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GST – The Framework
NIRC of ICAI
August 22, 2016
Discussion by:
CA Gaurav Gupta
FCA, LLB, DISA
Author
– GST – Law & Practise
- Service Tax – Law & Practise
Our Revenue
Practical Aspects of GST Gaurav Gupta 2CA Gaurav Gupta 2
2015-16
(RE)
(Rs. in Crores)
2016-2017
(BE)
(Rs. in Crores)
Corporation Tax 452969.68 493923.55
Taxes on income 299051.24 353173.68
Customs 209500.00 230000.00
Excise 284142.34 318669.50
Service Tax 210000.00 231000.00
State Taxes 846570 (2014-15) 969250 (2015-16)
Note:
State Taxes include all levies by state
Source: Union Budget for Central Levies and RBI for State Tax Revenue
GST – The Origin
GST – The Origin
Practical Aspects of GST Gaurav Gupta 4
2006- GST
Announcement
2009- First
Discussion
Paper
2011 – First
AmendmentBill
2014 -
Second
AmendmentBill
May 2015 - Bill
Passed by
Loksabha
Aug 2015 –
Select
Committee
Report
August 2016 –
Bill passed by
Rajya Sabha
GST
Consitutional
AmendmentBill
passed by
Assan, Bihar
and Jharkhand
CA Gaurav Gupta 4
The Stakeholders
Practical Aspects of GST Gaurav Gupta 5
GST
Central
Government
State
Government
GST
Council
GSTN
Commitees
CA Gaurav Gupta 5
The Committees
Practical Aspects of GST Gaurav Gupta 6
Committee on the Problem of Dual Control, Threshold and Exemptions
in GST Regime
Committee on Revenue Neutral Rates for State GST & Central GST
and Place of Supply Rules (A Sub-Committee has been constituted to
examine issues relating to the Place of Supply Rules)
Committee on IGST & GST on Imports (A Sub- Committee has been
set up to examine issues pertaining to IGST model
Committee to draft model GST Law (Three Sub-Committees have
been constituted to draft various aspects of the model law
Committee to examine Business Processes under GST Regime
(Three Sub-Committees have been constituted to examine issues
pertaining to Registration & Returns, Refunds and Payments)
CA Gaurav Gupta 6
GST – Need?
Current Indirect Tax
Regime in India
Practical Aspects of GST Gaurav Gupta 8
Indirect
Tax Levies
in India
Central
Levy
Service
Tax
Provision
of Service
Rate –
15%
Customs
Duty
+CVD
+BCD
Imports
10%
(varies)
Excise Duty +
Excise duty on
Medicinal
Manufactu
re
12.5%
(varies)
Central
Sales Tax
Inter state
Sale of
Goods
5%/12.5%
(varies)
State Levy
Sales Tax
/ VAT
Intra State
Sale of
Goods
5%/12.5%
(varies)
Entertainm
ent Tax /
Luxury Tax
Entertain
ment /
Luxuries
10%-50%
(varies)
Entry Tax
Entry of
goods in
state
Generally
around
5%.
(varies)
Taxes on
Betting/
Gambling
Betting /
Gambling
Varies
CA Gaurav Gupta 8
Current Indirect Tax
Regime in India
Rohtak
Delhi
Excise + CST
Panipat
Panipat
Excise + VAT
Manufacturer
Intra state Sale
Inter state Sale
Rohtak
No taxes
ParisExports
London
BCD + CVD + SAD
DelhiImports
CA Gaurav Gupta 9
Current Indirect Tax
Regime in India
Rohtak
Delhi
CST
Panipat
Panipat
VAT
Trader
Intra state Sale
Inter state Sale
Rohtak
No taxes
ParisExports
London
BCD+CVD+SAD
DelhiImports
CA Gaurav Gupta 10
Current Indirect Tax
Regime in India
Rohtak
Delhi
Service Tax
Panipat
Panipat
Service Tax
Services
Intra state Sale
Inter state Sale
Rohtak
No taxes
ParisExports
London
Service Tax – reverse charge
DelhiImports
CA Gaurav Gupta 11
Need for GST
Problems in the present structure:
• Complex
• Cascading effects of taxes
• Multiple tax rates
• Multiple Compliances
GST – an answer to present problems:
“It should establish a tax system that is economically efficient and
neutral in its application, distributionally attractive and simple to
administer.”
