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GST - An Overview

  1. VIVEKANANDA COLLEGE College with Potential for Excellence Reaccredited With ‘A’ Grade (CGPA 3.59 out of 4) by NAAC Residential &Autonomous - A Gurukula Institute of Life Training Affiliated to Madurai Kamaraj University Tiruvedakam West, Madurai-625 214 Tamil Nadu PG & Research Department of Commerce
  2. Dr.K.Chellapandian M.Com., MBA., M.Sc (Psy)., M.Phil., B.Ed., PGDCA., DGT., Ph.D., NET Assistant Professor of Commerce PG & Research Department of Commerce Vivekananda College Tiruvedakam West Madurai- 625 234 Tamil Nadu. Mobile No : 99767 13199 E-mail id: Madurai
  3. Goods and Services Tax (GST) An Overview
  4. Goods and Services Tax (GST) An Overview
  5. Goods and Services Tax (GST) An Overview
  6. WHAT IS TAX?  Tax is the financial charge imposed by the Government on Income, Commodity or Activity.  Tax is a price which each citizen pays to the state to cover his share of the cost of the general public services which he will consume.
  7. Tax Direct Tax Indirect Tax TYPES OF TAXES? Tax can be classified in to two types…..
  8. CLASSIFICATION OF TAXES Government Imposes two types of taxes namely Direct Taxes and Indirect Taxes. A direct tax is a form of tax is collected directly by the government from the persons who bear the tax burden. Examples of direct tax is IT (Income Tax)
  9. CLASSIFICATION OF TAX…. Government Imposes two types of taxes namely Direct Taxes and Indirect Taxes.. An indirect tax is a form of tax collected by mediators who transfer the taxes to the government, and also perform functions associated with filing tax returns. The customers bear the final tax burden. Examples of indirect taxes are GST (Goods and Services Tax) & Custom Duty.
  10. Share of Direct and Indirect Tax Revenue Direct Tax (Major Contribution by Rich) Indirect Tax (Major Contribution by Poor & Working Class) Direct Tax Indirect Tax 32% 68 %
  11. Why Are Taxes Levied ? ➢ Taxes constitute the basic source of revenue to the Government which are utilized for meeting the expenses of Government like defence, provision of education, health-care, infrastructure facilities like roads, dams etc.
  12. 1. Safeguard the security of the country from foreign powers. 2. Maintain law and order in the country. 3. Bring out welfare and development programmes Bright the gap between the rich and the poor Responsibilities of the Government The Government have a lot of responsibilities and needs money ………
  13. WHAT IS LAW?  Simply speaking, law is bundle of rules and principles to be followed by the members of the society.  Theses rules and principles, which regulate and control conduct of the people toward each other and towards the society are made by the state.
  14. GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017. What is GST in India?
  15.  In other words, Goods and Service Tax (GST) is levied on the supply of goods and services.  Goods and Services Tax Law in India is a comprehensive, multi- stage, destination-based consumption tax that is levied on every value addition.  GST is a single domestic indirect tax law for the entire country. What is GST in India?.....
  16. With the implementation of GST, we have already witnessed a number of positive changes in the fiscal domain of India. The various taxes that were mandatory earlier are now obsolete, thanks to this new reformed indirect tax. Not just that, GST is making sure the slogan “One Nation, One Tax, One Market” becomes the reality of our country and not just a dream. Goods and Services Tax - Meaning
  17.  In the year 2000, the then Prime Minister Atal Bihari Vajpayee mooted the concept of GST and set up a committee to design a Goods and Services Tax (GST) model for the country. In 2003, the Central Government formed a task force under Vijay Kelkar, which in 2004 strongly recommended fully integrated ‘GST’ on national basis. BIRTH OF GST IN INDIA
  18. Subsequently, the then Union Finance Minister, Shri P. Chidambaram, while presenting the Union Budget (2006-2007), announced that GST would be introduced from April 1, 2010. Since then, GST missed several deadlines and continued to be shrouded by the clouds of uncertainty. BIRTH OF GST IN INDIA
  19. However, gained momentum in the year 2014 when the NDA Government tabled the Constitution (122nd Amendment) Bill, 2014 on GST in the Parliament on 19th December, 2014. The Lok Sabha passed the Bill on 6th May, 2015 and Rajya Sabha on 3rd August, 2016. Subsequent to ratification of the Bill by more than 50% of the States, Constitution (122nd Amendment) Bill, 2014 received the assent of the President on 8th September, 2016 and became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of GST in India. BIRTH OF GST IN INDIA
  20. In the following year, on 27th March, 2017, the Central GST legislations - Central Goods and Services Tax Bill, 2017, Integrated Goods and Services Tax Bill, 2017, Union Territory Goods and Services Tax Bill, 2017 and Goods and Services Tax (Compensation to States) Bill, 2017 were introduced in Lok Sabha. Lok Sabha passed these bills on 29th March, 2017 and with the receipt of the President’s assent on 12th April, 2017, the Bills were enacted. BIRTH OF GST IN INDIA
  21. The enactment of the Central Acts was followed by the enactment of the State GST laws by various State Legislatures. Telangana, Rajasthan, Chhattisgarh, Punjab, Goa and Bihar were among the first ones to pass their respective State GST laws. By 30th June, 2017, all States and Union Territories had passed their respective SGST and UTGST Acts except Jammu and Kashmir. With effect from 1st July, 2017, the historic indirect tax reform - GST was introduced. GST law was extended to Jammu and Kashmir on 8th July, 2017. BIRTH OF GST IN INDIA
  22.  Presently, more than 160 countries have implemented VAT/GST in some form or the other because this tax has the capacity to raise revenue in the most transparent and neutral manner.  Most of the countries follow unified GST i.e., a single tax applicable throughout the country. However, in federal polities like Brazil and Canada, a dual GST system is prevalent.  Under dual system, GST is levied by both the federal/Union government and the State Governments. India, too, has adopted a dual GST.
