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1
2
3
4
Grand pa
(Constitution of India)
Big brother
Central Govt.
unmarried
No children
29 younger
brothers
State Govt.
Married
Many children
People
7 younger
sisters
Union
Territories
Married but
dependent on
bigger brother
Many children
People
India
5
Strong
 Maharashtra, Tamil Nadu,
Karnataka, Gujarat,
Haryana
 Developed infrastructure
like roads, electricity,
water, skilled labour, port,
telecommunication…
 Richer
Weak
 North Eastern States,
Orissa, Himachal Pradesh,
Uttarakhand, Madhya
Pradesh
 Could not develop
infrastructure due to
various reasons
 Poorer
6
Goods Services Goods + Services
Sale Manufacture Provision Goods Services
VAT+/CST
SG
Excise ++
CG
ST +
CG
VAT +
SG
ST +
CG
People
Goods + Services
SGST + CGST
One Window
7
 Direct tax :whose tax liability cannot be shift to
another person
 Indirect tax : whose tax liability can be shift to other
person
 3 important indirect tax
 Central Excise : tax on production and manufacture of
goods
 Sales tax : tax on distribution of goods
 Service tax : tax on production and distribution of
goods
8
CEN VAT
SL VAT
Stage Producer Product Input Output Profit CE/SST
@ 10%
VAT
@ 10%
1 Farmer Wheat 10 30 20 3 2 3-1=2
2 Miller Flour 30 50 20 5 2 5-3=2
3 Baker Cake 50 90 40 9 4 9-5=4
4 Shop
keeper
Sale 90 100 10 10 1 10-9=1
9
Example :
10
11
It is a tax on Goods & Services with
comprehensive & continuous Chain of Set off
benefit from producers to retailer point.
In other words, GST is an Indirect tax which is levy
on manufacture, sale & consumption of all goods
& services.
It substitute most of the indirect taxes like excise,
VAT, Service Tax, Entertainment Tax, Luxury Tax,
CVD as well as SAD.
It is based on the VAT principles .
Introduction/Concept of GST
12
It is implemented from 1St April 2017.
It is expected to be levied only at a destination
level/Real Consumption Place not at a various
points.
Taxation power lies with both in the hands of CG as
well as SG also.
There will be no distinction between goods &
services.
After Introduction of GST, all the traders including
manufacturer will be paying both the type of taxes
(CGST & SGST). (Administered by one authority)
GST leads to immense scope, Opportunities as
well as some challenges also.
Centre is empowered to levy GST on Goods &
Services upon the Production stage, while State
have the power to tax on sale of goods.
 India is proposing to implement dual GST.
GST law would emphasize on voluntary
compliance .
It is a comprehensive levy and envisages tax
collection on both goods and services at the same
rate.
13
14
It subsumes a large no. of central & state taxes
into a single tax.
It is also expected that GST will mitigate the
cascading effect of taxes.
In the mean time, it also helps in terms of
uniformity like in case of chargeability, definition of
taxable services or person, measure of levy, basis
of classification etc.
15
Existing Tax structure in India
Existing
Tax Structure
Direct Tax
Income
Tax
Wealth
Tax
Indirect
Tax
Central
Tax
Excise
Service
Tax
Custom
State Tax
VAT
Entry Tax,
luxury tax,
Lottery
Tax, etc.
16
Proposed Tax structure in India
Proposed
Tax Structure
Direct Tax
Income
Tax
Wealth Tax
Indirect Tax
= GST
(Except
customs)
Intra- state
CGST
(Central)
SGST
(State)
Inter State
IGST
(Central)
17
Model/Components of GST
CGST
(Central GST)
• Replace central Excise
Duty & service Tax.
• Cover Sale transaction
• Administered by CG
• Further it is expected
that the duty and tax
paid on closing stock
would be available as
credit.
• Levied on all intra-state
sale/supplies of goods
or services.
SGST
(State GST)
• Replace State Vat, Entry
Tax, Entertainment Tax,
& Luxury Tax.