- Working Paper No.1/2009 – DEA on GST Reforms and
Intergovernmental Considerations in India
Practical Aspects of GST Gaurav Gupta 12CA Gaurav Gupta 12
Features of GST
Features of proposed Model:
• Destination based taxation
• Dual Administration
• Consolidation of taxes
• State wise determination of taxable person – no more centralized
registration
• Seamless credit amongst goods and services
Practical Aspects of GST Gaurav Gupta 13CA Gaurav Gupta 13
GST – The Framework
Excise duty on Medicinal and
Toiletries Preparation
Central Levies
Central Excise Duty
Central Sales Tax
Service Tax
Tax on lottery, betting and
Gambling
State Levies
Entertainment Tax
State VAT/ Purchase tax
Entry Tax
Luxury Tax
Practical Aspects of GST Gaurav Gupta 14
Additional duty of Excise on
Textile and Textile Products
CVD and SAD (on import of
goods)
Cesses and surcharges insofar
as far as they relate to supply
of goods or services
State cesses and
surcharges insofar as far as
they relate to supply of
goods or services
Taxes on Advertisement
CA Gaurav Gupta 14
CGST
SGST
GST – The Framework
Practical Aspects of GST Gaurav Gupta 15CA Gaurav Gupta 15
CGST SGST IGST
1 Act 29 + 7 Acts 1 Act
GST – The Framework
Practical Aspects of GST Gaurav Gupta 16CA Gaurav Gupta 16
GST Model Countries following
Independent VAT in Centre and
State
Brazil, Argentina, Russia
VAT levied and administered at
Centre
Australia, Germany, Austria,
Switzerland, etc.
Dual VAT Canada and India today
Proposed Indirect Tax
Regime in India
Rohtak
Delhi
IGST
Panipat
Panipat
CGST + SGST
Supply of Goods/ Services
Intra state Sale
Inter state Sale
Rohtak
No taxes
ParisExports
CA Gaurav Gupta 17
Proposed Indirect Tax
Regime in India
Paris
London
IGST
Delhi
Panipat
BCD + IGST
Import of Goods/ Services
Goods
Services
CA Gaurav Gupta 18
122nd Constitutional
Amendment
Constitutional amendments
proposed by 122nd Bill
Article246A
• Concurrent jurisdiction
for levy of GST by the
Centre and the States
• Parliament has exclusive
power to make laws with
respect to goods and
services tax where the
supply takes place in the
course of inter-State
trade or commerce
Article269A
• Authority for Centre to
levy & collection of IGST
on supplies in the course
of inter-State trade or
commerce including
imports
• Import of goods or
provision of services
from outside India will be
treated as Inter-State
supplies
• ‘Place of supply’ of
goods & services to be
determined as per Rules
formulated by Centre
Article366(12A)
• GST defined as any tax
on supply of goods or
services or both other
than on alcohol for
human consumption
Practical Aspects of GST Gaurav Gupta 20CA Gaurav Gupta 20
GST Council
Practical Aspects of GST Gaurav Gupta 21
1. Constituted under Constitution by President of India under Article 279A
2. The GST Council shall consist of the following members:
i. The Union Finance Minister:- Chairperson;
ii. The Union Minister of State in charge of Revenue or Finance – Member
iii. The Minister in charge of Finance or Taxation or any other Minister
nominated by each State Government....................Members.
3. Quorum – 50% of total members
4. Every decision of the GST Council shall be taken at a meeting, by a majority of
not less than three-fourths of the weighted votes of the members present and
voting, in accordance with the following principles, namely:
• Central Government Vote - shall have a weightage of 1/3, and
• All the State Governments - weightage of 2/3 of the total votes cast
CA Gaurav Gupta 21
GST Council
Practical Aspects of GST Gaurav Gupta 22
The GST Council shall make recommendations to the Union and the States on—
• The taxes, cesses and surcharges levied by the Union, the States and the local bodies
which may be subsumed in the GS Tax
• The goods and services that may be subjected to, or exempted from the goods and
services tax;
• Model Goods and Services Tax Laws, principles of levy, apportionment of IGST and the
principles that govern the place of supply;
• The threshold limit of turnover below which goods and services may be exempted from
goods and services tax;
• The rates including floor rates with bands of goods and services tax;
• Any special rate or rates for a specified period, to raise additional resources during any
natural calamity or disaster;
• Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and
Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh
and Uttarakhand;
• Any other matter relating to the goods and services tax, as the Council may decide.