  23. NEED FOR GST IN INDIA Deficiencies in the existing value added taxation has led to GST A cure for ills of existing indirect tax regime
  24. Deficiencies in VAT Double taxation of a transaction as both goods and services Non-integration of VAT & service tax No CENVAT after manufacturing stage Cascading of taxes on account of (i) levy of Non-VAT able CST and (ii) inclusion of CENVAT in the value for imposing VAT Non-inclusion of several local levies in State VAT such as luxury tax, entertainment tax, etc.
  25. 1. GST is a Destination based Consumption Tax: GST is a consumption base tax i.e. tax will be payable in the state in which goods and services are finally consumed. The Destination Principle means that when a transaction takes place between two states, one state is the Origin State (from where the movement of goods as services commences) and the other state is the Destination State (the state where goods/services are consumed). GST is a destination or consumption based tax, where the destination state shall earn the tax revenue of GST. This implies that all SGST collected will accrue to the state where the consumer of the goods or services, sold resides. As the GST is a destination - based tax, the tax burden will shift from the state of origin to the state of consumption, and result in less revenue for manufacturing and developed states.
  26. As an example, if a car is manufactured in Gujarat however is bought in the end by means of a customer in Maharashtra, SGST (or the state aspect in IGST) might accrue to Maharashtra and not to Gujarat .
  27. 2. Concurrent Dual GST: India has adopted a Dual GST model in view of the federal structure of the country. Consequently, Centre and States simultaneously levy GST on taxable supply of goods or services or both which, takes place within a State or Union Territory. Now, the Centre also has the power to tax intra-State (within state) sales & States are also empowered to tax services. GST extends to whole of India including the State of Jammu and Kashmir. Under this model, both central and state Governments will levy GST concurrently. There will be Central GST to be administered by the Central Government and there will be State GST to be administered by State Governments.
  28. 3. Types of GST: Under the concurrent dual GST model for India, there are four different types of GST as listed below: 1. The Central Goods and Services Tax (CGST) 2. The State Goods and Services Tax (SGST) 3. The Union Territory Goods and Services Tax (UTGST) 4. The Integrated Goods and Services Tax (IGST)
  29. GST 1. (CGST) Central Goods and Services Tax 2. (SGST) State Goods and Services Tax 3. (UTGST) Union Territory Goods and Services Tax 4. (IGST) Integrated Goods and Services Tax
  30. 4. Legislative framework of GST: The legislative framework of GST has been tabulated as under: Type of Supply Type of Act Type of Tax Intra-State Supply (With in the State or UT) Central Goods and Service Tax Act, 2017 Levying CGST State Goods and Service Tax Act, 2017 Levying SGST Union Territory Goods and Service Tax Act, 2017 Levying UTGST Inter - State Supply (Between Two States or UT) Integrated Goods and Service Tax Act, 2017 Levying IGST
  31. Intra-State Supply It refers to any supply where the location of the supplier and the place of supply are in the same State or Union Territory. In case of such a supply of goods and services, a seller has to collect both CGST and SGST. Thereafter, the CGST part gets deposited with the Central Government. And the SGST portion gets deposited with the respective State Government.
