Goods and Services Tax (GST)

1. Presented By
Ms. Supriya Mahajan (Assistant Professor)
Department of Management (MBA),SSCET

2.  Basic Concept
 Direct Tax and Indirect Tax
 What is GST ???
 Why India need GST
 GST Law in India
 Regulatory framework of GST
 Types of GST
 Scope of GST
 List of Taxes included in GST
 Turn over rates in GST
 Why GST is cost effective ?????
 Benefits of GST
 GST SLABS
 GST RATES VS CURRENT RATES
 GST Analysis
 GST in India vs GST in Other countries

3. Basic Concepts

4.  This is the Tax which is to be charged from you directly and the
person on whom it is leveed can’t shift the burden of Tax on
any other person.
 “I Earn I Pay (Higher income, higher the income Tax
(Lesser Income, Lesser Income Tax)
(No Income, No Income Tax)
The basic purpose of Direct Tax is Socio Economic Benefit i.e
to decrease capitalism.

5. Before GST all the below mentioned taxes included in Indirect Tax
 Service Tax
 Sales Tax (VAT)
 Excise Tax
 Central Sales Tax (CST)
 Additional Taxes (Entertainment Tax, Petroleum Tax, Turnover
Tax)
But all these taxes are the part of GST i.e Goods and Services Tax

6. WHAT IS GST ??????

7.  GST is comprehensive tax mechanism where in all major indirect taxes are clubbed into
one, whether they are levied on services(service tax) or goods(excise and vat).
 The goods and service tax implemented in India, from 1 July 2017.
 The aim of introducing GST is to reduce the cascading effects of taxes which is the
primary focus of VAT but vat system is not comprehensive enough to do so.
 This Act does not apply separately on Manufacturing, Sales and Services. These all the
terms merge into one term i.e. supply. Supply of Goods and Services
 So basically GST is on Consumption basis

8. Here in this Example “Burden of Tax Liability shifted from one
person to another Person”
MANUFACTURER DISTRIBUTER WHOLESALER RETAILER CONSUMER

9.  Goods (Material+Labour+Overhead Expenses+Profit= Sale Price/ Value of
Goods)
 Services (Labour+Overhead Expenses + Profit = Sale Price/Value of
Service).
In case of goods value of material is included but services lack the substantial
or Normal value of material.

10. Taxes applicable on goods :
 Sales Tax(VAT)
 Excise Tax
 Central Sales Tax
 Additional Taxes (Entertainment Tax, Petroleum Tax, Turnover Tax)
Taxes applicable on Services
 Service Tax

12.  GST is introduced majorly due to two reasons:
1. The current indirect tax structure is full of uncertainties due to
multiple taxes and multiple rates.
2. Due to multiple rates, there are multiple forms and intern
cumbersome compliances. This will improve Tax compliances.
 Because of above transparency, Taxation would increase and lead to
reduced tax evasion.
 It would also reduce cascading effect(tax on tax) up to much extent.

13.  One Country – One Tax
 Consumption based tax instead of Manufacturing
 Uniform registration, payment and Input Credit
 Subsume all indirect taxes at Centre and State Level under
 Reduce corruption
 Increase productivity
 Increase Tax to GDP Ratio and revenue surplus
 Increase Compliance
 Reducing economic distortions

15.  Let us look back at the how and when of the Goods and Services Tax and its history
in the nation.
 France was the world’s first country to implement GST Law in the year 1954. Since
then, 159 other countries have adopted the GST Law in some form or other.
 In India, the discussion on GST Law was flagged off in the year 2000, when the then
Prime Minister Atal Bihari Vajpayee brought the issue to the table.

16.  In the year 2000 Prime Minister Atal Bihari Vajpayee setup a committee to draft GST
law.
 In the year 2003 Prime Minister Atal Bihari Vajpayee forms a task force under Vijay
Kelkar to recommend tax reforms.
 In the year 2004 task force concludes GST must be implemented to improve current
tax structure.
 In the year 2006 Finance Minister (P. Chidambaram) proposes GST introduction
from April 1, 2010
 In the year 2007 preparation of GST had started. The first step is that CST (Central
sales Tax) to be phased out. Rates reduces from 4% to 3%.

17.  In the year 2008 Empowered Committee finalizes dual GST structure to have
separate levy, legislation.
 In the year 2010 project to computerized commercial taxes launched but GST
implementation postponed.
 In the year 2011 Constitution Amendment Bill to enable GST law introduced.
 In the year 2012 standing committee beings discussion on GST implementation.
 In the year 2013 standing committee tables its report on GST.
 In the year 2014 GST bill Introduced in Parliament by Finance Minister.
 In the year 2015 GST bill passed in Lok Sabha but not passed in Rajya Sabha.
 In the year 2016 GSTN launch.
 In the same year Amended model GST law passed in both houses.