• Cover taxing of Services
• Administered by SG
• Rate can be a bit higher
than CGST rate .
• It is expected that the
duty and tax paid on
closing stock would be
available as credit.
• Levied on all intra-state
sale/supplies of goods
or services.
IGST
(Inter-State
GST)
• Levied on all inter –
state supplies of goods
or services which are
sold or transferred.
• Applicable to imports of
goods or services.
• Expected to be equal to
CGST as well as SGST.
• It is expected that the
duty and tax paid on
closing stock would be
available as credit.
18
19
Benefits under GST
Single taxation point.
Uniform tax rate
Common market.
Reduces Transaction cost.
Eliminates the cascading effect of taxes.
Reduces corruption.
Transparency.
Increasing the tax base & raising
compliance.
20
Simplified tax laws.
Increase in exports & employments.
GDP Growth – it is estimated to grow from o.9
to 1.5 percent in the coming three years
International competitiveness Go Up by about
5%.
Increased FDI
Growth in overall Revenues.
Prevention of unhealthy competition among
states.
Reduction in purchase price.
21
Applicability & Rate under GST Regime
 GST on Exports would be zero rated, but on the other hand in “import”
IGST will be levied.
 GST does not apply on Alcohol & petroleum products.
 But in the mean time tobacco products should be in the frame of GST.
 In fact, Gov. Can levy extra % of tax apart from GST .
 Basic threshold limit for Goods & Services shall be RS. 20 Lakh & for
North east Region (NER) Rs. 10.00 Lakh.
 Full exemption is applicable on basic necessities goods like Flour,
rice, pulses, textiles, buildings, education & healthcare etc.
 Gross Turnover of Goods up to Rs. 1.50 cr may be assigned
exclusively to the states.
 Gross Turnover of Services more than Rs. 1.50 cr may be assigned
exclusively to the center.
 Assess can have an option to pay tax as per composition scheme or
may join the GST law whose turnover is up to Rs. 1.50 cr.
 But, those assess whose turnover is and above Rs. 1.50 Cr will need
to be within the framework of GST.
22
A four-tier structure for Goods and Services Tax (GST)
comprising a lower rate of 6 per cent, two standard rates
of 12 per cent and 18 per cent, and a higher rate of 26
per cent with an additional cess for luxury and demerit
goods were proposed
GST rate on Gold Bullion/Jewelry might be 4%
 Around 70 per cent of the taxable base is proposed to
be taxed at either 18 per cent, 12 per cent or 6 per cent,
with more than 50 per cent of the items to be taxed at 12
per cent or 18 per cent. Ultra-luxury items like high-end
cars and demerit goods like tobacco, cigarettes, pan
masala and aerated drinks, comprising about 25 per
cent of the taxable base, would attract an additional
cess over and above the higher rate of 26 per cent.
23
Impact of GST
The total impact of the proposed rate structure on
Consumer Price Index (CPI)-based inflation rate will be (-)
0.06 per cent.
Under the proposed GST rate structure, the inflation
impact on constituents of CPI such as health services, fuel
and lighting and clothing is estimated to be 0.56 per cent,
0.05 per cent and 0.23 per cent, respectively, while for
transport it is estimated at (-) 0.65 per cent, education at (-)
0.08 per cent and housing at (-) 0.09 per cent. Total
revenue collection under the proposed GST structure is
estimated at Rs 8.72 lakh crore (based on 2015-16
estimates).
24
25
Others Areas of GST
 As far as registration decision is concerned, a supplier of Goods & services
would be made when GST is payable.
 Then the supplier would have to necessarily register & he would have no
other option.
 The Place of supply would determine first as to whether the transaction is
in India or Outside India. If it is outside India it would not be liable to GST.
 The main point in GST is the Point of supply of Goods.
 Under the GST structure , the tax would be collected by the states where
the goods or services are consumed .
 Hence there should be heavy losses for the producer states & so the
center would be required to compensate them for their revenue losses.