  32. Inter-State Supply It refers to any supply where the location of the supplier and the place of supply are in:  Two different States  Two different Union Territories  A-State and a Union Territory Additionally, any supply in a taxable territory, that is not an Intra-State supply is deemed to be an Inter-State supply. The following supplies are also treated as Inter-State supplies: Supplies to or by Special Economic Zones (SEZs) Goods or Services Imported to India Services or Goods Exported outside India Supply of Goods or Services to international tourists Thus, on the Inter-State supply of goods or services, only IGST is levied and collected by the Central Government
  33. Four tier structure: GST rate structure is basically a four-tier tax structure which contains four separate rates: a zero rate, a lower rate i.e. 5%/ a standard rate i.e. 12%/ and a higher rate i.e. 28%. 5. GST Rate Structure:
  34. GST Rates in India There are four slabs categorized based on goods and services, as proposed by the Government:  5%: Under this slab, household items are included like sweets, sugar, spices, tea, coffee, coal, edible oil, etc.  12%: Under this slab, computers and processed foods are included like cheese, ghee, ayurvedic medicines, cell phones, and fertilizers, etc. Services like work contracts, business-class air tickets, and non-ac hotels are also included.  18%: This slab qualifies for toothpaste, soaps, hair oil, etc. as well as capital goods and industrial intermediaries.  28%: This slab involves luxurious items such as premium cars, consumer durables – AC, Refrigerators, etc.
  35. HSN (Harmonised System of Nomenclature) is used for classifying the goods under the GST. SAC (Service Accounting Code) A new Scheme of Classification of Services has been devised wherein the services of various descriptions have been classified under various sections, headings and groups. Each group consists of various Service Codes (Tariff). 6. Classification of Goods and Services
  36. 7. Taxes to be subsumed under GST Structure. 23 taxes and 17 cesses have been subsumed in GST State Taxes State surcharges and cesses in so far as they relate to supply of goods & services Entertainment Tax (except those levied by local bodies) Tax on lottery, betting and gambling Entry Tax (All Forms) & Purchase Tax VAT/ Sales Tax Luxury Tax & Taxes on Advertisements Central Taxes Central Excise Duty & Additional Excise Duties Service Tax Excise Duty under Medicinal & Toilet Preparation Act CVD & Special CVD Central Sales Tax Central surcharges & Cesses in so far as they relate to supply of goods & services
  37. Taxes to be subsumed under GST Structure.
  38. 8. Exemptions from GST
  39. GST Registration means applying for a unique GST Number or GSTIN i.e. GST Identification Number on the GST Portal. The taxpayer requires GSTIN to collect and pay GST on the outward supplies i.e. sales and claim GST Input Tax Credit on the inward supplies i.e. purchases. Types of GST Registration depends on the nature of the business. 9. GST Registration….
  40. He is legally recognized as supplier of goods or services. He is legally authorized to collect tax from his customers. He is legally authorised to pass credit to his buyer He is legally authorised to claim Input Tax Credit (ITC) Seamless flow of Input Tax Credit at the national level. Registration enables inter state supplies without any restrictions . Benefits of Registration
  41. Type of Taxpayers Type of Supplies Exemption Limit With Effect From April 1, 2019 Normal Taxpayers Supply of Goods only Aggregate Annual Turnover of up to Rs. 40 lakhs Normal Taxpayers Supply of Services only Aggregate annual turnover of up to Rs. 20 lakhs Normal Taxpayers Supply of Goods and Services Aggregate annual turnover of up to Rs. 20 lakhs Special Category States Supply of Goods only Aggregate annual turnover of up to Rs. 20 lakhs Special Category States Supply of Services only Aggregate annual turnover of up to Rs. 10 lakhs Special Category States Supply of Goods and Services Aggregate annual turnover of up to Rs. 10 lakhs (A) Threshold limit for Registration: Note: The Special Category States: Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand.
  42. Aggregate Turnover 4. Exempted Supplies 1. Intra State Supplies (Taxable Supplies) 2. Inter State Supplies 3. Export Supplies Aggregate Turnover under GST (Taxable Supplies)
  43. 1. •Inter -State Taxable Supply. 2. •Casual Taxable Person. 3. •Persons Taxable Under the Reverse Charge Basis 4. •Persons required to deduct TDS and TCS under GST 5. •Input Service Distributors 6. • Agent or Principal 7. • Every E-Commerce Operator 8. •Non-Resident Taxable Persons (B) Compulsory Registration
  44. Persons Exclusively Supplying Exempted Goods and Services. Agriculturists for the supply of crops produced from the cultivation of land. Persons Exclusively making Reverse Charge Supplies. The business for which aggregate turnover during the financial year does not exceed limit. (C). Persons Not Liable to Registration under GST
  45. (D ) VOLUNTARY REGISTRATION A business that does not need to apply for compulsory registration can apply for registration on a voluntary basis. It is called Voluntary Registration under GST.
