6. THE PRESENT SYSTEM OF INDIRECT TAXATION
Ref. Tax Levy by Levied on
Credit
can be
set-off
against
Covered by
GST
1
Central
Excise duty Centre
Manufacture 1,2 Yes
2
Service Tax Centre
Providing
services
1,2 Yes
3
Customs Centre Import
-
No
4 CVD* under
Customs Centre
Import
(compensating
Excise)
1,2 Yes
5
SAD* under
Customs
Centre
Import
(compensating
Sales Tax)
1 Yes
6
CST Centre
Inter-State
sales
- Yes
7
VAT State
Sales within a
state
7 Yes
(* CVD-CounterVai l ing Duty;Sad-Special Additional Duty)
7. THE NEED FOR GST
REMOVE CASCADING EFFECT OF
TAXES
Price=100
+taxes@10
%
=110
B C
Purchase
Price 110
+Tax@10%
=121
A
Purchase
Price 121
+Tax@10%
=133
8.
9. Transaction NEW System OLD System Comments
Sale within the state SGST
CGST
VAT &
Excise/
ST
Under the new
system, a
transaction of sale
within the state shall
have two taxes,
SGST-which goes to
the State; and CGST
which goes to the
Centre
Sale outside
The state
IGST CST &
Excise/
ST
Under the new
system, a
transaction of sale
from one state to
another shall have
only one type of tax,
the IGST-which
goes to the Centre
10.
11. A(MUMBAI)
Sale Price=100
SGST@8%=8
CGST@8%=8
B(PUNE)
Sale Price=200
SGST@8%=16-Input SGST=8
CGST@8%=16-Input CGST=8
C(NAGPUR)
CENTRAL
Mumbai
MAHARASTR
A
12. A(INDORE)
Sale Price=100
SGST@8%=8
CGST@8%=8
B(BHOPAL)
Sale Price=200
IGST@16%=32-SGST & CGST=16
C(LUCKNOW)
CENTRAL
Transfer of
credit : SGST
MADHYA
PRADESH
13. A(DELHI)
Sale Price=100
IGST@16%=16
B(JAIPUR)
Sale Price=200
CGST@8%=16-Input IGST(8)=8
CGST@8%=16-Input CGST(8)=8
C(JODHPUR)
CENTRAL
Transfer of
Credit : IGST
Jaipur
RAJASTHAN
14. Reduction in prices
Increase in Government Revenue
Less compliance and procedural cost
Taxes which cannot be set off will reduce
All India tax will be based on value added
No value added implies no tax to be paid to the
government
Creation of a tax neutral supply chain.
You follow any route; the tax given to the government will
remain the same.
Entry tax, Octroi etc. Will be there, but as is evident, these
are also being slowly removed. This will make the supply
chain perfectly neutral to taxes
15. Factors to be kept in mind about GST
All the states implement the GST together and that too,at the same rates.
For smooth functioning, the GST legislation clearly sets out the taxable event.
It should be clearly identifiable as to where the goods are moving.
CAs will have to take the onus to spread the awareness about GST.
Notas do Editor
Prepared by : Aman Jajoo
Roll no : 300
Room no : 12