 Petroleum products, Alcohols/Liquor , Stamp/Custom duty,
Consumption & Sale of Electricity etc. are not covered under the
GST purview.
26
 If a company is having four branches in four different states, then all the
four branches will be considered as Taxable Person.
 Importer have to register under both CGST & SGST as well.
 GST paid by exporter on the procurement of Goods & services will be
refunded later on if paid.
 Each taxpayer would be allotted a PAN linked taxpayer identification
number with a total of 13/15 digits.
 This would bring the GST PAN-linked system in line with the prevailing
PAN-based system for Income tax facilitating data exchange and
taxpayer compliance.
 The taxpayer would need to submit periodical returns to both the central
& state GST authorities.
27
Key Amendments in GST Bill
Dropping 1% Additional on Inter-State Supply of
Goods.
Full Compensation to States upto 5 Years.
Apportionment of IGST i.e. ( States also shares IGST
amt along with centre)
 IGST term to be replaced with GST on supplies in
the course of inter-state trade or commerce.
28
29
Sector wise impact of GST
After implementation of GST, it seems that there is going to
be a positive impact on various Industry.
Some Glimpse of GST Impact of various Industry :
Automobiles Industry
Rate of Tax is expected b/w 20-22% as compared to 30-
47% in current scenario.
Drive overall demand & reduce cost for end user by about
10%.
Transportation time & overall cost will be reduced.
Cost of Logistics will be curtailed by almost 30-40%.
Key beneficiaries : Maruti Suzuki, Hero MotoCorp, Bajaj
Auto, Eicher Motors, Ashok Leyland
30
Consumer Durables
 Reduction of the Price gap between organized & unorganized sector.
 Warehouse/logistics costs will be curtailed.
 Improve the operational profitability by almost 300-400 bps.
Key beneficiaries: Havells, Voltas, Blue Star, Bajaj Electricals, Hitachi
Logistics
 Boost demand for high tonnage trucks.
 Overall reduction in transportation costs.
 Improving growth opportunities for the organized players.
 Facilitate seamless inter-state flow of Goods.
Key beneficiaries : VRL Logistics, GATI Ltd, Blue Dart, Snowman Logistics
Cement
 Tax rate expected to decline to 18-20% as compared to 27-32%.
 Able to save their logistics costs/transportation costs.
Key beneficiaries : ACC, Ultratech, JK Cement, Shree Cement
31
Banking & Financial services
 Under GST , effective tax rate is expected to increase to 18-20% as 14% earlier.
 Moderate increase in the cost of financial services like loan processing fees,
debit/credit charges, insurance premium etc.
IT
 Tax Rate is expected to increase to 18-20%.
 Litigation around taxability of canned software will probably end under GST
Regime.
Textile /Garments
 May be negatively impacted in case the output tax rate is high.
 No clarity whether a lower rate will continue in the proposed Tax regime.
 No clarity about the duty drawback benefits.
Key Players : Arvind, Raymond, Page Industries
Media
 Tax rate of around 18-20% as compared to 20-21%.
 Post GST, we expect concessional rate in news & Print sector.
Key beneficiary : Dish TV
32
33
Flaws of the GST Model
 Major flaws of this model is that the local dealers have to pay CGST
in addition to SGST.
 Because of no differentiation between “goods & services” , services
supply within the state would attract SGST at each stage in the
supply chain ,but in the mean time Assesse have to pay CGST also.
 The issue which still needs to be resolved are the revenue sharing
between States & center & a framework for exemption , threshold
limit as well as composition scheme.
 Introduction of GST model could affect negatively (than positively)
to few Industries/sectors.
 Under the GST Model , the state should face heavy losses in terms
of tax collection but they also get compensated on the other hand by
the states.
 In fact some states are of the view that there should not be any time
–frame for compensation scheme.
34
 Cost is reduced ---- Increase in GDP
 Saving rate increases ---- Tax : GDP increase
 Growth of economy 0.9 – 1.5 %
35
Is it a game changer
or name changer…..