  46. 10. Composition Scheme:  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 turnover. If the aggregate turnover exceeds the prescribed threshold limit of Rs.40 lacs (Rs.20 lacs for special category states) for goods or Rs.20 lacs (Rs.10 lacs for special category states) but is turnover less than Rs.1.5 Cr (Rs.75 lacs for special category states), the dealer can register under Composition Scheme.
  47. Conditions for Composition Scheme: Businesses having a turnover less than Rs.1.5 Crore or Rs.75 Lakhs (Rs.50 Lakhs for specified services) can opt for this scheme but on any given day, if the turnover crosses the above mentioned limit, then he becomes ineligible for the same and has to take registration under the regular scheme.
  48. Applicable GST Rates (Composition Scheme and Presumptive Scheme) Type of Business CGST SGST Total Manufacturer and Traders (Goods) 0.5% 0.5% 1.0% Restaurant Business Supplier of food & drinks 2.5% 2.5% 5.0% Goods or Services or Both (deemed as mixed supplies) 3.0% 3.0% 6.0% GST Rates for a Composition Dealer Applicability period :- These Rates are applicable from 01 April 2019 to till date
  49. WHO CANNOT OPT FOR COMPOSITION SCHEME? The following people cannot opt for the scheme- 1. Supplier of Service other than Restaurant Business. 2. Manufacturer of ice cream, pan masala or tobacco. 3. A person making inter-state supplies. 4. A casual taxable person or a non-resident taxable person. 5.Businesses which supply goods through an e-commerce Operator.
  50. 10. Input Tax Credit (ITC):  One of the fundamental features of GST is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country. Input Tax Credit (ITC) is the tax paid by the buyer on purchase of goods or services.  Such tax which is paid at the purchase when reduced from liability payable on outward supplies is known as input tax credit.  In other words, input tax credit is tax reduced from output tax payable on account of sales.
  51. LETS UNDERSTAND WITH THE HELP OF EXAMPLE Mr. A purchased goods worth Rs. 18,000 on which GST @ 18% was Rs. 3240. He sold goods worth Rs. 22,000. GST payable @ 18% is Rs. 3960. Let us calculate and understand net GST payable and input GST credit. Outward GST payable - Rs. 3960 Less- GST paid on purchases Rs. 3240 Thus, net GST payable through cash Rs. 720 From above, we understand that Rs 3240 reduced is input tax credit availed that had been paid on purchases.
  52. Conditions for claiming ITC A business can claim ITC provided the following conditions have been met Dealer must be registered under the GST law. Dealer must receive the goods or services or both. It has a GST-compliant invoice. Its supplier has uploaded the invoice to the GSTN Its supplier has paid GST to the government Returns have been filed A business under composition scheme cannot avail of the input tax credit. ITC cannot be claimed for personal use or for goods that are exempt.
  53. GST is levied on all goods and services, except alcoholic liquor for human consumption and petroleum crude, diesel, petrol, ATF and natural gas. 11. Goods Outside GST purview
  54. Common GST Electronic Portal – – a website managed by Goods and Services Network (GSTN) a company incorporated under the provisions of section 8 of the Companies Act, 2013] is set by the Government to establish a uniform interface for the tax payer and a common and shared IT infrastructure between the Centre, States and Union Territories) The GST portal is accessible over Internet (by taxpayers and their CAs/Tax Advocates etc.) and Intranet by Tax Officials etc. The portal is one single common portal for all GST related services. 12. GST Common portal
  55. Primary services offered by GST Common Portal 1. Registration – Anyone willing to register under GST can use this service 2. Payments – Typically used for creating Challans and tracking payments 3. User Services – Users can search HSN/SAC code, grievance redressal, locate GSP and so on 4. Refund – Track refund status
  56.  The taxable event in GST is the supply of goods or services or both. Note that the word used is 'supply' and not 'sale‘.  In general words, supply includes both Inter and Intra state supply of goods or services or both.  It also includes sales, barter, exchange, transfer, rental, lease, etc.  But all should be done for the course of business of for furtherance of business.  Consideration is not required for supply. Thus, stock transfers, branch transfers will also get covered under GST net.  Even free samples will be 'supply of goods. Luckily, goods sent for job work will not be liable to pay GST. 13. Taxable Event in GST.
  57. GST Council is an apex member committee to modify, reconcile or to procure any law or regulation based on the context of goods and services tax in India. GST Council Structure.... Chairperson: Union Finance Minister Nirmala Sitharaman State Union Minister in-charge of Finance and Revenue Finance and Taxation in-charge Minister Other state government nominated Minister as member of GST Council 14. GST Council
  58. 15. Benefits of GST
  59. Conclusion.... ttps://
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