GST is a comprehensive indirect tax on the supply of goods and services throughout India that will replace existing taxes levied on goods and services by the central and state governments. It is expected to simplify and harmonize the indirect tax regime in India and provide a more efficient system of tax administration. Key benefits of GST include a wider tax base through elimination of cascading of taxes, simplification and rationalization of tax rates and structures, and improved compliance. The proposed GST model in India will follow a dual GST model with taxation powers shared between the central and state governments.

1. GROW AND SHARE TOGETHER!
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2. What is GST?
GST is a value added tax, levied at all points in the supply chain with credit
allowed for any tax paid on inputs acquired for use in making the supply. It
would apply to both goods and services in a comprehensive manner
Ø In simple terms it is a tax levied when a consumer buys goods
or services.
Ø GST is a comprehensive tax levy on manufacture, sale and
consumption of goods and services at an all India level.
Ø Through a tax credit mechanism, this tax is collected on value-
added goods and services at each stage of sale or purchase.
Ø The system allows the set-off of GST paid on the purchase of
goods and services against the GST which is payable on the
supply of goods or services.
Ø This is how consumption is taxed in most developed countries

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4. What are the benefits of GST for
Companies?
• GST has been envisaged as a more efficient tax
system, neutral in its application and
distributionally attractive.
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 center and State tax
administrations, which would reduce duplication
and compliance costs.

5. What are the benefits of GST for
Companies?
Destination principle
Ø The GST structure would follow the destination
principle.
Ø Imports would be subject to GST in the same
manner as domestic goods
Ø Exports would be zero-rated
Ø 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. There would be an
integrated GST (IGST) which is an aggregate of
Inter State GST and State GST
Ø An additional 1% tax has been proposed to be
levied by the centre which will be passed on to the
origin state

6. What taxes will be eliminated as
a result of GST?
Central taxes proposed to be eliminated
• Central Excise Duty
• Additional Excise Duty
• Service Tax
• Special Additional Duty (SAD)
• Countervailing Duty (CVD)
• Central Surcharge
• Cess

7. What taxes will be eliminated as
a result of GST?
State taxes proposed to be eliminated
• StateVAT / Sales Tax
• Entertainment Tax
• Luxury Tax
• State Cess and Surcharge

8. What will be out of GST?
— Levies on petroleum products
— Levies on alcoholic products
— Taxes on lottery and betting
— Basic customs duty and safeguard duties on import of
goods into India
— Entry taxes levied by municipalities or panchayats
— Entertainment and Luxury taxes
— Electricity duties/ taxes
— Stamp duties on immovable properties
— Taxes on vehicles
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10. IMPACTS OF GST ONYOUR SUPPLY CHAIN
Sourcing • Inter State Procurement may prove viable
• Opportunity to consolidate suppliers spread across India
Distribution • GST will result in changes in both procurement and distribution
arrangements
• The current product flow will need to be re-examined and altered
Pricing and
Profitability
• The tax savings from GST will need to passed on to consumers,
hence products need to be re-priced
• Margins and Mark Ups would need to be reexamined
Cash Flow • Excise Duty would be removed as a result cash flow will improve.
GST is payable at the time of sale and not at the time of removal
from the factory
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11. IMPACTS OF GST ONYOUR SUPPLY CHAIN
Information
Technology
Changes
• Changes to existing systems in terms of changes in master data,
system design and re-customizations
• Existing open balances and transactions need to be migrated to the
new system
• Changes to supply chain reports such as purchase register, sales
register
• Changes to forms such as purchase orders, invoices
• Need for training employees, educating customers
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12. Illustration on Tax Credit
Supplier Input
Cost
Value
added
Sale
price
Rate of
GST
GST -
output
Tax
credit
Net GST
payable
Manufacturer 100 30 130 10% 13 10 13-10
= 3
Whole seller 130 20 150 10% 15 13 15-13
= 2
Retail Seller 150 10 160 10% 16 15 16-15
= 1
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14. Rates ofTax
Ø There with be a two-rate structure –a lower rate for necessary
items and items of basic importance and a standard rate for
goods in general. There will also be a special rate for precious
metals and a list of exempted items.
Ø For CGST relating to goods, the States considered that the
Government of India might also have a two-rate structure, with
conformity in the levels of rate with the SGST.
Ø For taxation of services, there may be a single rate for both
CGST and SGST. It will be total of the rate as applicable under
CGST & SGST.
Ø Government is considering pegging the revenue neutral rate of
GST at a rate between 18% to 22%.This represents the aggregate
of CGST and SGST payable on the transaction.
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15. Current Status of GST in India
Ø The Government proposes to roll out GST from
April 1, 2016
Ø The Bill was approved in the Lok Sabha but did not
pass muster in the Rajya Sabha. It has now been
referred to a select committee for scrutiny
Ø The select committee is expected to report to the
Rajya Sabha sometime in July. The house can then
approve the recommendations
Ø After both the houses of parliament pass the bill at
least 50% of India’s 29 states have to approve the
constitutional amendment.
Ø The bill has to finally be approved by the President of
India
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16. V. Ramaratnam & Company,
Chartered Accountants,
Chennai.
info@vramaratnam.com
www.vramaratnam.com
THANKYOU!
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