36
Obviously game changer
37
Submitted by :
1)N.Ravi Teja Kumar Reddy RA/14-111
COLLEGE OF AGRICULTURE
PJTSAU…

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Goods and service tax explained by Ravi Teja Reddy

  • 1. 1
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  • 5. Grand pa (Constitution of India) Big brother Central Govt. unmarried No children 29 younger brothers State Govt. Married Many children People 7 younger sisters Union Territories Married but dependent on bigger brother Many children People India 5
  • 6. Strong  Maharashtra, Tamil Nadu, Karnataka, Gujarat, Haryana  Developed infrastructure like roads, electricity, water, skilled labour, port, telecommunication…  Richer Weak  North Eastern States, Orissa, Himachal Pradesh, Uttarakhand, Madhya Pradesh  Could not develop infrastructure due to various reasons  Poorer 6
  • 7. Goods Services Goods + Services Sale Manufacture Provision Goods Services VAT+/CST SG Excise ++ CG ST + CG VAT + SG ST + CG People Goods + Services SGST + CGST One Window 7
  • 8.  Direct tax :whose tax liability cannot be shift to another person  Indirect tax : whose tax liability can be shift to other person  3 important indirect tax  Central Excise : tax on production and manufacture of goods  Sales tax : tax on distribution of goods  Service tax : tax on production and distribution of goods 8 CEN VAT SL VAT
  • 9. Stage Producer Product Input Output Profit CE/SST @ 10% VAT @ 10% 1 Farmer Wheat 10 30 20 3 2 3-1=2 2 Miller Flour 30 50 20 5 2 5-3=2 3 Baker Cake 50 90 40 9 4 9-5=4 4 Shop keeper Sale 90 100 10 10 1 10-9=1 9 Example :
  • 10. 10
  • 11. 11 It is a tax on Goods & Services with comprehensive & continuous Chain of Set off benefit from producers to retailer point. In other words, GST is an Indirect tax which is levy on manufacture, sale & consumption of all goods & services. It substitute most of the indirect taxes like excise, VAT, Service Tax, Entertainment Tax, Luxury Tax, CVD as well as SAD. It is based on the VAT principles . Introduction/Concept of GST
  • 12. 12 It is implemented from 1St April 2017. It is expected to be levied only at a destination level/Real Consumption Place not at a various points. Taxation power lies with both in the hands of CG as well as SG also. There will be no distinction between goods & services. After Introduction of GST, all the traders including manufacturer will be paying both the type of taxes (CGST & SGST). (Administered by one authority)
  • 13. GST leads to immense scope, Opportunities as well as some challenges also. Centre is empowered to levy GST on Goods & Services upon the Production stage, while State have the power to tax on sale of goods.  India is proposing to implement dual GST. GST law would emphasize on voluntary compliance . It is a comprehensive levy and envisages tax collection on both goods and services at the same rate. 13
  • 14. 14 It subsumes a large no. of central & state taxes into a single tax. It is also expected that GST will mitigate the cascading effect of taxes. In the mean time, it also helps in terms of uniformity like in case of chargeability, definition of taxable services or person, measure of levy, basis of classification etc.
  • 15. 15 Existing Tax structure in India Existing Tax Structure Direct Tax Income Tax Wealth Tax Indirect Tax Central Tax Excise Service Tax Custom State Tax VAT Entry Tax, luxury tax, Lottery Tax, etc.
