General knowledge on GST to understand the biggest tax reform in the Indian Economy. Note: It's just a brief on GST and does not get into the intricacies. Thank you for viewing.

2.  What is Tax ? A compulsory contribution to state revenue, levied
by the government on workers' income and business profits, or
added to the cost of some goods, services, and transactions.
 Two types of taxes:
1) Direct Taxes: Taxes that are directly paid to the
government by the taxpayer. It is a tax applied on individuals and
organizations directly by the government e.g. income tax,
corporation tax, wealth tax etc.
2)Indirect Taxes: Taxes 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 e.g. sales tax, service tax, excise duty etc.

3.  Cascading Effect (Tax on Tax)
 Complexity in determining the nature of transaction –
Sale vs Service
 Lack of uniformity in provision and rates
 Fixation of situs – Local Sale vs Central Sale

4.  Goods and Services Tax (GST) is an indirect tax reform
which aims to remove tax barriers between states and
create a single market.
 A tax trigger aimed to replace the current complex
structure of multiple indirect taxes in favour of a
comprehensive dual Goods and Services Tax (GST).
With clear road map being laid down by the Finance
Ministry, the Government seems on course to fast
track the entire process to achieve targeted GST
implementation effective 1 July 2017.

6.  Removal of cascading effect on taxes
 Free movement of goods and services
 Rationalize structure of indirect taxation
 Continuous chain of set off till the consumer
 Wider coverage of Input Tax and Service Tax set-off
Destination principle
The GST structure would follow the destination principle.
Accordingly, imports would be subject to GST, while
exports would be zero-rated. In the case of inter-State
transactions within India, the State tax would apply in the
State of destination as opposed to that of origin.

7. TYPES OF
GST
CGST SGST IGST
Intra-State Inter-State

8. CGST
Excise duty
Service Tax
SAD
SurchargesCess
CVD
Medicinal
excise

9. SGST
State cess
&
surcharges
Entertainment
tax
Luxury
Tax
VAT/ Sales
tax
Entry tax/
Octroi/LBT
Purchases
Tax
Taxes on
Lottery
& Gambling

10. TAX RATE Coverage
Tax exempt – 0% tax rate
Commodities such as food grains, rice and wheat are
included.
First slab – 5% tax rate
Under which common-use items such as spices, tea
and mustard oil will taxed at 5%
Second slab – 12% tax rate
Under this slab, processed food items have been
included.
Third slab – 18% tax rate
Under this slab, items such as soaps, oil, toothpaste,
refrigerator and smart phones have been included.
Fourth slab – 28% tax rate
There are two tiers under this fourth slab:-
 White goods and cars will be taxed at 28% tax
rate.
 28% tax rate plus cess will be charged for sin
products such as luxury cars, tobacco products,
pan masala, and aerated drinks. Cess will be levied
on top of the higher tax rate.

11. 7%
14%
17%
43%
19%
COMPOSITION OF GOODS UNDER TAXATION
No tax, 0%
5%
12%
18%
28%

13. GST
Business
process
Supply
Chain
HR
Sales &
Marketing
Cash
flows
Accounting
Fiscal
Policies
IT Systems

16. 1) Securities transactions will become expensive: At present, the
transactions on securities are excluded from the purview of Value
Added Tax (VAT) and Service Tax. The GST regime is likely to change
this practice and the delivery of securities would attract tax.
2) Compliance burden of mutual funds will go up
substantially: As per the model of GST code, a tax incidence arises
at the location where a service is being delivered. Besides this, the
model law considers the head office of the Asset Management
Company (AMC) and its branches different entities. The asset
management activity of a fund house is usually centrally operated,
while marketing and sales activities of the schemes run at various
places. The problem arises when branches and the head office are
treated as different entities. It is also unwise to treat transactions
between the head office and the branches as "supply" of services.

17. 3) Investors will suffer once the GST is implemented: Don't
be surprised if mutual fund houses subsequently raise the
expense ratios under most of their schemes. We not only
provide fund management services, but in this effort, we utilise
services of other entities such as custodians and brokerage
houses. As a result, the expense ratio of the scheme investors
have invested in includes the Service tax that the Asset
Management Companies (AMCs) pay.
4) Mutual fund advice will also cost investors more: GST will
also negatively affect distributors: If investors opt for
arbitrary recommendations from mutual fund distributors who
earn commissions from mutual fund houses, it could possibly
hurt this category of financial professionals.
5) Impact on distribution levels: The government has
exempted distributors' annual earning up to Rs. 20 lakh from
paying service tax. Currently, distributors earning up to Rs. 10
lakh as a commission are exempted from paying service tax

19. GST has been envisaged as a more efficient tax system, neutral in
its application and attractive in distribution. The advantages of
GST are:
 Wider tax base, necessary for lowering the tax rates and
eliminating classification disputes
 Elimination of multiplicity of taxes and their cascading effects
 Rationalization of tax structure and simplification of compliance
procedures
 Harmonization of centre and State tax administrations, which
would reduce duplication and compliance costs
 Automation of compliance procedures to reduce errors and
increase efficiency

20.  High Tax burden for manufacturing SMEs
 Increasing operating costs
 Change in Business software
 GST will be implemented in the middle of the year
 Increase in Taxes will increase the price
 Petroleum products are not a part of GST yet
 Registration in multiple states
 Problems Faced by E-commerce
 Composition scheme is available for many Businesses
 No Anti-Inflationary Measures

21. Change is definitely never easy. It is important to take a leaf from global
economies that implemented GST and overcame the teething troubles to
experience the advantages of having a unified tax system, easy input credits,
and reduced compliances.
Once GST is implemented, most of the current challenges of this move will be a
story of the past. India will become a single market where goods can move freely
and there will lesser compliances to deal with for businesses.
Twenty four states have passed the state GST (SGST) Act till June 5, while seven
states, including Meghalaya, Punjab, Tamil Nadu, Kerala, Karnataka, Jammu &
Kashmir and West Bengal are yet to pass the SGST Act . The Centre has said it
will roll out the Goods and Services Tax (GST) on July 1 and it is crucial for all
states to approve the SGST Act for smooth implementation of the tax reform
measure.