2. Contents
Meaning of Tax.
Types of taxes.
Introduction.
History.
Tax Structures.
Implementations.
Model of GST.
GST Chain.
Functioning of GST.
Taxable Person.
Registration Under GST.
Returns.
Rate of Tax.
Exempted Goods.
Flaws of GST Model.
References.
3. TAX
A tax is a fee charged (levied) by a government on
a product, income, or activity. The purpose of
taxation is to finance government expenditure.
Use of tax in financing public goods and services,
such as street lighting, street cleaning
Infrastructure development.
4. Types Of Tax
Direct tax
Directly levied on the individual group or an
organization by the imposing entity.
Examples of direct taxes:
Income tax, corporate tax, wealth tax etc.
5. Indirect Tax
A tax levied on goods and services rather than
on income or profits.
Examples of indirect taxes:-
Excise duty, Customs duty, VAT, Central
sales tax, Entry tax, Octroi tax, Service tax,
etc.
6.
7. What Is GST
GST stands for Goods and Service Tax which is a
comprehensive tax levied on manufacture, sale and
consumption of goods and services at pan-India
level. Implying, GST will subsume host of central
(Excise, Countervailing Duty and Service Tax) and
state taxes (Octroi, VAT, Entry tax and Luxury tax).
GST is touted as the biggest indirect tax reform in
India since independence and is expected to boost
GDP growth by 100 to 150 basis points.
12. Existing Tax structure in India
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.
13. Proposed Tax Structure in India
Tax Structure
Direct Tax
Income Tax
Wealth Tax
Indirect Tax =
GST (Except
customs)
Intra- state
CGST
(Central)
SGST
(State)
Inter State
IGST
(Central)
14. State wise Implementation
S.No. State Passed On Government
1 Assam 12th August, 2016
BJP, CM Chief Minister
Sarbananda Sonowal
2 Bihar 16TH August, 2016 RJD-JDU, CM Nitish Kumar
3 Jharkhand 17th August, 2016 BJP, CM Raghubar Das
4 Himachal Pradesh 22nd August, 2016 Congress, CM Virbhadra Singh
5 Chhattisgarh 22nd August, 2016 BJP, CM RAMAN SINGH
6 Gujarat 23rd August, 2016 BJP, CM Vijay Rupani
7 Madhya Pradesh 24th August, 2016 BJP, CM Shivraj Singh Chouhan
8 Delhi 24th August, 2016 AAP, CM Arvind Kejriwal
16. 18 Rajasthan 2th September, 2016 BJP, CM Vasundhara Raje
19 Andhra Pradesh 8th September, 2016
TDP, CM N. Chandrababu
Naidu
20 Arunachal Pradesh 8th September, 2016
Janta Party, CM Prem
Khandu
21 Meghalya 9th September, 2016
Congress, CM Mukul
Sangma
22 Punjab 12th September, 2016
BJP-AKAALI, CM Prakash
Singh Badal
23 Tripura 26th September, 2016 CPI, CM Manik Sarkar
17. Subsuming of Existing Taxes
• Central Excise
• Additional duties of Custom
(CVD)
• Service Tax
• Surcharges and all cesses
CGST
• VAT/sales tax
• Entertainment Tax
• Luxury Tax
• Lottery Tax
• Entry Tax
• Purchase Tax
• Stamp Duty
• Goods and passenger Tax
• Tax on vehicle
• Electricity, banking, Real state
SGST
• CST
IGST
18. Model of GST
SGST and CGST for intrastate transaction : In the GST system,
both Central and State taxes will be collected at the point of sale.
Both components (the Central and State GST) will be charged on
the manufacturing cost. This will benefit individuals as prices are
likely to come down. Lower prices will lead to more consumption,
thereby helping companies.
IGST for Interstate transaction: ‘IGST Model’ will be in place
for taxation of inter State transaction of Goods and Services. The
scope of IGST Model is that center would levy IGST which would
be CGST plus SGST on all inter State transactions of taxable goods
and services with appropriate provision for consignment or stock
transfer of goods and services.
19. GST Set off Chain
Manufacturer
• Input Credit of Goods+ services
• After taking set off of Input credit, pay the Output Liability on value addition
Wholesaler
• Input Credit of Goods+ services from manufacturer
• After taking set off of Input credit, pay the Output Liability on value addition
Retailer
• Input Credit of Goods+ services from wholesaler
• After taking set off of Input credit, pay the Output Liability on value addition
Consumer • Ultimate Output Liability recovered from consumer
20. Functioning of GST
The illustration shown how GST will work.
VAT GST
Base Price 100 100
+ 12% Excise duty 12 NA
+12.5% VAT 14 NA
State GST NA 8
Centre GST NA 12
Total Tax Burden 26 20
Value Of Product to
Consumer
126 120
21. Taxable Person
It will cover all types of person carrying on business activities, i.e.
manufacturer, job-worker, trader, importer, exporter, all types of service
providers, etc.
If a company is having four branches in four different states, all the four
branches will be considered as TP (Taxable person) under each jurisdiction
of SGs.
A dealer must get registered under CGST as it will make him entitle to claim
ITC of CGST thereby attracting buyers under B2B (Business to Business)
transactions.
Importers have to register under both CGST and SGST as well.
22. GST on Export of Goods and
Services
GST on export would be zero rated.
Similar benefits may be given to Special Economic Zones (in
processing zones only).
GST paid by Exporter on the procurement of goods and
services will be refunded.
23. Registration under GST
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 exact design would be worked out in consultation
with the Income-Tax Department.
24. Returns under GST
The taxpayer would need to submit periodical returns to both
the Central GST authority and to the concerned State GST
authorities.
ITC credit can also be verified on the basis of the returns filed
and revenues reconciled against Challan data from banks.
Common standardized return for all taxes (with different
account heads for CGST, SGST, IGST) can come into picture.
25. Rate of Tax
The combined GST rate is being discussed by government.
The rate is expected around 16 per cent.
After the total GST rate is arrived at, the States and the Centre
will decide on the CGST and SGST rates.
Currently, services are taxed at 12 per cent and the combined
charge indirect taxes on most goods are around 20 per cent.
26. Rate of GST in some Countries
Country Tax Rate
Australia 10%
France 19.60%
Canada 5%
Germany 19%
Singapore 7%
New Zealand 15%
27. Exemption of Goods and Services Tax
Alcohol.
Tobacco Products.
Petroleum Products.
28. GST and Information Technology (IT)
Interface
Based on the legal provisions and procedure for GST,
the content of work-flow software such as ACES
(Automated Central Excise & Service Tax) would
require review.
On the IT front, there has been consensus that there
will be a common portal providing three core services
(registration, returns and payments).
29. Flaws of GST Model
Major flaw of this model is , Local Dealers have to pay CGST in
addition to SGST.
In Addition to this, CGST mainly represents the Excise/service tax
and SGST mainly represents the VAT portion but, because of ‘No
differentiation between Goods and Services’ service supply within
the state would attract SGST as GST is levied at each stage in the
supply chain and Assessee have to Pay CGST as well SGST.
The issue which still needs to be resolved are, the revenue sharing
between States and Centre, and a framework for exemption,
thresholds and composition.
