and
VAT.
 GST levied by both tiers of Government
concurrently. Central GST administered
by Central Government & State GST
administered by State Government.
• Central Government will collect most of
country’s total tax revenue, leaving very
little for sub – national Governments.
• Significantly enhance the revenue
capacity of States and reduce their
dependence on the Centre.
• Central GST to subsume central taxes,
such as, excise duty, CVD, SAD and
service tax
• State GST to subsume VAT, Octroi, entry
tax, luxury tax, etc.
Considering the federal structure of the Indian Constitution, where the powers to levy is distributed
amongst the states and centre, the Indian model of GST would be based on Dual Structure, wherein both
Central as well as States would levy this tax.
DEVALYA ADVISORY LLP.

4. The GST will be on dual structure, where, the Central GST shall be levied and collected by the Centre and
the State GST shall be levied and collected by the States.
Centre will also levy and collect the Integrated GST on Inter State transactions. It will be distributed
amongst States.
Rate of GST would be on the basis of Revenue Neutral Rates (RNR). RNR is defined as the rate at which tax
revenue will remain same for both Centre and the States, despite allowing input tax credit and other
factors.
 It shall mean the rate that allows the Centre and the States to sustain the current revenues from tax collections; and
therefore, taking into various aspects, such as, any tax losses because of taxes subsumed and/or phased out, grant of
input tax credits as well as sharing of the tax base.
 In this regime, the revenue of the Government would not be same in comparison with the present tax structure due
to tax credit mechanism, removal of cascading effect or otherwise. Therefore, an adjustment in tax rate is required to
avoid reduction in revenue of Government. Hence, the tax rate has to suitably adjusted to make sure the tax revenue
does not reduce.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Rates of GST

5. Likely RNR in INDIA
The GST rates have not yet been finalized; but most likely, it might be in between 16% to 24%. Task of
finalizing the tax rates will be given to GST Council.
“Entry tax will be subsumed in the GST. However, since some states fear losing revenues, the government
has proposed 1% extra levy for states for a period of two years. Additional tax at 1 percent is to be applied
on the inter-state supply of goods and services for a period of two years or such other period as the Goods
and Services Tax Council may recommend which would directly accrue to the originating State and
therefore would not be shared.
Petroleum to be included in GST but taxed at zero rate till the time GST council decides. Thus, petroleum
will be taxed in the present form for some years.
Alcohol products are outside GST.”
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Rates of GST

6. 1. “New article 279A will create a GST council, a joint forum of state and centre. The GST Council, and not
the Centre, would be decision making authority for GST.” The President shall, within 60 days from the
date of commencement of the Constitution (122 Amendment) Act, 2014, by order, constitute a Council
to be called the Goods and Services Tax Council.
2. The GST council shall consist of the following members, namely:-
a) The Union Finance Minister ……………… Chairperson;
b) The Union Minister of State in charge of Revenue or Finance…. Member;
c) The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government
…………….. Members
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
What is GST Council

7. 3. The GST Council shall make recommendations to the Union and the States on
a) The taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be
subsumed in the goods and services tax;
b) The goods and services that may be subjected to, or exempted from the goods and services tax;
c) The threshold limit of turnover below which goods and services may be exempted from goods and
services tax;
d) The rates including floor rates with bands of goods and services tax;
e) Any special rate or rates for a specified period, to raise additional resources during any natural calamity or
disaster;
f) Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
g) Any other matter relating to the GST, as the Council may decide.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
What is GST Council

8. 4. One half of the total number of Members of the GST Council shall constitute the quorum at its
meetings.
5. Every decision of the GST Council shall be taken at a meeting by a majority of not less than 3/4th of the
weighted votes of the members present and voting, in accordance with the following principles,
namely:-
a) The vote of the CG shall have a weightage of 1/3rd of the total votes cast,
b) The votes of all SG taken together shall have a weightage of 2/3rd of the total votes cast,
in that meeting.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
What is GST Council

9. Schedule VII of the Constitution of India will be amended vide 122nd Constitutional Amendment Bill with a
view to bring various Union and State taxes and duties in the GST Scope.
GST will subsume following Central Taxes/ Duties on supply of goods and services :-
 Central Excise Duty (other than on tobacco and its products and specified petroleum goods)
 Additional Excise duty
 Excise duty under Medicinal & toilet Preparation,
 Special Additional Duty of Customs (SAD)
 Service Tax
 Taxes on Sale or purchase of newspapers and on advertisements published therein,
 Central Sales tax (levied and collected by states). (it may be partially phased out since few commodities
are outside the GST)
 Surcharges & cesses relatable to supply of goods & services.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Central Taxes/ Duties to be Subsumed in GST

