GST 6TH MAY 2015
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Goods and Services Tax (GST) is a major tax reform in India that aims to unify indirect taxes into a single tax. GST passed in the Lok Sabha in May 2015 and aims to make India a unified market. It replaces existing taxes such as VAT, service tax, and other duties. GST has a dual model with Central GST and State GST applied to all goods and services. It follows a destination-based principle where taxes are levied at the destination of consumption. The GST rate structure has lower and standard rates applied to goods and services. Threshold limits and compensation mechanisms were delayed due to disagreements but were eventually resolved.
GST 6TH MAY 2015
- 1. GST PASSED INGST PASSED IN LOKSABHA MAY 2015
- 2. Goods and service tax is a futuristic tax with the goal of making india a globalGoods and service tax is a futuristic tax with the goal of making india a global participant. India has witnessed substantial reforms in indirect taxes over the past two decades. The gst is one of the biggest tax reforms in india
- 3. Components of GST CGST It would be levied by the Centre SGST It would be levied by the States
- 4. Dual GST The Basic features of law such as *Chargeability * Definition of Taxable Events * Taxable Person* Taxable Person * Measure of levy including valuation provisions * Basis of classification etc. would be uniform across the statutes as far as practicable
- 5. Taxes To be Subsumed Central Taxes Central Excise Duty Additional Excise Duties Excise Duty levied under Medicinal & Toiletries State Taxes Value Added Tax CST Entertainment Tax Medicinal & Toiletries Preparation Act Service Tax Countervailing Duty(CVD) Special Additional Duty Surcharge Cess Luxury Tax Taxes on Lottery,Betting & Gambling State Cess and Surcharges Entry Tax not in lieu of Octroi
- 6. Taxes that may or may not be subsumed Purchase Tax Stamp Duty Vehicle Tax Electricity Duty Electricity Duty Other Entry Tax and Octroi
- 7. Destination Basis GST will follow the destination principle ie. Impact of GST would fall on the person finally consuming the commodity. Also tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed.where the imported goods and services are consumed. GST would be structured on the destination principle, as a result of this, tax will shift from production to consumption whereby imports will be liable to both CGST and SGST and export should be relieved from the burden of GST by zero rating. Consequently, revenue will accrue to the State in which the consumption takes place or deemed to take place
- 8. Rate Structure (SGST as well as CGST of Goods should have two-rate structure) Lower Rate For necessary items and goods of basic importance Standard Rate For other goods in general importance
- 9. Revenue Neutral Rate (RNR) Since the GST is primarily intended as an exercise in reforming the consumption tax in India and not an exercise for additional resource mobilisation through discretionary changes, the CGST and SGST ratesdiscretionary changes, the CGST and SGST rates should be such rates which would yield the same revenue as collected from various taxes which will be subsumed in the CGST and SGST, that is, it should be RNR. That is to say the revenue to Government is same as it is earned prior to introduction of GST. Combined RNR ????
- 10. Reasons for Delay Turnover Threshold Limit Purchase Tax Compensation for Losses Single Rate Structure Single Rate Structure
- 11. Classification of Goods and Services GST should be applicable on all transactions of Goods and Services, however different rates for taxability of Goods and Services. A registered dealer will be required to collect A registered dealer will be required to collect taxes on every invoice irrespective of whether the supply is for goods or services. Therefore, no classification of goods and services should be provided for in law. This will eliminate all classification disputes. “Services” means anything other than goods.
