goods & service tax (gst)
TRANSCRIPT
Goods & Service Tax (GST)
The Constitution (One Hundred One Amendment) Bill, 2014
HAVE YOU EVER NOTICED HOW MUCH
INDIRECT TAX DO YOU PAY??????
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PRESENTPRESENTINDIANINDIAN
INDIRECTINDIRECTTAX STRUCTURETAX STRUCTURE
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WHAT WASTHIS ALLLEADINGTO???????????????????
• Cascading effect of various taxes
• Complexity in tax structure
• High bureaucracy or several levels in the structure.
• Corruption
• Trade deficits 5
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Empowered committee set up by Atal Bihari Vajpayee
government in 2000 to streamline The GST model to
be adopted and to develop the required backend
infrastructure that would be needed for its
implementation.
on 28 February 2006, P. Chidambaram, the then Finance
Minister, announced the target date for implementation of GST to be 1 April
2010 and formed another empowered committee of State Finance Ministers to
design the roadmap.
Constitution (122nd Amendment) Bill, 2014 was introduced in the Lok Sabha
by Finance Minister Arun Jaitley on 19 December
2014, and passed by the House on 6 May 2015.
ROAD TO GSTROAD TO GST
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CASCADING EFFECT• “Taxation over taxes” or “cascading-
effect”
• Slump in total surplus of supply chain consisting of supplier, manufacturer,
retailer and consumer.
• Extra tax paid due to taxation of the already taxed amount is finally bore by
the end consumer which is common man and strikes them badly in addition-to
inflation.8
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EXAMPLE FOR CASCADING EFFECTASSUMPTIONS
Consider the above supply ChainNo profit margin is added by wholesaler & manufacturerExcise duty is 12%, CST 2%, VAT is 12.5%Consider, GST rate to be 26.50%
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TRADE DEFICITS• Cascading caused due to levy of variety of charges
by state and union governments has raised the tax-burden on Indian products and made them less competitive in the International market.
• multi-staged and cascading tax-structure steals the advantage of availability of cheap labour and other factors-of-production from India and brings the market-price (post-taxes) at par or above par the price of the international price.
• The manufacturing industry of India thus is not able to compete with that in China and Brazil.
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CORRUPTION
• The gargantuan-sizes of corporate-taxes owe much to
this taxation structure and have led to adoption of tax-
evasive practices.
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COMPLEXITY
•Common man finds himself strangled in a Gordian knot of multiple tax-rates, laws and elaborate processes and often fails to comply
with these complex legislations.
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WHAT IS GST??????????????????
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GST
Destination based tax on consumption of goods and services
levied at final consumption
only value addition will be taxed and burden of tax is to be borne by the
final consumer.
1 April 2017
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Destination based tax on consumption
•The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of
supply.20
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IS ITAPPROVED????????????
RATIFICATION
• Ratification is the official way to confirm something, usually by vote.
• On 12 August 2016, Assam became the first state to ratify the bill, when the Assam Legislative Assembly unanimously approved it.
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States who did not ratify GST
• Jammu and Kashmir• Karnataka• Kerala• Manipur• Tamil Nadu• Uttar Pradesh• Uttarakhand• West Bengal
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FEATURES OFGST
FEATURES
OF
GST
Destination-based Consumption Taxation
Transactions below threshold limits
Dual GST having two concurrent
components
Export of goods / services – Zero
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FEATURES
OF
GST
GST Rates – based on RNR : Four rates - Merit rate - essential goods or services Standard rate - goods or services in general Special rate - precious metals Nil rate - exempted goods or services
Floor rate with a small band of rates for standard rated
goods / services for CGST & SGST
Optional Threshold exemption in both
components of GST
Utilization of Input tax credit 28
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INPUTTAXCREDIT?????
Input tax credit is the credit for tax paid on inputs.
Every dealer is liable for output tax on the taxable sale effected by him.
The basic principle of VAT is that every dealer pays tax only on the
value addition in his hands.
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IT SOUNDS AMAZING BUT WHAT ARE ITS BENEFITS?????????????
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GST: PERCEIVED BENEFITS
To Trade
1.Reduction in multiplicity of taxes
2.Mitigation of cascading/ double taxation
3.More efficient neutralization of taxes especially for exports
4.Development of common national market
5.Simpler tax regime
6.Fewer rates and exemptions
7.Distinction between Goods & Services no longer required
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BENEFITS IN REGARDS TO FOREIGN TRADE
1.Makes Indian Products more competitive in global market.