18.  In the year 2017 four supplementary GST bills passed in Lok Sabha and approved by
cabinet.
 In the same year Rajya Sabha also passes four supplementary bills.
 Finally GST to implement on July 1, 2017

19. FLOW CHART OF GST IMPLEMENTATION

21.  A new set up by Government of India named as ‘GST Council’.
 The GST Council consists of
◦ (a)the Union Finance Minister (as Chairman),
◦ (b) the Union Minister of State in charge of Revenue or Finance, and
◦ (c) the Minister in charge of Finance or Taxation or any other Minister, nominated by
each state government.
 All decisions of the GST Council will be made by three fourth majority of
the votes cast; the centre shall have one-third of the votes cast, and the
states together shall have two-third of the votes cast.

23.  CGST (Central Goods
and Services Tax)
 SGST (State Goods
and Services Tax)
 IGST (Integrated
Goods and Services
Tax)
 UTGST (Union
Territory Goods and
services Tax)

24.  If there is INTRA STATE TRADE (Within
the state)
Then Tax = SGST+CGST
For Exp: Tax Rate is 18% then 9% +9%=18%
 If there is INTER STATE TRADE (from
one state to another state)
Then TAX= IGST = (CGST+SGST/UTGST)

25.  Product sold from Nagpur to
Chennai
 Price = Rs 1100
 Profit =1000
 Sale Price =Rs2100
Product sold from Mumbai to Nagpur
Price = Rs 1000
VAT @ 10% = Rs 100
CST @ 10% = Rs 210
Total Cost
Rs -2310

26.  Product sold from Nagpur to
Chennai
 Price = Rs 1100
 Profit =1000
 Sale Price =Rs2100
Product sold from Mumbai to Nagpur
Price = Rs 1000
CGST @ 5% = Rs 50
SGST @ 5% =Rs 50
IGST @ 10% = Rs 210
Total Cost
Rs -2210
Less:
CGST
SGST

28.  All goods and services are covered under GST Regime except Alcoholic
liquor for Human Consumption,
 Tobacco Products subject to levy of GST and Centre may also levy excise
duty
 GST Council yet to decide the incidence and levy of GST on following;
◦ a)Crude Petroleum
◦ b)High Speed Diesel (HSD)
◦ c)Motor Spirit (Petrol)
◦ d)Natural Gas
◦ e)Aviation Turbine Fuel

30. State taxes which will be subsumed in SGST
 VAT/Sales tax
 Entertainment tax (unless it is levied by local bodies)
 Luxury tax
 Taxes on lottery, betting and gambling
 State cess and surcharges to the extent related to supply of goods and
services.
 Entry tax not on in lieu of octroi

31. Central taxes which will be subsumed in CGST:
 Central excise duty
 Additional excise duty
 The excise duty levied under The Medical and Toiletries Preparation Act
 Service tax
 Additional customs duty, commonly known as countervailing duty (CVD)
 Special additional duty of customs (SAD)
 Education cess
 Surcharge

32.  Stamp duty
 Vehicle tax
 Electricity duty
 Other entry taxes and octroi
 Entertainment tax (levied by local bodies)
 Basic customs duty and safeguard duties on import of goods into India

34.  If a person registered under GST having Turnover 1.5 crore then 90% of
these cases are controlled by State Government and 10% by Central
Government.
 But If Turnover is more than 1.5 crore then 50% of these cases controlled
by State Government and 50 % by Central Government.
 Now for Small Businessman having turnover up to 20 lakh are not
considered under GST Act they have no need to register under GST. But if
they want they can do registration and follow all the provisions of GST.
 For Business Man whose turnover is up to 50 lakh for them registration is
compulsory. If they think it is difficult to pay GST then they adopt
Compounding Scheme where Small % of amount of Tax is to be paid.

35. Special Category States
 There are some states known as Special category States where GST is not
applicable if threshold limit is not more than 10 lakh.
 Under this we consider North East States like Arunachal Pradesh,
Assam, Sikkim, Mizoram, Tripura, Nagaland, Meghalaya, Manipur.

