gst one nation one tax - a myth or a reality

Maheshwari Yuva Sangathan

BASIC CONCEPTSTAXATION

May 2, 2023CA Sandesh Mundra for Maheshwari Yuva Sangathan

Taxes can be classified into various types on the basis of form, nature, aim and method of taxation. the most common and traditional classification is to classify into direct and indirect taxes.

Direct Tax Indirect tax


Multiple Events and Taxes in India


Service Tax

VAT

Octroi

Entertainment Tax

Swaccha Bharat Cess

ExciseLuxury Tax

CVD / SAD

Entry Tax

KKC

Sector Wise Tax Rates


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SSI Exemption

VAT – Rs. 5 Lacs Service Tax – Rs. 10 Lacs Excise – Rs. 150 Lacs

Composition of Taxes – Guj VAT – Rs. 50 Lacs


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Existing Indirect Tax System

RBI/ Banks

(Payments)

CBDT(PAN

Verification)

CAG(Audit & Accounting)

CGA/SAG (Accounting)

Facilitation Centre

E-Services

Centre

States

Tax Administration Tax Payer

Interface

•The present systems at Centre and States do not share data.• Limited sharing amongst States through TINXSYS

Department OfficesCUSTOMS

CEN. EXCISESERVICE TAX

VAT

OTHER TAXES


Non Harmonization of Tax Law, Rules and rates Lack of automation Different Exemptions Poor Quality of tax Returns / Multiple Formats Delayed Assessments Lack of Cross Verifications with other tax administrations

CA Sandesh Mundra for Maheshwari Yuva Sangathan

Lesson from Present System

May 2, 2023

GST- why did it took so much time


Taxable Event under GST is Supply

Even Branch Transfers / No declaration formsMay 2, 2023CA Sandesh Mundra for Maheshwari Yuva Sangathan

What is GST ?

Tax on Goods and ServicesDestination based consumption taxLeviable on each stage on value

additionCross credits across the country


GST Common Portal

RBI / Banks

(Payments)

CBDT(PAN

Verification)

CAG(Audit & Accounting)

CGA/SAG (Accounting)

Facilitation

Centre

E-Services

Centre

State A

GST PORTA

L

Tax Administration Tax Payer Interface

CustomsCGST

IGST

SGST

•Proposed common GST Portal – To act as common interface, will provide core services of Registration, Returns & Payments, Accounting of taxes

State BSGST


One Nation One Tax

CA Sandesh Mundra for Maheshwari Yuva Sangathan May 2, 2023

May 2, 2023

Taxes to be subsumed in GST

CGST

Taxes on lottery

Entry Tax& Octroi

Entertainmen t Tax (except by local bodies)

Purchase Tax & Luxury Tax

Central Sales Tax

VAT

Taxes on betting and gambling

SGST


Concept of IGST


May 2, 2023

Tax to be charged – Place of supply

SGST + CGST

IGSTCustoms +IGST

No GST


These would continue (apart from IT)

Customs Duty Stamp Duty Property Tax Professional Tax Old Taxes on Alcohol / Petroleum / Electricity Old Taxes + GST on Tobacco


How many acts will be passed in GST

CGST Act IGST Act SGST Act for each state


May 2, 2023

SGST + CGST % Supply of Goods & Services

0% Social Goods + Social services + Exports5 % Gold & Silver ornaments, precious &

semi-precious stones

Around12%Goods/Services of basic necessities, all industrial & agricultural inputs & passenger transport services

Around 18% Normal Rate on all goods & services other than mentioned else where

28% + CessCigarettes, other tobacco products, lottery tickets, luxury services, entertainment, betting & gambling

Expected Rates under GST


Input CreditCGSTSGSTIGST

Matching IssuesCross CreditSupplier RatingImpact on Working Capital


Illustration to Showcase Tax Benefit under GST


Present Scenario (Intra-State Trade of Goods)

CA Sandesh Mundra for Maheshwari Yuva Sangathan 22

Input Manufacturer Output Manufacturer Dealer Consumer

State Tax = 13.31( 11 + 1.10 + 1.21)

VAT = 11VAT = 12.10ITC = ( 11) 1.10

VAT = 13.31ITC = ( 12.10)

1.21

Excise = 10

Excise = 11ITC = (10) 1

Tax Invoice (A)Value = 100Excise = 10VAT = 11

121

Tax Invoice (B)Cost = 100Value = 110Excise = 11VAT = 12.10

133.10

Tax Invoice (C)Cost = 121Value = 133.10VAT = 13.31

146.41

Central Tax = 11( 10 + 1)

May 2, 2023

GST Scenario (Intra-State Trade of Goods)


Input Manufacturer Output Manufacturer Dealer Consumer

State Tax = 12.10( 10 + 1 + 1.10)

SGST = 10SGST = 11ITC = ( 10) 1

SGST = 12.10

ITC = ( 11) 1.10

CGST = 10CGST = 11ITC = (10) 1

Tax Invoice (A)Value = 100CGST = 10SGST = 10

120

Tax Invoice (B)Cost = 100Value = 110CGST = 11SGST = 11

132

Tax Invoice (C)Cost = 110Value = 121CGST = 12.10SGST = 12.10

145.20

Central Tax = 12.10( 10 + 1 + 1.10)

CGST = 12.10

ITC = (11) 1.10

May 2, 2023

Comparison (Trade of Goods)


Sr. No. Particular Intra-State Inter-StatePresent GST Present GST

1. Initial Value 121.00 120.00 121.00 120.002. Centre’s Tax 11.00 12.10 11.00 12.223. State (X)’s Tax 13.31 12.10 11.00 1.104. State (Y)’s Tax - - 16.91 12.225. State’s Total 13.31 12.10 27.91 13.326. Total Tax paid to Govt. 24.31 24.20 38.91 –

Refund Claim

25.54

7. Non-Vatable Tax borne by Business

11.00 0.00 25.00 1.10

8. Final value paid by Consumer

146.41 145.20 152.97 146.65May 2, 2023

Time of Supply of Goods / services

Currently Under GST

Dispatch of Goods / Service

Date of Invoice

Dispatch of Goods

Date of Invoice

Receipt of

Payment

GRN by buyer


Issue – Place of supply of service

May 2, 2023


Software downloads

Hotel stay

EventsEvent Services

Transport

E-commerce

Telecom

GST PLANNING


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May 2, 2023


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Do’s and Don’ts – To be reviewed after final Act and Rules are released

Reviewing the procurement policyRenegotiate contracts with

assumptionsReview all sources of procurement

excluding tax costsStock clearances if required

⤬ Avoid major procurements just before implementation

⤬ Avoid large cenvat and other credit balances

⤬ Avoid entering into new contracts

Supply Chain

The following are the benefits enjoyed by companies after the implementation of GST:

Interstate sourcing of raw materials Price negotiation Improvement in quality Better forecasting Improved inventory management Better trade-off between cost and customer service Capacity expansion Greater flexibility in manufacturing May 2, 2023CA Sandesh Mundra for Maheshwari Yuva Sangathan

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Thank You

CA Sandesh MundraEmail: [email protected]

www.gstbuilder.comMobile: 09426024975


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May 2, 2023

mailto:[email protected]

http://www.gstbuilder.com/