• GST is single indirect tax for the whole nation.

• Any tax on supply of goods and services except some.

• Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into single system of taxation.

• First country to introduce GST was France in 1954.• Currently almost 160 countries have implemented GST with some countries 

having Dual-GST ( e.g. Brazil, Canada etc.) model.• It was presented as a bill and now it is The constitution (one hundred and 

First amendment) Act 2016. • The GST is administered & governed by GST Council and its Chairman 

is Union Finance Minister of India Arun Jaitley

GST

• Petroleum(but may be included within GST subsequently, basic recommendation by GST council)

• Alcohol for human consumption• Lottery & betting• Electricity duty and taxes• Entry tax levied by municipalities or panchayats• Stamp duties on immovable properties• Taxes on vehicles.

EXCLUSIONS OF GOODS & SERVICE TAX.

CURRENT STATUS OF GOODS & SERVICE TAX

The bill was approved in Lok Sabha but did not pass muster in Rajya Sabha. Then it has been referred to a select committee for scrutiny

Bill was introduced in the Lok Sabha by Finance Minister 

Arun Jaitley on 19 December 2014.

The select committee is expected to report  to the Rajya Sabha sometime in July. Then 

the house approved the recommendations.

The bill has to finally be approved by the President of 

India in 2016.

After both the houses of parliament pass the bill at 

least 50% of India’s 29 states have to approve the 

constitutional amendment.

Amendments are going on and yesterday, Lok Sbaha passed four GST bills.

Present Indirect Taxes system in India

Central Levy

Central Sales Tax 

Basic Custom Duty

SAD*

CVD**

Excise Duty

Service tax

State Levy

VAT

Octroi***

Purchase Tax

Entry Tax

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Article 246 of the Indian Constitution gives power to parliament to make

SAD* = Special Additional Duty levied to counter balance the sales tax  /Vat ,local tax 

**CVD is equivalent to the amount of excise

*** tax collected on various articles brought into a district for consumption

Why there is a need for GST? 

Complex Tax Structure Tax Cascading Changing business 

environment 

Inefficiency in Tax Administration Barriers to trade 

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CURRENT WORKING OF TAX 

Manufacturer

Wholesaler

Retailer

CustomerSupplier of Raw

Materials Material worth Rs. 100 inclusive of Rs. 10 in tax

Produces a good and adds Rs. 50 value.Price before tax=Rs. 150.Tax= 15 @ 10%.Total Price for WS=150+15=165

Adds Rs. 30 to the value.Price before tax= 195Tax= 19.5Total Price for Retailer=214.5

Adds Rs. 20 value.Price before Tax=234.5Tax=23.45Price to the Customer= 257.85

Analysis of Tax Paid

Total Value added in the process: 90+50+30+20=190. Total Tax Paid= 10+15+19.5+23.45=67.8. So out of the total 257.8 paid by the customer he ends up paying 67.8 in taxes.

One interesting thing to notice: The amount of tax in each subsequent level only increases despite of a lesser increase in value addition.

  Notice:  WS to Retailer & Retailer to Customer.                    This happens because:

There is cascading impact of ‘Tax On Tax’ i.e. after adding tax in the current level we do not offset it with tax already paid and again tax it (at 10%) in the subsequent level.

Also, greater the value added in the previous step the more tax gets accumulated in the subsequent level due to the cascading effect.

HOW GST solves THIS!?HOW WE WILL SOLVE THIS!?

Manufacturer

Wholesaler

Retailer

CustomerSupplier of Raw

Materials Material worth Rs. 100 inclusive of Rs. 10 in tax

Produces a good and adds Rs. 50 value.Price before tax=Rs. 150.Tax= 15 @ 10%.Tax already paid= 10Net Tax= 15-10=5Total Price for WS=150+5=155

Adds Rs. 30 to the value.Price before tax= 185 (155+30)Tax= 18.5 @ 10%Tax Already paid: 15Net Tax: 18.5-15=3.5Total Price for Retailer=188.5

Adds Rs. 20 value.Price before Tax=208.5Tax=20.85 @ 10%Tax Already Paid: 18.5Net Tax=20.85-18.5=2.35Price to the Customer= 210.85

Analysis:

Total Value added: 90+50+30+20=190 Total Tax paid= 10+5+3.5+2.35= 20.85 Compare this to tax paid in Non-GST regime of 67.8.   Rs. 47 decrease in taxes for good worth Rs. 190. Result: Goods become cheaper by the amount of decrease in tax!!

Why does this happen?

By offsetting tax in each level with the tax already paid in the previous level we avoid ‘tax on tax’.

Now the additional tax comes from value added in each stage.

This results in a lesser tax burden on the final customer. 

Features of Proposed GST 17

Destination based Taxation

GST Rates – to be based on RNR 

Dual model 

Centre will manage IGST 

Features of Proposed GST18

Nil Rate on necessary items

Merit rate for essential goods and services

Standard rate for goods and services in general

GST RATE STRUCTUREZERO RATED 0% On nearly 50% of the consumer inflation basket,

including food grains, the GST will be at 0 per cent

LOWER RATE 5% Items of common consumptionSTANDARD RATE 1 12% Two standard rates of 12 per cent and 18 per cent,

which would fall on the bulk of the goods and services. This includes fast-moving consumer goodsSTANDARD RATE 2 18%

HIGHER RATE 28% White goods, like washing machines, air conditioners, refrigerators, shampoo, shaving stuff and soap. The current levy varies between nil tax to 30-31 percent. Demerit goods or sin goods such as luxury cars, pan masala, aerated drinks, and tobacco and tobacco products, will invite a tax of 28 percent plus the cess.

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Transparency in taxation system 

AdvantagesOf GST  

Low price goods 

Simple structure

Zero Rated Exports 

Not helpful for manufacturing states

Service becomes costlier

Disadvantages Of GST  

India essentially lacks IT infrastructure at grass-root 

levels. 

THANK YOUQuestions and queries are most

welcome….