36.  29 States
• Andhra Pradesh
• Arunachal Pradesh
• Assam
• Bihar
• Chhattisgarh
• Goa
• Gujarat
• Haryana
• Himachal Pradesh
• Jammu & Kashmir
• Jharkhand
• Karnataka
• Kerala
• Madhya Pradesh
• Maharashtra
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Odisha
• Punjab
• Rajasthan
• Sikkim
• Tamil Nadu
• Telangana
• Tripura
• Uttarakhand
• Uttar Pradesh
• West Bengal
7 Union Territories
• Andaman and Nicobar
Islands
• Chandigarh
• Delhi
• Dadra and Nagar Haveli
• Daman and Diu
• Lakshadweep
• Puducherry

37.  As we know in India there are 29 states and 7 union territories i.e. 36 places
are there.
 Union territories are those places which are controlled by Central
Government Administrator that means no state government is there.
 But out of these 7 Union Territories there are 2 union territories having
state legislature so that are controlled State government that Union
Territories are Delhi and Puducherry.
 So overall 31 places are there which are controlled by State government
and where SGST is applicable is there and rest 5 places are that where
under UTGST is applicable.
 If GST give loss to some state then there is a act called GST
Compensation act Apply.

39.  System is completely Online.
 From Registration to Tax Payment each and everything is online. No need
to go anywhere.
Special Case
 But if Aggregate Turnover is more than 1 crore then he or she has to get
Audit Report from CA.

41.  Boost Economic Growth
 Streamline domestic supply chain
 Reduce compliance burden
 Removes contradictory tax regimes
 Increase global competitiveness
 Ease of doing business
 Attractive for foreign investors
 FDI
 No tax evasion
 Inventory cost will fall
 Make in India
 Common market
 Manufacture goods could become cheap
 GDP lift

43.  The four GST slabs
have been set at 5%,
12%, 18% and 28%
for different items or
services.
 The peak rate of 28%
will apply to luxury
goods. Luxury cars,
tobacco products and
aerated drinks will
attract an additional cess
on top of the highest tax
rate.

44. Slabs Details
0%
•There Will be 0 % Tax On More than 50 Per cent
Consumer Price Basket Including Food Grains.
•Government of India tried to Keep Food grains items
Out of GST Slabs .
•This Will play An important Role In Curbing
Inflation .
•Food grains will be zero-rated to insulate people
from inflationary pressures.
5 %
• In this Category Tax Will be 5 Percent .
•Most of The items In this Category are Mass
Consumed like Mustard Oil ,Spices Etc
12 % There Will be 12 Percent Tax In this Category .
Items -Processed goods

45. 18 %
• There Will 18 Per cent Tax In this Slab .
•Items–
Smartphones,Mobiles,Toothpastes,Computer,Tablets
etc
28 %
•Most white goods, like washing machines, air
conditioners, refrigerators, shampoo, shaving stuff and
soap, will be taxed at 28 percent (with riders).
•The current levy varies between nil tax to 30-31
percent.
•The rider has been set as there are several items
which are used by the lower middle class.

46.  Goods (Under this slab)
No tax will be imposed on items like Jute, fresh
meat, fish chicken, eggs, milk, butter milk, curd,
natural honey, fresh fruits and vegetables, flour,
besan, bread, prasad, salt, bindi. Sindoor, stamps,
judicial papers, printed books, newspapers,
bangles, handloom, Bones and horn cores, bone
grist, bone meal, etc.; hoof meal, horn meal,
Cereal grains hulled, Palmyra jaggery, Salt - all
types, Kajal, Children's' picture, drawing or
colouring books, Human hair
 Services (Under this slab)
Hotels and lodges with tariff below Rs 1,000,
Grandfathering service has been exempted under
GST. Rough precious and semi-precious stones
will attract GST rate of 0.25 per cent.

47.  Goods (under this slab)
Items such as fish fillet, Apparel below Rs 1000,
packaged food items, footwear below Rs 500,
cream, skimmed milk powder, branded paneer,
frozen vegetables, coffee, tea, spices, pizza bread,
rusk, sabudana, kerosene, coal, medicines, stent,
lifeboats, Cashew nut, Cashew nut in shell, Raisin,
Ice and snow, Bio gas, Insulin, Agarbatti, Kites,
Postage or revenue stamps, stamp-post marks, first-
day covers
 Services (under this slab)
Transport services (Railways, air transport), small
restaurants will be under the 5% category because
their main input is petroleum, which is outside
GST ambit.

