• A tax (from the Latin taxo) is a mandatory
financial charge or some other type of levy
imposed upon a taxpayer) by a governmental
organization in order to fund various public
• A failure to pay, or evasion of or resistance to
taxation, is punishable by law.
• The first known system of taxation was in Ancient
Egypt around 3000–2800 BC in the First Dynasty
of Egypt of the Old Kingdom of Egypt
8. Types of Tax
1. Direct Tax:
• Directly paid to the government by the taxpayer. I
• t is a tax applied on individuals and organizations
directly by the government
• e.g. income tax, corporation tax, wealth tax etc.
2. Indirect tax:
• Indirect Taxes are applied on the manufacture or sale
of goods and services.
• These are initially paid to the government by an
intermediary, who then adds the amount of the tax
paid to the value of the goods / services and passes
on the total amount to the end user.
• Goods & Services Tax Law in India is a
comprehensive, multi-stage, destination-
based tax that is levied on every value
• In simple words, Goods and Service Tax is an
indirect tax levied on the supply of goods and
12. GST(MULTIPLE STAGE TAXATION)
• There are multiple change-of-hands an item goes through
along its supply chain: from manufacture to final sale to the
consumer.Let us consider the following case:
• Purchase of raw materials
• Production or manufacture
• Warehousing of finished goods
• Sale to wholesaler
• Sale of the product to the retailer
• Sale to the end consumer
• Under the GST regime, the tax will be levied at every point
14. GST(VALUE ADDITION)
• The manufacturer who makes biscuits buys flour, sugar
and other material. The value of the inputs increases
when the sugar and flour are mixed and baked into
• The manufacturer then sells the biscuits to the
warehousing agent who packs large quantities of
biscuits and labels it. That is another addition of value
after which the warehouse sells it to the retailer.
• The retailer packages the biscuits in smaller quantities
and invests in the marketing of the biscuits thus
increasing its value.
15. GST(VALUE ADDITION)
GST will be levied on these value additions i.e. the monetary worth added at
each stage to achieve the final sale to the end customer.
16. GST(DESTINATION BASED)
• Consider goods manufactured in Maharashtra
and are sold to the final consumer in
• Since Goods & Service Tax (GST) is levied at
the point of consumption, in this case,
Karnataka , the entire tax revenue will go to
Karnataka and not Maharashtra.
18. BRIEF HISTORY
• A single common "Goods and
Services Tax (GST)" was proposed
and given a go-ahead in 1999 during
a meeting between the then Prime
Minister Atal Bihari Vajpayee and his
economic advisory panel, which
included three former RBI governors
IG Patel, Bimal Jalan and C
• Vajpayee set up a committee headed
by the then finance minister of West
Bengal, Asim Dasgupta to design a
19. BRIEF HISTORY
• In 2002, the Vajpayee government formed a task
force under Vijay Kelkar to recommend tax
• After the fall of the BJP, the new Finance Minister
P Chidambaram in February 2006 continued work
on the same and proposed a GST rollout by 1
• However in 2010, with the Trinamool Congress
routing CPI(M) out of power in West Bengal, Asim
Dasgupta resigned as the head of the GST
20. BRIEF HISTORY
• In 2014, the NDA government was re-elected into
power, under the leadership of Narendra Modi.
• Seven months after the formation of the Modi
government, the new Finance Minister Arun Jaitley
introduced the GST Bill in the Lok Sabha, where the BJP
had a majority.
• In May 2016, the Lok Sabha passed the Constitution
Amendment Bill, paving way for GST. Finally in August
2016, the Amendment Bill was passed.
• Over the next 15 to 20 days, 18 states ratified the GST
Bill and the President Pranab Mukherjee gave his
assent to it
21. BRIEF HISTORY
• A 22-members select committee was formed to
look into the proposed GST laws.
• State and Union Territory GST laws were passed
by all the states and Union Territories of India
except Jammu & Kashmir, paving the way for
smooth rollout of the tax from 1 July 2017.
• The Jammu and Kashmir state legislature passed
its GST act on 7 July 2017, thereby ensuring that
the entire nation is brought under an unified
indirect taxation system
24. GST COUNCIL
• The GST is governed by a GST
Council and its Chairman is the
Finance Minister of India.