2.Lower cost of production
3.Economies of scale
4.Attracts more Foreign Investments.
5.Common Market.
6.Logistics Cost will fall down.
7.GDP Grows.35
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PRICE
QUANTITY
S
D
P before GST
P after GST
So, this shows Price goes down as taxes are lower than earlier therefore a buyer is able to purchase more quantity of goods or in economic terms his purchasing power of a consumer increases
Q1 Q2
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To Consumers
• Simpler Tax system
• Reduction in prices of goods & services due to elimination of cascading of taxes which is currently estimated at 25%-30%.
• Uniform prices throughout the country
• Transparency in taxation system
• Increase in employment opportunities
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• Presently, for industries, the decision of how many inventories to maintain or where to maintain them is guided heavily by the concerns of tax avoidance.
• Most of the industries maintain warehouses in each state and union-territories to avoid the CST charged on crossing the border.
• This gives rise to 25-30 warehouses as compared to 8-10 in developed countries and leads to various inefficiencies in terms of space, cost-structure and operations.
• Extra money is wasted in procuring space for these inventories as well as operating them. This trade-off between cost and quality manifests in inefficient quality to the final consumer.
• Need to ensure real-time visibility of inventory across the diversified warehouse-network amounts to higher IT cost, Further, multiple handling across the various layers of distribution and multi-layered compliance requirements result in higher material handling and cost-compliance cost.
• Generally, the numbers of these warehouses being high, their sizes have remained very small and have caused duplication of overheads and have inhibited racking and automation. In short, the prevalent taxation policy has left our industries with no choice but to make do with obsolete and inefficient warehouses and inventory.
EFFECT ON LOGISTICS SECTOR OF INDIA & LAND (FOP)
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IS GST APPLICABLE TO EVERY GOOD OR SERVICE?????????????
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GST
GST would apply to all goods and services except Alcohol for human consumption, Electricity and Real Estate.
GST on petroleum
products would be applicable from a date to
be recommended by the GSTC. Tobacco and tobacco
products would be subject to GST. In
addition, the Centre would continue to levy
Central Excise duty.
A common threshold exemption would
apply to both CGST and SGST. Taxpayers
with a turnover below it would be exempt
from GST. A compounding option (i.e.to pay tax at a flat rate without credits) would be available to
small taxpayers below a certain threshold.
The threshold exemption and
compounding scheme would be optional.
Exports would be zero-rated.
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SOWHO ALLARE SUBJECTED TOGST?????????????????????
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MODEL OF GST
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WHO ISGOING TOGOVERN THIS STUPENDOUS TAX REGIME???????????????????
ROLE OF CBEC
1. Prominent role in relation to indirect taxes
2. Role in Policy making: Drafting of GST Law, Rules & Procedures – CGST & IGST Law
3. Assessment, Audit, Anti-evasion & enforcement under CGST & IGST Law
4. Levy & collection of Central Excise duty on products outside GST – Petroleum Products & Tobacco
5. Levy & collection of Customs duties
6. Evolving a joint Dispute resolution mechanism
7. Developing linkages of CBEC-GST System with GSTN
8. Training of officials of both Centre & States
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GST Council1. India’s most powerful federal bodies that will
oversee and administer the goods and services tax.
2. The GST council, the key decision-making body for GST.
3. Representation of Central & State government.
4. GST council will oversee tax collections that at present exceed Rs.13 trillion, according to a rough calculation of the centre and states’ tax collections from taxes on goods and services.
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SHORT TERM GOALS OFGST COUNCIL
SHORT TERM GOALS OF GST COUNCIL1. Establishment of IT framework
2. Meeting implementation challenges
3. Effective coordination between Centre & State tax administrations
4. Reorganization of field formations
5. Training of Officials and Trade & Industry
6. Augmentation of human resources
7. Spreading Accounting Literacy
8. Developing IT skills
9. Reorganization of Audit procedures
10. Harmonization of processes & procedures between CGST / IGST & SGST Law
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1. Ease of starting business
2. Higher exemptions to new businesses
3. Simple taxation
4. Respite for businesses in both sales and services
5. Reduction in logistics cost and time across States
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M V S SAI HEMANTM V S SAI HEMANT
BBA FOREIGN TRADEBBA FOREIGN TRADEUPES, DEHRADUNUPES, DEHRADUNUTTARAKHAND, INDIAUTTARAKHAND, INDIA 59