GOODS AND SERVICE TAX (GST) CONCEPT, MODEL AND PRESENT STATUS December, 2015 By Sushil Solanki Principal Commissioner of Service Tax GST by Sushil Solanki 1 PRESENT LAWS AND DISTORTIONS Multiplicity of Indirect Taxes Cascading taxation
Varying VAT rates in different States Credit of CST not available to buyers Service Tax credit not available to traders Uneconomic activities like opening of branches to save CST, Purchase from within State No set off ---no invoice parallel economy Plethora of forms required for movement of goods within States, Inter States, through State GST by Sushil Solanki 2 GST : PERCEIVED BENEFITS To Trade Development of common national market. Reduction of Procurement cost.
Efficient use of Resources & Economy of scale. Reduction in multiplicity of taxes. Mitigation of cascading/double taxation. More efficient neutralization of taxes especially for exports. Simpler tax regime Fewer rates and exemptions Conceptual clarity (Goods vs. Services) GST by Sushil Solanki 3 GST : PERCEIVED BENEFITS
To Government Enhanced GDP growth by increase in economic activities and efficient use of resources. Simpler Tax system Broadening of Tax base Improved compliance & revenue collections To Consumer Transparency as total taxes paid available in invoice. Total Tax burden to reduce. GST by Sushil Solanki 4 Features of GST(1) Destination-based Taxation
Applies to all stages of value chain primary, secondary & tertiary including retail Applies to all supplies of goods / services (as against manufacture, sale or provision of service) made for a consideration except Exempted goods / services common list for CGST & SGST Goods / services outside the purview of GST Transactions below threshold limits Dual GST having two concurrent components Central GST levied & collected by Centre State GST levied & collected by States GST by Sushil Solanki 5
Features of GST (2) IGST (CGST + SGST) applicable to Inter-State supplies of goods / services in India Inter-state stock transfers of goods Import of goods / services IGST levied & collected by the Centre Additional Tax not exceeding 1% on inter-state supply of goods to be levied & collected by the Centre but assigned to originating State Export of goods / services Zero rated GST by Sushil Solanki 6 Products under GST All
goods or services likely to be covered under GST except: Alcohol for human consumption - State Excise + VAT Electricity - Electricity Duty Real Estate - Stamp Duty + Property Taxes Petroleum Products to be brought under GST from a later date on recommendation of GSTC Tobacco Products under GST + Central Excise GST by Sushil Solanki 7 TAXES TO BE SUBSUMED INTO GST
CENTRAL TAXES Central Excise duty (CENVAT) Additional duties of excise Excise duty levied under Medicinal & Toiletries Preparation Act Additional duties of customs (CVD & SAD) Service Tax Surcharges & Cesses STATE TAXES State VAT / Sales Tax Central Sales Tax
Purchase Tax Entertainment Tax (not levied by local bodies) Luxury Tax Entry Tax (All forms) Taxes on lottery, betting & gambling Surcharges & Cesses GST by Sushil Solanki 8 GST Rates GST Rates Merit Rate/Standard Rate/Precious Metal
Floor rate with a small band of rates for standard rated goods / services for CGST & SGST Common Threshold exemption for CGST and SGST. Compounding scheme for taxpayers having taxable turnover up to a certain threshold above the exemption GST by Sushil Solanki 9 Other Features of GST Existing area based tax exemption likely to be made into Refund mechanism. C/F/H forms likely to be abolished Multiple statutes one for Centre & one for every
State Place of Supply Rules to determine Place of Supply of goods or services to determine whether the supplies are intra-State or inter-State HSN Code to be used for classification of goods Present system of classification of services to be used GST by Sushil Solanki 10 Integrated GST (IGST) To be levied on interstate supply of goods and services GST being destination based tax, tax paid in exporting
State needs to reach the importing State. Tax paid in the exporting state would be available as input tax credit in the importing State. IGST can be paid by using credit of IGST, CGST or SGST. In the returns, invoice wise supply details and importing state wise details required to be mentioned for settlement of tax credit amongst the States. On import of goods, IGST would be levied in lieu of CVD and SAD. GST by Sushil Solanki 11 Credit Utilization of CGST, SGST & IGST ITC of CGST for CGST & SGST for SGST - no cross