• As a member, the Union Minister
of State will be in charge of
Revenue of Finance
• The Minister in charge of finance
or taxation or any other Minister
nominated by each State
government, as members.
25. GST COUNCIL - FUNCTIONS
• The GST Council dictates
the due date of forms,
tax laws, and
tax deadlines, keeping in mind special rates and
provisions for some states.
• The predominant responsibility of the GST
Council is to ensure to have one uniform tax rate
for goods and services across the nation
28. COMPONENTS OF GST
1. CENTRAL GST(CGST): Collected by the Central
Government on an intra-state sale (Eg:
2. STATE OR UNION TERRITORY GST(SGST Or
UGST): Collected by the State Government on
an intra-state sale (Eg: Within Mahaashtra)
3. INTEGRATED GST(IGST): Collected by the
Central Government for inter-state sale (Eg:
Maharashtra to Tamil Nadu)
• Let us assume that a dealer in Gujrat had sold the
goods to a dealer in Punjab worth Rs. 50,000. The GST
rate is 18% comprising of only IGST. In such case, the
dealer has to charge Rs. 9,000 as IGST. This IGST
revenue will go to the Central Government.
• The same dealer sells goods to a consumer in Gujrat
worth Rs. 50,000. The GST rate on the good is 12%.
This rate comprises of CGST at 6% and SGST at 6%.The
dealer has to collect Rs. 6,000 as Goods and Service
Tax. Rs. 3,000 will go to the Central Government and
Rs. 3,000 will go to the Gujrat government as the sale is
within the state
36. GST IN OTHER COUNTRIES
• France was the first country to introduce GST in
• Almost 150 countries have introduced GST in one
or the other form since now.
• Most of the countries have a unified GST system.
• Brazil and Canada follow a dual system vis-à-vis
India is going to introduce.
• In China, GST applies only to goods and the
provision of repairs, replacement and processing
39. ADVANTAGES OF GST
1. GST eliminates the cascading effect of tax
2. Higher threshold for registration
3. Composition scheme for small businesses
4. Simple and easy online procedure
5. The number of compliances is lesser
6. Defined treatment for E-commerce operators
7. Improved efficiency of logistics
8. Unorganized sector is regulated under GST
40. 1. ELIMINATION OF CASCADING
• Cascading tax effect can be best described as ‘Tax
• Before GST regime:
– A consultant offering services for say, Rs 50,000 and
charged a service tax of 15% (Rs 50,000 * 15% = Rs
– Then say, he would buy office supplies for Rs. 20,000
paying 5% as VAT (Rs 20,000 *5% = Rs 1,000).
– He had to pay Rs 7,500 output service tax without
getting any deduction of Rs 1,000 VAT already paid on
– His total outflow is Rs 8,500.
42. 2. HIGHER THRESHOLD FOR
• Earlier, in the VAT structure, any business with a
turnover of more than Rs 5 lakh was liable to pay
VAT. (This limit differed state-wise).
• Also, service tax was exempted for service
providers with a turnover of less than Rs 10 lakh.
• Under GST regime, however, this threshold has
been increased to Rs 20 lakh, which exempts
many small traders and service providers.
44. 3. COMPOSITION SCHEME FOR SMALL
• Composition Scheme is a simple and easy
scheme under GST for taxpayers.
• Small taxpayers can get rid of tedious GST
formalities and pay GST at a fixed rate of
• This scheme can be opted by any taxpayer
whose turnover is less than Rs. 1.5 crore
45. 4. SIMPLE AND EASY ONLINE
• The entire process of GST (from registration to
filing returns) is made online, and it is super
• This has been beneficial for start-ups
especially, as they do not have to run from
pillar to post to get different registrations such
as VAT, excise, and service tax
46. 5. THE NUMBER OF COMPLIANCES IS
• Earlier, there
was VAT and
47. 5. THE NUMBER OF COMPLIANCES IS
• Under GST, however, there is just one, unified
return to be filed.
• Therefore, the number of returns to be filed
has come down.
• There are about 11 returns under GST, out of
which 4 are basic returns which apply to all
taxable persons under GST.
49. 6. DEFINED TREATMENT FOR E-
• Earlier, supplying goods through e-commerce sector
was not defined. It had variable VAT laws.
