Gst presentation

11
RRooaaddmmaapp ttoo GGooooddss &&
SSeerrvviiccee TTaaxx
-- BByy CCAA RRaagghhaavv BBaajjaajj
© Copyright Raghav Bajaj

22
2 things bound
to happen in a human’s life
Death Taxes
Doesn’t
get worse
every
year!!! “The hardest thing
in the world to
understand is the
income tax.”

33
OObbjjeeccttiivveess ooff
TThhee ppaappeerr
GST-What & Why?? The GST model Conclusion
Cascading Effect
of taxes
Multiple levels of
taxation
Treating goods &
services on the same
footing
Ensuring that the
credit chain doesn’t
break
Reduction in
inflation
Rate
Structure
Inter State
Transactions
Minimal
exemptions
The Indian
Constitution
Extinction of
© Copyright Raghav Bajaj CST

44
GST-What & Why??
Cascading Effect of taxes
Multiple levels of taxation
Treating goods & services on the same
footing
Ensuring that the credit chain doesn’t
break
Reduction in inflation

55
CCaassccaaddiinngg EEffffeecctt
 CCeennttrree ccaannnnoott lleevvyy ttaaxx bbeeyyoonndd ppooiinntt ooff
mmaannuuffaaccttuurriinngg..
 SSttaatteess ccaannnnoott lleevvyy ttaaxx oonn sseerrvviicceess..
 UUnnffrriieennddllyy iinnppuutt ttaaxx ccrreeddiitt rruulleess..

66
CCaassccaaddiinngg EEffffeecctt ((ccoonnttdd..)) –– IIlllluussttrraattiioonn
Rajasthan Chattisgarh
GGooooddss mmaannuuffaaccttuurreedd iinn RRaajjaasstthhaann 110000..0000
AAdddd:: -- EExxcciissee DDuuttyy @@ 1100%% 1100..0000
TToottaall CCoosstt 111100..0000
AAdddd:: -- CCSSTT @@ 22%% oonn 111100 ((iinntteerr ssttaattee ssaalleess)) 22..2200
PPuurrcchhaassee pprriiccee iinn CChhaattttiissggaarrhh 111122..2200
AAdddd:: -- VVaalluuee AAddddeedd bbyy bbuuyyeerr iinn CChhaattttiissggaarrhh 4400..0000
TToottaall CCoosstt 115522..2200
AAdddd ::-- VVAATT lleevviieedd @@ 1100%% oonn 115522..22 1155..2222
TToottaall 116677..4422
CST
levied on
excise
also
VAT
levied on
prior
taxes also
Goods sold

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CCaassccaaddiinngg EEffffeecctt ((ccoonnttdd..)) –– IIlllluussttrraattiioonn
Who bears
the Ultimate
Burden
???
Final
Consumer!!
No credit of excise in
CST
No credit of excise &
CST in VAT

88
Harmonization & Simplification of
Indirect Taxation
 Subsumes various cceennttrraall aanndd ssttaattee ssttaattuueess
CCeennttrraall SSttaattuueess SSttaattee SSttaattuueess
TThhee EExxcciissee LLaaww SSttaattee VVAATT
AAddddiittiioonnaall dduuttiieess ooff ccuussttoommss EEnnttrryy TTaaxxeess nnoott iinn lliieeuu ooff OOccttrrooii
TThhee SSeerrvviiccee TTaaxx TTaaxxeess oonn llootttteerryy eettcc..
CCSSTT EEnntteerrttaaiinnmmeenntt ttaaxxeess
PPuurrcchhaassee ttaaxx,, OOccttrrooii mmiigghhtt nnoott
bbee ssuubbssuummeedd
Basic Custom duties
will remain outside
the GST regime

99
OObbjjeeccttiivveess ooff
TThhee ppaappeerr
GST-What & Why?? The GST model Conclusion
Cascading Effect
of taxes
Multiple levels of
taxation
Treating goods &
services on the same
footing
Ensuring that the
credit chain doesn’t
break
Reduction in
inflation
Rate
Structure
Inter State
Transactions
Minimal
exemptions
The Indian
Constitution
Extinction of
© Copyright Raghav Bajaj CST

1100
The GST model
Rate Structure
Inter State Transactions - IGST
Minimal exemptions
The Indian Constitution
Extinction of CST

1111
Rate
For
GST
CGST – Central GST SGST – State GST

1122
EExxppeecctteedd GGSSTT RRaattee
1166%%--
1188%%

1133
IInntteerr ssttaattee GGSSTT -- IIGGSSTT

1144
The GST model
Rate Structure
Inter State Transactions
Minimal exemptions
Extinction of CST

1155
Minimal exemptions in GST
More exemptions = More problems

1166
The GST model
Rate Structure
Minimal exemptions
Extinction of CST

1177
Constitutional Amendment Bill
(CAB)
 Presently, the centre can impose taxes on
manufactured goods and services;
 While states can only tax sales of goods. At present,
the States do not have the power to levy taxes on
services.
 The CAB was tabled before the Parliament of
India on 22 March 2011 by the Finance Minister
of India.
 The CAB needs to be passed by a 2/3rd majority in
both Houses of Parliament.
 Subsequently it needs to be ratified by at least 50%
of the state legislative assemblies before it can
legally amend the present provisions of the
Constitution.
 After ratification of the CAB, the center and state
assemblies will have to pass the GST legislation.

1188
GST and the Constitution of India
 The amendments have 3
components:
 1. Grant of new powers to the Centre
and the states to levy GST,
 2. Deletion of powers to levy taxes that
are to be subsumed by the GST, and
 3. Empowering the finance ministries
to collectively determine the design of
GST
© Copyright Raghav Bajaj 18

1199
The GST model
Rate Structure
Minimal exemptions
Extinction of CST

Changes to the Finance Bill
2011-2012 for introducing GST
 IT infrastructure
 Number of exceptions to excise duty
have been reduced
 Negative list of services (27 services
proposed under 9 broad categories)
[Source: http://www.cbec.gov.in/taxservices-negativelst.pdf]
 Definition of service

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Expectations from GST
Cost of production
Rise in demand
Competitiveness
Govt. revenues

2222
Yes to GST but when????
 The introduction of a new GST has been
long-awaited in India. But the burning
question is — what is the expected time line
for its implementation?
 The government has expressed its intention
to introduce a national-level GST by 1 April
2012.
 However, the implementation has been
delayed in the past and this may not be a
firm date.

2233
Conclusion
Reduction in compliance costs
Reduction in inflation
Opportunity for CA’s
Globally fruitful results

GST – a weapon against corruption
 Reduction in the ‘cash’ component of
the economy
 Heavy reliance on technology
 PAN based GST registration
 Shifting from origin to destination
based taxation

Email Id raghav.b.bajaj@gmail.com
Thanks!!
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