  • 16. 16 Proposed Tax structure in India Proposed Tax Structure Direct Tax Income Tax Wealth Tax Indirect Tax = GST (Except customs) Intra- state CGST (Central) SGST (State) Inter State IGST (Central)
  • 17. 17 Model/Components of GST CGST (Central GST) • Replace central Excise Duty & service Tax. • Cover Sale transaction • Administered by CG • Further it is expected that the duty and tax paid on closing stock would be available as credit. • Levied on all intra-state sale/supplies of goods or services. SGST (State GST) • Replace State Vat, Entry Tax, Entertainment Tax, & Luxury Tax. • Cover taxing of Services • Administered by SG • Rate can be a bit higher than CGST rate . • It is expected that the duty and tax paid on closing stock would be available as credit. • Levied on all intra-state sale/supplies of goods or services. IGST (Inter-State GST) • Levied on all inter – state supplies of goods or services which are sold or transferred. • Applicable to imports of goods or services. • Expected to be equal to CGST as well as SGST. • It is expected that the duty and tax paid on closing stock would be available as credit.
  • 18. 18
  • 19. 19 Benefits under GST Single taxation point. Uniform tax rate Common market. Reduces Transaction cost. Eliminates the cascading effect of taxes. Reduces corruption. Transparency. Increasing the tax base & raising compliance.
  • 20. 20 Simplified tax laws. Increase in exports & employments. GDP Growth – it is estimated to grow from o.9 to 1.5 percent in the coming three years International competitiveness Go Up by about 5%. Increased FDI Growth in overall Revenues. Prevention of unhealthy competition among states. Reduction in purchase price.
  • 21. 21 Applicability & Rate under GST Regime  GST on Exports would be zero rated, but on the other hand in “import” IGST will be levied.  GST does not apply on Alcohol & petroleum products.  But in the mean time tobacco products should be in the frame of GST.  In fact, Gov. Can levy extra % of tax apart from GST .  Basic threshold limit for Goods & Services shall be RS. 20 Lakh & for North east Region (NER) Rs. 10.00 Lakh.  Full exemption is applicable on basic necessities goods like Flour, rice, pulses, textiles, buildings, education & healthcare etc.  Gross Turnover of Goods up to Rs. 1.50 cr may be assigned exclusively to the states.  Gross Turnover of Services more than Rs. 1.50 cr may be assigned exclusively to the center.  Assess can have an option to pay tax as per composition scheme or may join the GST law whose turnover is up to Rs. 1.50 cr.  But, those assess whose turnover is and above Rs. 1.50 Cr will need to be within the framework of GST.
  • 22. 22 A four-tier structure for Goods and Services Tax (GST) comprising a lower rate of 6 per cent, two standard rates of 12 per cent and 18 per cent, and a higher rate of 26 per cent with an additional cess for luxury and demerit goods were proposed GST rate on Gold Bullion/Jewelry might be 4%  Around 70 per cent of the taxable base is proposed to be taxed at either 18 per cent, 12 per cent or 6 per cent, with more than 50 per cent of the items to be taxed at 12 per cent or 18 per cent. Ultra-luxury items like high-end cars and demerit goods like tobacco, cigarettes, pan masala and aerated drinks, comprising about 25 per cent of the taxable base, would attract an additional cess over and above the higher rate of 26 per cent.
  • 23. 23 Impact of GST The total impact of the proposed rate structure on Consumer Price Index (CPI)-based inflation rate will be (-) 0.06 per cent. Under the proposed GST rate structure, the inflation impact on constituents of CPI such as health services, fuel and lighting and clothing is estimated to be 0.56 per cent, 0.05 per cent and 0.23 per cent, respectively, while for transport it is estimated at (-) 0.65 per cent, education at (-) 0.08 per cent and housing at (-) 0.09 per cent. Total revenue collection under the proposed GST structure is estimated at Rs 8.72 lakh crore (based on 2015-16 estimates).
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  • 25. 25 Others Areas of GST  As far as registration decision is concerned, a supplier of Goods & services would be made when GST is payable.  Then the supplier would have to necessarily register & he would have no other option.  The Place of supply would determine first as to whether the transaction is in India or Outside India. If it is outside India it would not be liable to GST.  The main point in GST is the Point of supply of Goods.  Under the GST structure , the tax would be collected by the states where the goods or services are consumed .  Hence there should be heavy losses for the producer states & so the center would be required to compensate them for their revenue losses.  Petroleum products, Alcohols/Liquor , Stamp/Custom duty, Consumption & Sale of Electricity etc. are not covered under the GST purview.