10. GST will subsume following State Taxes/ Duties:-
 State Value Added Tax/ Sales tax (other than alcoholic liquor for human consumption and specified
petroleum goods)
 Purchase tax
 Entertainment tax
 Luxury tax
 Entry tax and octroi
 Taxes on lottery, betting and gambling
 Taxes on advertisements other than those published in newspapers and broadcasted on televisions and
radios
 Surcharges & cesses relatable to supply of goods & services.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
State Taxes/ Duties to be Subsumed in GST

11. GST will not subsume following Central Taxes/ Duties:-
Basic custom duty
Excise duty on tobacco and its products and specified petroleum goods
Specific cesses (other than relatable to supply of goods & services).
GST will not subsume following State Taxes/ Duties:-
State excise duty on alcoholic liquor for human consumption
Taxes on entertainment and amusements to the extent levied and collected by a Panchayat or a Municipality or a
Regional Council or a District Council
Specific cesses (other than relatable to supply of goods & services)
Stamp duty on transfer of immovable property
Tax on consumption or sale of electricity.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Taxes/ Duties not to be Subsumed in GST

12. With the introduction of 122nd Constitutional Amendment Bill, 2014, the broad framework of GST is now
clear. The GST will be a dual tax with both the Central GST and State GST levied on the same base. Thus, all
goods and services barring a few exceptions will be brought into the GST net. There will be no distinction
between goods and services for the purpose of the tax with a common legislation applicable to both.
 Change in law, concept and procedure
 Sale vs. Service
 Stock transfers from one state to another
 Stock transfers to branches/ consignment
agents within the state
 Change in tax rates
 Changed system of tax credit
 Upgradation of software
 Training
 Competent professionals
 All existing contractors may undergo change
 GST will be based on HSN
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Impact of GST

13.  Understanding the concept
 Evaluate the impact on own industry, its input suppliers of goods and services and output procedures
 Input VAT credit on stock on the date of transition
 Unutilized Cenvat Credit on the date of transition
 Contracts already entered and partly executed on the date of transition
 Existing tax holidays and tax incentive schemes
 Registration – consolidation or new registration in the respective state
 Pending assessments and refunds
 Adequate training to staff
 Updating the accounting software.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Transitional issues for the industries

14. DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Developments in GST
2004
Dr. Kelkar Task Force
recommended the
need of a National
GST.
2007
Consultation with
stakeholders on GST
Model
Jan, 2007
First GST study
released by Dr.
Shrome
Nov, 2007
13th Finance
Commission
constituted
May, 2007
Joint Working Groups
appointed by E.C.
April,2008
Empowered committee
(EC) finalised its views on
GST Structure
July,2009
The Union Finance Minister
announced Dual GST to be
introduced from 1st April 2010
in his Budget Speech.
Oct, 2009
13th Finance
Comission to submit
its Report
Nov, 2009
Release of First
Discussion Paper
Dec, 2014
122nd Constitutuon
Amendment Bill introduced in
the Lok Sabha
.
April 1, 2016
Target date for
implementation
March,2011
115th Constitution Amendment
Bill introduced in Lok Sabha,
which got lapsed.
Consultation on Model of Inter - State transactions, RNR and
other issues - In progress

15. Design Issues
 Constitutional amendments
 Enactments of legislations
 GST rates - to be decided by GST Council
 Determining exempted and zero rated activities, Non vatable goods & services
 Seamless input tax credit removing all cascading effect.
 To determine the basic exemption limit
 Framework for exemption and composition
 Registration, payment of tax, and filing of returns
 future of various existing exemptions under Cenvat and State VAT
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Challenges before the Government in implementation of GST

16. Operational Issues
 Monitoring of inter- state trade
 Sharing of information using comprehensive IT network
 Improving relations between centre and state
 Common approach of the states, i.e., common law, common assessment procedure and even a common
return.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Challenges before the Government in implementation of GST

17. Infrastructure Issues
 Human Resource of the department
 IT Infrastructure
 Impact on Small Enterprises
 Cross - verification of documents must be strengthened
 Decision on elimination of Check Posts
 Common dispute resolution mechanism
 Common procedure for levy, assessment, collection and appropriation
 Training
 Persuasion to the State Government
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Challenges before the Government in implementation of GST

18. As next step, this Bill needs to be debated and voted on by the Lower House of
Parliament. Thereafter, it would need to be voted on by the Upper House of
Parliament, before being ratified by at least half of the States.
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.
Next Step

19. THANKYOU!
Get in touch with us to know more…
Devalya Advisory LLP.
30A - 1X, ILD Trade Tower, Sector 47, Sohna Road,
Gurgaon, Haryana
Devalya Advisory LLP.
728-C, Sector 14, Gurgaon, Haryana.
Mail us at:-info@indirecttaxprofessionals.com
Mob:- +91 9711587858 | +91 9899834353
Website: www.indirecttaxprofessionals.com
Develop CLARITY
Discover CONFIDENCE &
Experience SUCCESS
CONSULTING| COMPLIANCE | CORPORATE TRAININGS
DEVALYA ADVISORY LLP. DEVALYA ADVISORY LLP.