48.  Goods (Under this Slab)
Apparel above Rs 1000, frozen meat products ,
butter, cheese, ghee, dry fruits in packaged form,
animal fat, sausage, fruit juices, Bhutia, namkeen,
Ayurvedic medicines, tooth powder, agarbatti,
colouring books, picture books, umbrella, sewing
machine, cell phones, Ketchup & Sauces, All
diagnostic kits and reagents, Exercise books and
note books, Spoons, forks, ladles, skimmers, cake
servers, fish knives, tongs, Spectacles, corrective,
Playing cards, chess board, carom board and
other board games like ludo
 Services (Under this slab)
State-run lotteries, Non-AC hotels, business
class air ticket, fertilisers, Work Contracts will
fall under 12 per cent GST tax slab

49.  Goods (Under this slab)
Most items are under this tax slab which include
footwear costing more than Rs 500, Trademarks,
goodwill, software, Bidi Patta, Biscuits (All
catogories), flavoured refined sugar, pasta, cornflakes,
pastries and cakes, preserved vegetables, jams, sauces,
soups, ice cream, instant food mixes, mineral water,
tissues, envelopes, tampons, note books, steel
products, printed circuits, camera, speakers and
monitors, Kajal pencil sticks, Headgear and parts
thereof, Aluminium foil, Weighing Machinery [other
than electric or electronic weighing machinery],
Printers [other than multifunction printers], Electrical
Transformer, CCTV, Optical Fiber, Bamboo furniture,
Swimming pools and padding pools, Curry paste;
mayonnaise and salad dressings; mixed condiments
and mixed seasonings.
 Services (Under this slab)
AC hotels that serve liquor, telecom services, IT
services, branded garments and financial services will
attract 18 per cent tax under GST, Room tariffs
between Rs 2,500 and Rs 7,500, Restaurants inside
five-star hotels

50.  Goods (Under this slab)
Bidis, chewing gum, molasses, chocolate
not containing cocoa, waffles and wafers
coated with choclate, pan masala, aerated
water, paint, deodorants, shaving creams,
after shave, hair shampoo, dye, sunscreen,
wallpaper, ceramic tiles, water heater,
dishwasher, weighing machine, washing
machine, ATM, vending machines, vacuum
cleaner, shavers, hair clippers,
automobiles, motorcycles, aircraft for
personal use, will attract 28 % tax - the
highest under GST system.
 Services (Under this slab)
Private-run lotteries authorised by the states,
hotels with room tariffs above Rs 7,500, 5-
star hotels, race club betting, cinema will
attract tax 28 per cent tax slab under GST

54.  GST is expected to boost competitiveness and performance in India’s
manufacturing sector. Declining exports and high infrastructure spending
are just some of the concerns of this sector. Multiple indirect taxes have
also increased the administrative costs for manufacturers and distributors
and it is being hoped that with GST in place, the compliance burden will
ease and this sector will grow more strongly.

55.  As of March 2014, there were 12, 76,861 service tax assesses in the country
out of which only the top 50 paid more than 50% of the tax collected
nationwide. Most of the tax burden is borne by domains such as IT
services, telecommunication services, Insurance industry, business support
services, Banking and Financial services etc. These pan-India businesses
already work in a unified market, and while they will see compliance
burden becoming lesser there will apparently not be much change in the
way they function even after GST implementation.

57.  Logistics
In a vast country like India, the logistics sector forms the backbone of the
economy. We can fairly assume that a well organized and mature logistics
industry has the potential to Achieve the “Make In India” initiative of the
Government of India to its desired position.
 E-com
The e-com sector in India has been growing by leaps and bounds. In many
ways, GST will help the e-com sector’s continued growth but the long-term
effects will be particularly interesting because the model GST law
specifically proposes a tax collection at source (TCS) mechanism, which e-
com companies are not too happy with. The current rate of TCS is at 1% and
it’ll remain to be seen if it dilutes the rapid boom in this sector in any way in
the future.

58.  Pharma
On the whole, GST is expected to benefit the pharma and healthcare
industries. It will create a level playing field for generic drug makers, boost
medical tourism and simplify the tax structure. If there is any concern
whatsoever, then it relates to the pricing structure (as per latest news). The
pharma sector is hoping for a tax respite as it will make affordable healthcare
easier to access by all.
 Telecommunications
In the telecom sector, prices are expected to come down after GST.
Manufacturers will save on costs through efficient management of inventory
and by consolidating their warehouses. Handset manufacturers will find it
easier to sell their equipment as GST will negate the need to set up state-
specific entities, and transfer stocks. The will also save up on logistics costs.

59.  Textile
The Indian textile industry provides employment to a large number of skilled
and unskilled workers in the country. It contributes about 10% of the total
annual export, and this value is likely to increase under GST. GST would
affect the cotton value chain of the textile industry which is chosen by most
small medium enterprises as it currently attracts zero central excise duty
(under optional route).
 Real Estate
The real estate sector is one of the most pivotal sectors of the Indian
economy, playing an important role in employment generation in India.The
probable impact of GST on the real estate sector cannot be fully assessed as it
largely depends on the tax rates. However, it is a given that the sector will see
substantial benefits from GST implementation, as it will bring to the industry
much required transparency and accountability.