- 12. Integrated GST (IGST) Under the IGST Model of GST taxation, Centre would levy IGST which would be CGST+SGST on all inter-State transactions of taxable goods and services.services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST,CGST and SGST on his purchases. IGST apportioned between the Centre and States in the manner as may be prescribed by Parliament by law
- 13. Branch Transfers IGST would be applicable on every Branch Transfer/Consignment Reduce Tax Evasion Transfer/Consignment Sales across State
- 14. Additional Tax Additional tax on supply of goods in the course of inter-State shall be levied not exceeding @1% Distributed among the States from where the supply originates.originates. Additional tax on supply originates from Union Territories shall be form part of Consolidated Fund of India. Only for two years. No Input tax Credit on such additional tax
- 15. Tax Credit Taxes paid against SGST shall be allowed to be taken as input tax credit for the SGST and could Taxes paid against CGST shall be allowed to be taken as input tax credit for the CGST and couldfor the SGST and could be utilised only against the payment of SGST for the CGST and could be utilised only against the payment of CGST
- 16. Tax Credit Tax Credit Out put Tax Input TaxOut put Tax Input Tax CGST CGST IGST SGST SGST IGST
- 17. RATE OF IGST= RATE OF CSGT+RATE OF SGST TAX CREDIT OUTPUT TAX INPUT TAXOUTPUT TAX INPUT TAX IGST IGST CGST SGST
- 18. THRESHOLD Turnover of Goods Applicable Taxes Below Rs. 10 Lacs Neither SGST nor CGST Between Rs.10 Lacs and Rs.150 Lacs Only SGST Above Rs.150 Lacs Both SGST and CGST Turnover of Services Applicable Taxes Below Rs.10 Lacs Neiher SGST nor CGST Between Rs.10 Lacs and RS.___* Only SGST Above Rs._____* Both SGST and CGST *would be appropriately high may be at or around Rs.150 Lacs
- 19. Threshold Limit(Inter-State) The threshold exemption should not apply to dealers and service providers who under take Inter-State Supplies. The GST Council recommends to the Union and the The GST Council recommends to the Union and the States on the threshold limit of turnover below which goods and services may be exempted from goods and service tax
- 20. IMPORT The incidence of tax will follow the destination principle. The tax revenue in case of SGST will accrue to the State where the imported goods and services consumed.where the imported goods and services consumed. Full and complete set-off will be available on the CGST and SGST paid on imported goods.
- 21. Import Taxes Even after introduction of GST following duties may not be subsumed under GST regime and they may continue to be levied as usual. These duties are:are: Basic Customs Duty Anti-Dumping Duty Safeguard Duty
- 22. EXPORT GST would be structured on the destination principle, as a result, exports would be relieved of the burden of GST by Zero Rating. Zero Rating of exports means that when goods are Zero Rating of exports means that when goods are exported, no VAT is charged on the goods. VAT paid on the inputs is also refunded.
- 23. EXPORT DUTY Even after introduction of GST, Export Duty under Customs Act,1962 may not be subsumedAct,1962 may not be subsumed and it will continue to be levied as usual.
- 24. EXEMPTIONS Zero Rating Vs Exemption ZERO RATING EXEMPTION Actual Benefit is given Theoretical Benefit Tax Relief at all levels Tax Relief only at one level Credit Chain Continues Credit Chain Broken No tax on value added at all Tax on value added of a particular dealer is foregone/exempted
- 25. Area Based Exemption Numerous Area Based Exemptions (Uttaranchal, Himachal Pradesh etc) Under GST regime, Area Based Exemption is not expected to be continued.expected to be continued. Provide Direct Investment Linked Cash Subsidy
- 26. FORMS ER1 and 6 VAT FORM CST FORM ST3 GST 1
- 27. Registration The GST Registration Number would be a 12 Digit Alpha Numeric PAN Based NumberNumeric PAN Based Number
- 28. Global GST Rates Highest GST Rate @25% ( Denmark,Hungary,Norway, Sweden) Lowest GST Rate @3%Lowest GST Rate @3% (Aruba,French Polynesia,Iran)
- 29. 12 Benefits of GST 1. One Tax 2. Common Market 3. Distinction Between Goods and Services will go 4. Invoicing will be Simpler 5. No Entry Tax5. No Entry Tax 6. Common Exemptions between Centre and State 7. Big Central Excise Tariff Will Go 8. Concept of Manufacture will go 9. Classification Controversies will go 10. Problem of Identification will go 11. Undue Enrichment Law will 12. Zero Rating will be more Comprehensive & More Easy
- 30. The End