• Online websites (like Flipkart and Amazon) delivering
to Uttar Pradesh had to file a VAT declaration and
mention the registration number of the delivery truck.
Tax authorities could sometimes seize goods if the
documents were not produced.
• Again, these e-commerce brands were treated as
facilitators or mediators by states like Kerala,
Rajasthan, and West Bengal which did not require
them to register for VAT.
50. 6. DEFINED TREATMENT FOR E-
• All these differential treatments and confusing
compliances have been removed under GST.
• For the first time, GST has clearly mapped out
the provisions applicable to the e-commerce
sector and since these are applicable all over
India, there should be no complication
regarding the inter-state movement of goods
51. 7. IMPROVED EFFICIENCY OF
• the logistics industry in India had to maintain
multiple warehouses across states to avoid the
current CST and state entry taxes on inter-state
• Under GST, these restrictions on inter-state
movement of goods have been lessened.
• Warehouse operators and e-commerce
aggregators players have shown interest in
setting up their warehouses at strategic locations
such as Nagpur (which is the zero-mile city of
India), instead in every other city.
52. 8. UNORGANIZED SECTOR IS
REGULATED UNDER GST
• In the pre-GST era, it was often seen that certain
industries in India like construction and textile
were largely unregulated and unorganized.
• Under GST, however, there are provisions for
online compliances and payments, and for
availing of input credit only when the supplier has
accepted the amount.
• This has brought in accountability and regulation
to these industries.
54. DISADVANTAGES OF GST
1. Increased costs due to software purchase
2. Being GST-compliant
3. GST will mean an increase in operational
4. GST came into effect in the middle of the
5. GST is an online taxation system
6. SMEs will have a higher tax burden
55. 1. INCREASED COSTS DUE TO
• Businesses have to either update their existing
accounting or ERP software to GST-compliant
one or buy a GST software so that they can
keep their business going.
• But both the options lead to increased cost of
software purchase and training of employees
for an efficient utilization of the new billing
56. 2. BEING GST-COMPLIANT
• Small and medium-sized enterprises (SME) who
have not yet signed for GST have to quickly grasp
the nuances of the GST tax regime.
• They will have to issue GST-complaint invoices, be
compliant to digital record-keeping, and of
course, file timely returns.
• This means that the GST-complaint invoice issued
must have mandatory details such as GSTIN,
place of supply, HSN codes, and others.
57. 3. GST WILL MEAN AN INCREASE IN
• As we have already established that GST is
changing the way how tax is paid, businesses will
now have to employ tax professionals to be GST-
• This will gradually increase costs for small
businesses as they will have to bear the
additional cost of hiring experts.
• Also, businesses will need to train their
employees in GST compliance, further increasing
their overhead expenses
58. 4. GST CAME INTO EFFECT IN THE
MIDDLE OF THE FINANCIAL YEAR
• As GST was implemented on the 1st of July
2017, businesses followed the old tax
structure for the first 3 months (April, May,
and June), and GST for the rest of the financial
• Businesses may find it hard to get adjusted to
the new tax regime, and some of them are
running these tax systems parallelly, resulting
in confusion and compliance issues.
59. 5. ONLINE TAXATION SYSTEM
• Unlike earlier, businesses are now switching
from pen and paper invoicing and filing to
online return filing and making payments. This
might be tough for some smaller businesses to
60. 6. SME’s WILL HAVE A HIGHER TAX
• Smaller businesses, especially in the manufacturing sector will
face difficulties under GST. Earlier, only businesses whose
turnover exceeded Rs 1.5 crore had to pay excise duty.
• But now any business whose turnover exceeds Rs 20 lakh will
have to pay GST.
• SMEs with a turnover upto Rs 75 lakh can opt for the
composition scheme and pay only 1% tax on turnover in lieu
of GST and enjoy lesser compliances.
• These businesses will then not be able to claim any input tax
• The decision to choose between higher taxes or the
composition scheme (and thereby no ITC) will be a tough one.
61. Change is definitely never easy. The government
is trying to smoothen the road to GST. It is
important to take a leaf from global economies
that have implemented GST before us, and who
overcame the teething troubles to experience
the advantages of having a unified tax system
and easy input credits