60.  Agriculture
Agricultural sector is the largest contributing sector the overall Indian GDP.
It covers around 16% of Indian GDP. One of the major issues faced by the
agricultural sector, is transportation of agri products across state lines all over
India. It is highly probable that GST will resolve the issue of transportation.
GST may provide India with its first National Market for the agricultural
goods. However, there are a lot of clarifications which need to be provided
for rates for agricultural products.
 FMCG
The FMCG sector could see significant savings in logistics and distribution
costs as the GST will eliminate the need for multiple sales depots. The GST
rate for this sector is expected to be around 17% which is way lesser than the
24-25% tax rate paid currently by FMCG companies. This includes excise
duty, VAT and entry tax – all of which will be subsumed by GST.

61.  Automobiles
The automobile industry in India is a vast business producing a large number of
cars annually, fueled mostly by the huge population of the country. Under the
current tax system, there are several taxes applicable on this sector like excise,
VAT, sales tax, road tax, motor vehicle tax, registration duty which will be
subsumed by GST. Though there is still some ambiguity due to tax rates and
incentives/exemptions provided by different states to the manufacturers/dealers for
manufacturing car/bus/bike, the future of the industry looks rosy.
 BFSI (Banking Financial Services and Insurance)
Among the services provided by Banks and NBFCs (Non Banking Financial
Companies), financial services such as fund based, fee-based and insurance
services will see major shifts from the current scenario. Owing to the nature and
volume of operations provided by banks and NBFC vis a vis lease transactions, hire
purchase, related to actionable claims, fund and non-fund based services etc., GST
compliance will be quite difficult to implement in these sectors.

63.  Goods and service tax is taking India by the storm. GST will bring in “One nation
one tax” to unite indirect taxes under one umbrella and facilitate Indian businesses to
be globally competitive. The Indian GST case is structured for efficient tax
collection, reduction in corruption, easy inter-state movement of goods etc.
 France was the first country to implement GST to reduce tax- evasion. Since then,
more than 159 countries have implemented GST with some countries having Dual-
GST (e.g. Brazil, Canada etc.) model. India has chosen the Canadian model of dual
GST.

64. Particulars India (proposed) Canada UK
Name of GST in the country Goods and Service tax
Federal Goods and Service Tax &
Harmonized Sales Tax
Value Added Tax
Standard Rate
0% (for food staples), 5%, 12%, 18%
and 28%(+cess for luxury items)
GST 5% and HST varies from 0% to
15%
20 %
Reduced rates- 5 %, exempt, zero rated
Threshold exemption
Limit 20 lakhs (10 lakhs for NE states)
Canadian $ 30,000 (Approx Rs. 15.6
lakhs in INR)
£ 73,000
(Approx Rs. 61.32 lakhs)
Returns and
payments Monthly and 1 annual return
Monthly, quarterly or annually based on
turnover
Usually quarterly. Small business
option- annual
Reverse charge
Mechanism
Apply on goods (new) as well as
services (currently under Service tax)
Reverse charge applies to importation of
services and
intangible properties.
Applicable
Exempt services
Manufacture of
exempted goods or Provision of
exempted services (to be notified)
Real estate, Financial Services,
Rent (Residence), Charities, Health,
Education
Medical, Education, Finance, Insurance,
Postal services

65. Particulars India (proposed) Singapore Malaysia
Name of GST in the country Goods and Service tax Goods and Service Tax Goods And Services Tax
Standard Rate
0% (for food staples), 5%, 12%, 18% and
28%(+cess for luxury items)
7% Reduced rates- Zero rated, exempt 6%
Threshold exemption
Limit
20 lakhs (10 lakhs for NE states)
Singapore $ 1 million
(Approx Rs. 4.8 crore)
MYR 500,000
(Approx Rs. 75 lakhs)
Returns and
payments
Monthly and 1 annual return
Usually quarterly Business option-
Monthly
returns.
Large organsations- Monthly
Reverse charge
Mechanism
Apply on goods (new) as well as
services (currently under Service tax)
Reverse charge applies to supply of
services
Reverse charge applies to imported
services
Exempt services
Manufacture of
exempted goods or Provision of
exempted services (to be notified)
Real estate, Financial services,
Residential rental
Basic food,Health Transportation,
Residential property, Agricultural land