  • 26. 26  If a company is having four branches in four different states, then all the four branches will be considered as Taxable Person.  Importer have to register under both CGST & SGST as well.  GST paid by exporter on the procurement of Goods & services will be refunded later on if paid.  Each taxpayer would be allotted a PAN linked taxpayer identification number with a total of 13/15 digits.  This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance.  The taxpayer would need to submit periodical returns to both the central & state GST authorities.
  • 27. 27 Key Amendments in GST Bill Dropping 1% Additional on Inter-State Supply of Goods. Full Compensation to States upto 5 Years. Apportionment of IGST i.e. ( States also shares IGST amt along with centre)  IGST term to be replaced with GST on supplies in the course of inter-state trade or commerce.
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  • 29. 29 Sector wise impact of GST After implementation of GST, it seems that there is going to be a positive impact on various Industry. Some Glimpse of GST Impact of various Industry : Automobiles Industry Rate of Tax is expected b/w 20-22% as compared to 30- 47% in current scenario. Drive overall demand & reduce cost for end user by about 10%. Transportation time & overall cost will be reduced. Cost of Logistics will be curtailed by almost 30-40%. Key beneficiaries : Maruti Suzuki, Hero MotoCorp, Bajaj Auto, Eicher Motors, Ashok Leyland
  • 30. 30 Consumer Durables  Reduction of the Price gap between organized & unorganized sector.  Warehouse/logistics costs will be curtailed.  Improve the operational profitability by almost 300-400 bps. Key beneficiaries: Havells, Voltas, Blue Star, Bajaj Electricals, Hitachi Logistics  Boost demand for high tonnage trucks.  Overall reduction in transportation costs.  Improving growth opportunities for the organized players.  Facilitate seamless inter-state flow of Goods. Key beneficiaries : VRL Logistics, GATI Ltd, Blue Dart, Snowman Logistics Cement  Tax rate expected to decline to 18-20% as compared to 27-32%.  Able to save their logistics costs/transportation costs. Key beneficiaries : ACC, Ultratech, JK Cement, Shree Cement
  • 31. 31 Banking & Financial services  Under GST , effective tax rate is expected to increase to 18-20% as 14% earlier.  Moderate increase in the cost of financial services like loan processing fees, debit/credit charges, insurance premium etc. IT  Tax Rate is expected to increase to 18-20%.  Litigation around taxability of canned software will probably end under GST Regime. Textile /Garments  May be negatively impacted in case the output tax rate is high.  No clarity whether a lower rate will continue in the proposed Tax regime.  No clarity about the duty drawback benefits. Key Players : Arvind, Raymond, Page Industries Media  Tax rate of around 18-20% as compared to 20-21%.  Post GST, we expect concessional rate in news & Print sector. Key beneficiary : Dish TV
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  • 33. 33 Flaws of the GST Model  Major flaws of this model is that the local dealers have to pay CGST in addition to SGST.  Because of no differentiation between “goods & services” , services supply within the state would attract SGST at each stage in the supply chain ,but in the mean time Assesse have to pay CGST also.  The issue which still needs to be resolved are the revenue sharing between States & center & a framework for exemption , threshold limit as well as composition scheme.  Introduction of GST model could affect negatively (than positively) to few Industries/sectors.  Under the GST Model , the state should face heavy losses in terms of tax collection but they also get compensated on the other hand by the states.  In fact some states are of the view that there should not be any time –frame for compensation scheme.
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  • 35.  Cost is reduced ---- Increase in GDP  Saving rate increases ---- Tax : GDP increase  Growth of economy 0.9 – 1.5 % 35
  • 36. Is it a game changer or name changer….. 36 Obviously game changer
  • 37. 37 Submitted by : 1)N.Ravi Teja Kumar Reddy RA/14-111 COLLEGE OF AGRICULTURE PJTSAU…