CA Gaurav Gupta 22
Proposed GST
Framework
GST - Levy
• Who shall pay
• On what GST shall be paid
• When GST shall be paid
• Where shall GST be paid
• To whom shall it be paid
• How to Pay
Taxable Person – Sch III
Supply of Goods and
services – Section 7
Point of Supply
Place of Supply
Respective Government
Practical Aspects of GST Gaurav Gupta 24
Cash / Credit
CA Gaurav Gupta 24
Country Rate of VAT/GST
Australia 10%
Canada
5% Goods and Services Tax, plus Provincial Sales
Tax
China 17%
France 19.60%
Germany 19%
Hong Kong 0%
Russia 18%
Singapore 7% GST
United Kingdom 15%
United States
No national VAT / GST. State tax vary from 5 –
10.25%
Rate of VAT / GST around the world at present, some of which are enumerated as under:
GST Rates
General
Rate–
18%
Low rate –
8-10%
Luxury
Goods –
40%
Exemption
Precious
Metal – 2-
4%
India
Input SGST
Input CGST
Input IGST
Output SGST
Output CGST
Output IGST
Levy Cenvatable against [Section 35(5)]
SGST SGST , IGST
CGST CGST, IGST
IGST IGST, CGST, SGST
Payment by Credit
CA Gaurav Gupta 26
Registration under Taxes
CA Gaurav Gupta 27
Government2 States + UTs
29+
7
Business
VerticalsN Number of
Registrations
CA Gaurav Gupta 27
Features of
Registration Process
• PAN based Registration: PAN will be mandatory
• Unified application to both tax authorities
• To be filed within 30 days
• State-wise registration for entities having presence in more than one State; Need not
apply separately for each State
• Deemed approval within three days
• Within a PAN, separate registration for separate business verticals within a State possible
Practical Aspects of GST Gaurav Gupta 28
GSTIN - Features
X X X X XX X X X X XXX X
State
Code
PAN Business
Vertical
X
Blank Checksum
CA Gaurav Gupta 28
GST - Interface
Draft Model GST Law CA Gaurav Gupta 29
Taxable Person
1
GSTN
Taxable Person
2
Central
Government
State
Government
Features:
 IT based compliances
 Dual review
 Real time updates
 Lesser interaction with
authorities
CA Gaurav Gupta 29
GST - Interface
Draft Model GST Law CA Gaurav Gupta 30
Taxable Person
1
GSTN
Taxable Person
2
Central
Government
State
Government
Services provided
 Registration
 Payment of tax
 Return
 Refunds
CA Gaurav Gupta 30
Disclaimer
This presentation has been prepared for internal use of ICAI and its members. The contents of this document are
solely for informational purpose. It does not constitute professional advice or a formal recommendation. The
presentation is made with utmost professional caution but in no manner guarantees the content for use by any
person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the
matter given. The presentation is meant for general guidance and no responsibility for loss arising to any person
acting or refraining from acting as a result of any material contained in this presentation will be accepted by us.
Professional advice recommended to be sought before any action or refrainment.
Thank you
CA Gaurav Gupta
Partner
MGS & Co.
LD- 65, Pitampura, Delhi – 110034
119, DLF City Court, Gurgaon
+91 11 32962487
+91 11 4781 8819
+91 98110 13940
cagauravmgs@gmail.com

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Gst the framework

  • 1. GST – The Framework NIRC of ICAI August 22, 2016 Discussion by: CA Gaurav Gupta FCA, LLB, DISA Author – GST – Law & Practise - Service Tax – Law & Practise
  • 2. Our Revenue Practical Aspects of GST Gaurav Gupta 2CA Gaurav Gupta 2 2015-16 (RE) (Rs. in Crores) 2016-2017 (BE) (Rs. in Crores) Corporation Tax 452969.68 493923.55 Taxes on income 299051.24 353173.68 Customs 209500.00 230000.00 Excise 284142.34 318669.50 Service Tax 210000.00 231000.00 State Taxes 846570 (2014-15) 969250 (2015-16) Note: State Taxes include all levies by state Source: Union Budget for Central Levies and RBI for State Tax Revenue
  • 3. GST – The Origin
  • 4. GST – The Origin Practical Aspects of GST Gaurav Gupta 4 2006- GST Announcement 2009- First Discussion Paper 2011 – First AmendmentBill 2014 - Second AmendmentBill May 2015 - Bill Passed by Loksabha Aug 2015 – Select Committee Report August 2016 – Bill passed by Rajya Sabha GST Consitutional AmendmentBill passed by Assan, Bihar and Jharkhand CA Gaurav Gupta 4
  • 5. The Stakeholders Practical Aspects of GST Gaurav Gupta 5 GST Central Government State Government GST Council GSTN Commitees CA Gaurav Gupta 5
