goods and service tax
TRANSCRIPT
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By:- Siddhant Jain
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WHAT IS GST?
System of indirect taxation under which the host of indirect tax such as VAT, ST, central excise duty, octroi, etc. shall be merged & there will be a single levy for every service or goods with a single rate of tax.
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Reason for Adoption
GST is likely to improve tax collections and boost India'seconomic development by breaking tax barriersbetween States and integrating India through a uniformtax rate.
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Subsuming of Taxes
Central Excise DutyAdditional Excise
Duty
Special Additional Duty
Countervailing Duty
Service Tax
Centre GST
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Subsuming of Taxes
Lottery Tax Entertainment Tax
Entry Tax (other than for local body)
Luxury Tax
Value Added Tax/ Sales Tax
State GST
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Proposed Key Features
Dual GST : Central GST & State GST
Destination based State GST
Common Base
Uniform Classification
Uniform Forms – Returns, Challans ( in electronic mode)
No cascading of Central and State taxes
Cross credit between Centre and State not allowed
Tax levied from production to consumption
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One Common return for both Central and State GST
Uniform collection procedure for central and state GST
13 digit PAN based Common TIN registration
TINXSYS ( Tax Information Exchange System) to track
transactions
Balance of Fiscal Autonomy to Center and States and
need for Harmonization
Proposed Key Features
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GST Rate Structure
Two Rate Structure
lower rate for necessary items and goods of basic importance
Standard Rate for goods in general
Note: • Special Rates also available•Exports are fully exempted with Zero rates.
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CGST: Centre GST
Levied by the Centre through a separate statute on alltransactions of goods and services made for aconsideration.
Exceptions would be exempted goods and services,goods kept out of GST and transactions below prescribedthreshold limits.
CGST would be levied across the value chain.
Rates for CGST would be prescribed appropriatelyreflecting revenue considerations and acceptability.
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SGST: State GST
Levied by the States through statute on all transactions ofgoods and services made for a consideration.
Exceptions would be exempted goods and services, goodskept out of GST and transactions below prescribed thresholdlimits.
Basic features of law such as chargeability, taxable event,measure, valuation, classification would be uniform across theseStatutes as far as practicable.
State GST would be paid to the accounts of the respectiveState.
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Inter State Transactions
Centre would levy IGST which would be CGST + SGST.
IGST would be levied on all inter-State transactions of taxable
goods and services with appropriate provision for consignment
or stock transfer of goods and services.
Inter-State dealer will pay IGST after adjusting available, IGST,
CGST and SGST on purchases.
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Illustration for IGST
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Illustration for IGST
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Credit Utilization
CGST• CGST credit can be utilized only against CGST liability
SGST• SGST credit can be utilized only against SGST liability
IGST
• IGST consist of 2 components i.e. CGST & SGST –Available CGST credit can be utilized against CGST portion while SGST credit against SGST portion
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Some Special Cases
Taxes on items containing alcohol and petroleum product are
kept out of GST. They will continue to be taxed as per existing
practices.
Tax on Tobacco products will be subject to GST. But
government can levy the extra Excise duty over and above GST.
Exports are fully exempted with Zero rates.
Imports will be treated as that manufactured in India.
PAN based identification number will be allowed to each
taxpayer to have integration of GST with Direct Tax.
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Favorable Impact of GST
Seamless credit to trade and industry throughout supply chain will improve
competitiveness
Common Tax Base will eliminate tax cascading
CST phase-out will reduce supply chain cost
Economy in production scale & efficiency in distribution
Simplified structure to reduce transaction cost
Boost up of exports.
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Major Challenges to GST
Rapid increase in assessee
Legislative challenge
Effective credit mechanism
IT Infrastructure
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Why are some States against GST; will they lose money?
•Some States have sought assurances that their existing revenues will be protected. The central government has offered to compensate States in case of a loss in revenues. •Some States fear that if the uniform tax rate is lower than their existing rates, it will hit their tax kitty. The government believes that dual GST will lead to better revenue collection for States.•However, backward and less-developed States could see a fall in tax collections. GST could see better revenue collection for some States as the consumption of goods and services will rise.
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Implementation Scenario
Past Near Past Implementation
National GST Dual GST ????????????
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Business Man: Sir do you really think that ‘negative list of services’ is amilestone in the road towards GST ?
CA: Well…..I think it is not a milestone, it seems to be a Pavement tothe GST road.
Business Man: Not understood Sir ……!!
CA: I mean the negative list has a capacity to exist along with Centre-state disconnects on the services to be covered there under which arepartially forming part of the GST disconnects.
Business Man: Sir………I still could not understand anything.
CA: OK….I will tell you in your language…….states asked for35services to be included in the negative list….correct?
Business Man: Yes Sir.
CA: And Government kept only 17 services in the list and have notincluded therein many services specified by the states. correct?
to be contd…….
GST- HUMOUR
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GST- HUMOUR
Business Man: Yes Sir.
CA: Now Empowered Committee of states is saying that their demandwas not taken into consideration and negative list will lead to doubletaxation and litigation….correct?
Business Man: Yes Sir.
CA: So the negative list of services when implemented willComplement the Centre -States contended road to GST, and can fit inas pavement along with that road whenever it comes into
existence….Understood??
Business Man: No Sir……..I mean. Yes Sir……I mean I will think overit…and am sure that I will understand!!!
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