utilization ITC of IGST allowed for payment of IGST, CGST & SGST in that order ITC of CGST allowed for payment of CGST & IGST in that order ITC of SGST allowed for payment of SGST & IGST in that order No ITC of Additional Tax GST by Sushil Solanki 12 Registration Return, Other Process State wise registration Business Vertical-wise registration allowed LTU status
Amendment in Registration details- Except 3-4 details, no approval required Registration to be applied 30 days prior to specified date for taking registration ITC allowed only after date of Registration application Common GST Return for CGST, SGST, IGST, ADDL TAX Common e-payment facilities for all taxes Annual Return for comparison with Financial Records GST by Sushil Solanki 13 Input Tax Credit Changes & ISD Provisions ITC available on the basis of supplier uploading invoices and payment of taxes, like TDS credit in Income Tax
Seller/Supplier to upload invoice wise detail for all B-2B sale and in other specified cases Rating of Dealers and black listing of dealers ISD registration permitted for transfer to credit on services only. ITC transfer allowed from one to other registration only on supply/use of services. For goods transfer, normal branch transfer procedure to follow. GST by Sushil Solanki 14 Constitutional Amendment Concurrent jurisdiction for levy and collection of GST by the Centre and States. Centre to levy and collect IGST and the tax to be
apportion between Centre and State. Upto 1% additional tax to be collected by Centre but to be assigned to originating tax. Compensation to States for five years. Power to impose surcharge by Parliament removed. Concept of declared goods done away with. GST by Sushil Solanki 15 Constitutional Provision - GST COUNCIL (GSTC) Consist of Union FM, Union MOS (Revenue) and State Finance Ministers. Union Finance Minister as Chairperson
Vice Chairperson from States Weightage for votes provided. Decision by majority of 75% of weighted votes of members present and voting. GST by Sushil Solanki 16 Functions of GST COUNCIL Council to make recommendations on Taxes, etc. to be subsumed in GST Exemptions & thresholds GST rates Band of GST rates
Model GST Law & procedures Special provisions for certain special category States like North East, J &K, HP, Uttrakhand. Date from which GST would be levied on petroleum & related products GST by Sushil Solanki 17 GST NETWORK (GSTN) GSTN incorporated on 28th March, 2013 as Section 25 Private Limited Company. Central Government, State Government and Financial Institution are equity holders. GSTN to develop and operate a common IT portal to : Submit registration applications
File returns Make tax payments. Registration, return and payment information to be passed on to Central and State Tax authorities. GSTN to develop IT platform for verification of CENVAT credit availment. GST by Sushil Solanki 18 Current Status & Way Forward CAB introduced in parliament on 19th December, 2014 Passed by Lok Sabha and pending in Rajya Sabha
To be ratified by at least 50% of the State Legislatures Assent of President of India GST Council to be constituted GST by Sushil Solanki 19 Current Status & Way Forward ---(2) Report on Return, Registration and Refund placed in public domain Drafting of GST legislation Completed by Centre & State Govt representatives. Discussion for final draft underway GSTC to recommend GST Law and Procedure. GST law to be introduced in Parliament / State Legislature. GST Rates, Exemption to be decided
Consultation with Trade & Industry Training of Officers & Trade GSTN Portals to be made operational and to link with existing portals of Centre and State Government GST by Sushil Solanki 20 Preparation by Industry Review of Procurement decisions Review of Logistic Requirements like Warehousing, Storage, Transport Costing of Products for future orders for export, etc Industry specific issues like Area based Exemption, MRP based assessment requiring abatement % to be represented to the Govt
Exemption from Excise, Service Tax, VAT, to be taken up with Govt Decision for business vertical registration & Preparedness for State level registration GST by Sushil Solanki 21 Modification of IT systems Provision for CGST & SGST on Sales Interstate Sale IGST Capture of registration no. of buyer Sales Invoice to be uploaded Comparison of ITC as per Company record & as per GST ledger of Govt Tracking of ITC for invoices not uploaded by
supplier Tracking of blacklisted Suppliers GST by Sushil Solanki 22 Thanks GST by Sushil Solanki 23
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