  • 6. The Committees Practical Aspects of GST Gaurav Gupta 6 Committee on the Problem of Dual Control, Threshold and Exemptions in GST Regime Committee on Revenue Neutral Rates for State GST & Central GST and Place of Supply Rules (A Sub-Committee has been constituted to examine issues relating to the Place of Supply Rules) Committee on IGST & GST on Imports (A Sub- Committee has been set up to examine issues pertaining to IGST model Committee to draft model GST Law (Three Sub-Committees have been constituted to draft various aspects of the model law Committee to examine Business Processes under GST Regime (Three Sub-Committees have been constituted to examine issues pertaining to Registration & Returns, Refunds and Payments) CA Gaurav Gupta 6
  • 8. Current Indirect Tax Regime in India Practical Aspects of GST Gaurav Gupta 8 Indirect Tax Levies in India Central Levy Service Tax Provision of Service Rate – 15% Customs Duty +CVD +BCD Imports 10% (varies) Excise Duty + Excise duty on Medicinal Manufactu re 12.5% (varies) Central Sales Tax Inter state Sale of Goods 5%/12.5% (varies) State Levy Sales Tax / VAT Intra State Sale of Goods 5%/12.5% (varies) Entertainm ent Tax / Luxury Tax Entertain ment / Luxuries 10%-50% (varies) Entry Tax Entry of goods in state Generally around 5%. (varies) Taxes on Betting/ Gambling Betting / Gambling Varies CA Gaurav Gupta 8
  • 9. Current Indirect Tax Regime in India Rohtak Delhi Excise + CST Panipat Panipat Excise + VAT Manufacturer Intra state Sale Inter state Sale Rohtak No taxes ParisExports London BCD + CVD + SAD DelhiImports CA Gaurav Gupta 9
  • 10. Current Indirect Tax Regime in India Rohtak Delhi CST Panipat Panipat VAT Trader Intra state Sale Inter state Sale Rohtak No taxes ParisExports London BCD+CVD+SAD DelhiImports CA Gaurav Gupta 10
  • 11. Current Indirect Tax Regime in India Rohtak Delhi Service Tax Panipat Panipat Service Tax Services Intra state Sale Inter state Sale Rohtak No taxes ParisExports London Service Tax – reverse charge DelhiImports CA Gaurav Gupta 11
  • 12. Need for GST Problems in the present structure: • Complex • Cascading effects of taxes • Multiple tax rates • Multiple Compliances GST – an answer to present problems: “It should establish a tax system that is economically efficient and neutral in its application, distributionally attractive and simple to administer.” - Working Paper No.1/2009 – DEA on GST Reforms and Intergovernmental Considerations in India Practical Aspects of GST Gaurav Gupta 12CA Gaurav Gupta 12
  • 13. Features of GST Features of proposed Model: • Destination based taxation • Dual Administration • Consolidation of taxes • State wise determination of taxable person – no more centralized registration • Seamless credit amongst goods and services Practical Aspects of GST Gaurav Gupta 13CA Gaurav Gupta 13
  • 14. GST – The Framework Excise duty on Medicinal and Toiletries Preparation Central Levies Central Excise Duty Central Sales Tax Service Tax Tax on lottery, betting and Gambling State Levies Entertainment Tax State VAT/ Purchase tax Entry Tax Luxury Tax Practical Aspects of GST Gaurav Gupta 14 Additional duty of Excise on Textile and Textile Products CVD and SAD (on import of goods) Cesses and surcharges insofar as far as they relate to supply of goods or services State cesses and surcharges insofar as far as they relate to supply of goods or services Taxes on Advertisement CA Gaurav Gupta 14 CGST SGST
  • 15. GST – The Framework Practical Aspects of GST Gaurav Gupta 15CA Gaurav Gupta 15 CGST SGST IGST 1 Act 29 + 7 Acts 1 Act
  • 16. GST – The Framework Practical Aspects of GST Gaurav Gupta 16CA Gaurav Gupta 16 GST Model Countries following Independent VAT in Centre and State Brazil, Argentina, Russia VAT levied and administered at Centre Australia, Germany, Austria, Switzerland, etc. Dual VAT Canada and India today
  • 17. Proposed Indirect Tax Regime in India Rohtak Delhi IGST Panipat Panipat CGST + SGST Supply of Goods/ Services Intra state Sale Inter state Sale Rohtak No taxes ParisExports CA Gaurav Gupta 17
  • 18. Proposed Indirect Tax Regime in India Paris London IGST Delhi Panipat BCD + IGST Import of Goods/ Services Goods Services CA Gaurav Gupta 18
  • 20. Constitutional amendments proposed by 122nd Bill Article246A • Concurrent jurisdiction for levy of GST by the Centre and the States • Parliament has exclusive power to make laws with respect to goods and services tax where the supply takes place in the course of inter-State trade or commerce Article269A • Authority for Centre to levy & collection of IGST on supplies in the course of inter-State trade or commerce including imports • Import of goods or provision of services from outside India will be treated as Inter-State supplies • ‘Place of supply’ of goods & services to be determined as per Rules formulated by Centre Article366(12A) • GST defined as any tax on supply of goods or services or both other than on alcohol for human consumption Practical Aspects of GST Gaurav Gupta 20CA Gaurav Gupta 20
  • 21. GST Council Practical Aspects of GST Gaurav Gupta 21 1. Constituted under Constitution by President of India under Article 279A 2. The GST Council shall consist of the following members: i. The Union Finance Minister:- Chairperson; ii. The Union Minister of State in charge of Revenue or Finance – Member iii. The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government....................Members. 3. Quorum – 50% of total members 4. Every decision of the GST Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely: • Central Government Vote - shall have a weightage of 1/3, and • All the State Governments - weightage of 2/3 of the total votes cast CA Gaurav Gupta 21
  • 22. GST Council Practical Aspects of GST Gaurav Gupta 22 The GST Council shall make recommendations to the Union and the States on— • The taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the GS Tax • The goods and services that may be subjected to, or exempted from the goods and services tax; • Model Goods and Services Tax Laws, principles of levy, apportionment of IGST and the principles that govern the place of supply; • The threshold limit of turnover below which goods and services may be exempted from goods and services tax; • The rates including floor rates with bands of goods and services tax; • Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; • Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; • Any other matter relating to the goods and services tax, as the Council may decide. CA Gaurav Gupta 22
  • 24. GST - Levy • Who shall pay • On what GST shall be paid • When GST shall be paid • Where shall GST be paid • To whom shall it be paid • How to Pay Taxable Person – Sch III Supply of Goods and services – Section 7 Point of Supply Place of Supply Respective Government Practical Aspects of GST Gaurav Gupta 24 Cash / Credit CA Gaurav Gupta 24
  • 25. Country Rate of VAT/GST Australia 10% Canada 5% Goods and Services Tax, plus Provincial Sales Tax China 17% France 19.60% Germany 19% Hong Kong 0% Russia 18% Singapore 7% GST United Kingdom 15% United States No national VAT / GST. State tax vary from 5 – 10.25% Rate of VAT / GST around the world at present, some of which are enumerated as under: GST Rates General Rate– 18% Low rate – 8-10% Luxury Goods – 40% Exemption Precious Metal – 2- 4% India
  • 26. Input SGST Input CGST Input IGST Output SGST Output CGST Output IGST Levy Cenvatable against [Section 35(5)] SGST SGST , IGST CGST CGST, IGST IGST IGST, CGST, SGST Payment by Credit CA Gaurav Gupta 26
  • 27. Registration under Taxes CA Gaurav Gupta 27 Government2 States + UTs 29+ 7 Business VerticalsN Number of Registrations CA Gaurav Gupta 27
  • 28. Features of Registration Process • PAN based Registration: PAN will be mandatory • Unified application to both tax authorities • To be filed within 30 days • State-wise registration for entities having presence in more than one State; Need not apply separately for each State • Deemed approval within three days • Within a PAN, separate registration for separate business verticals within a State possible Practical Aspects of GST Gaurav Gupta 28 GSTIN - Features X X X X XX X X X X XXX X State Code PAN Business Vertical X Blank Checksum CA Gaurav Gupta 28
  • 29. GST - Interface Draft Model GST Law CA Gaurav Gupta 29 Taxable Person 1 GSTN Taxable Person 2 Central Government State Government Features:  IT based compliances  Dual review  Real time updates  Lesser interaction with authorities CA Gaurav Gupta 29
  • 30. GST - Interface Draft Model GST Law CA Gaurav Gupta 30 Taxable Person 1 GSTN Taxable Person 2 Central Government State Government Services provided  Registration  Payment of tax  Return  Refunds CA Gaurav Gupta 30
  • 31. Disclaimer This presentation has been prepared for internal use of ICAI and its members. The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. The presentation is made with utmost professional caution but in no manner guarantees the content for use by any person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the matter given. The presentation is meant for general guidance and no responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this presentation will be accepted by us. Professional advice recommended to be sought before any action or refrainment. Thank you CA Gaurav Gupta Partner MGS & Co. LD- 65, Pitampura, Delhi – 110034 119, DLF City Court, Gurgaon +91 11 32962487 +91 11 4781 8819 +91 98110 13940 cagauravmgs@gmail.com