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Overview of this sensitization programSession 4This is where we are!Sessions 6, 7, 8Session 1Sessions 3, 5Constitutional PowersLegal FrameworkIT FrameworkAdministrative PreparednessGSTSession 2Taxation of ServicesGSTOverview of GSTSession 1

ContentsWhat is GST?Why do we need GST?Brief Background and ChronologyThe Road to GSTAmendment of ConstitutionSalient Features and present statusLegal frameworkIT frameworkInteraction with the PanelPresent indirect tax systemMultiplicity of taxes and rates Entry barriers across StatesCascading of taxes

What is gst?Single tax on goods and servicesSimultaneous powers to States and Centre to levy and collect tax throughout the value chainTax is on value addition at each stage of transaction: from raw material supplier to final consumerInput Tax Credit Tax already paid at one stage is deducted at the next stage

Major Benefits of GSTTrade:Simplification of indirect tax regime by subsuming of many indirect taxesHarmonization of duty structureNo cascading of taxes8Major Benefits of GSTEconomy:Broadening of tax base with minimal exemptionsBetter compliance due to input credit utilization and robust IT infrastructureIndia will become one common marketEfficiency and competitiveness of economy will improve Consequent growth in the economy92006-07Proposal first mooted in the Budget Speech for the financial yearApril 2008Empowered Committee of State Finance Ministers (EC) engagedNovember 2009First Discussion Paper released by ECMarch 2011Constitution (115th Amendment) Bill on GST introduced in Lok SabhaNovember 2012First meeting of Union Finance Minister with State Finance Ministers to push GST negotiationsTwo Committees Constituted:Committee on CST compensationCommittee on GST design Brief Background and chronologyJanuary 2013Reports of the two Committees presented to EC in BhubaneswarThree Committees Constituted:Committee on Revenue Neutral Rates and Place of Supply RulesCommittee on Dual Control, Threshold and ExemptionsCommittee on IGST and GST on importsAugust 2013Parliamentary Standing Committee submits its report to Lok SabhaSeptember 2013Revised Constitution (Amendment) Bill sent to EC for considerationMarch 2014After incorporating comments from EC and the Ministry of Law, revised version of the Bill sent to ECBrief Background and chronologyJune 2014After incorporating opinion of the Attorney General and certain other amendments, a further revised version of the Bill sent to EC on 20th June, 2014July 2014Meeting of Union Finance Minister with State Finance MinistersDecember, 2014Two meeting of Union Finance Minister with State Finance Ministers on 11.12.2014 and 15.12.2014.Introduction of Constitution (122nd Amendment) Bill, 2014 in Parliament.May, 2015Lok Sabha passes the Constitution (122nd Amendment) Bill, 2014Brief Background and chronologyThe Road to GSTAmendment of ConstitutionSalient FeaturesLegal frameworkIT frameworkAdministrative preparedness

BILL: Salient featuresArticle 246A: Dual GST ModelCGST to be levied and collected by Centre across the value chainSGST to be levied and collected by State across the value chainArticle 269A: Integrated GST (IGST) for inter-state transactions To be between the Union & States Unions share to be devolved14Taxes to be subsumedCentre:Central excise duty Additional excise duty Service tax Additional customs duty (CVD) Special additional duty of customs (SAD) Central cesses and surchargesBILL: Salient features15Taxes to be subsumedStates:VAT/sales tax Central Sales Tax (levied by the Centre, collected by the States)Entertainment tax Luxury taxTaxes on lottery, betting and gamblingEntry tax (all forms) State cesses and surchargesBILL: Salient featuresAll goods and services to be included, except:Petroleum and petroleum products Constitutionally included in GSTGST to be levied on petroleum products from the date to be recommended by GST CouncilAlcohol to be outside GST ConstitutionallyCentre to levy excise duty on tobacco over and above GST

BILL: Salient features17GST Council comprising FMs of all States and headed by Union FM, to be set up under proposed Article 279A GST Council to recommend:Taxes, Cesses and Surcharges to be subsumed;Exempted goods and services;Model GST laws CGST, SGST and IGST lawsBILL: Salient features18GST Council to recommend:Rates including floor rates with bands of GST;Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;Special provision with respect to J&K, NE States, Sikkim, Uttarakhand and Himachal PradeshBILL: Salient features19GST Council Voting Pattern:1/3rd vote with Centre 2/3rd vote with Statesdecision to be taken with 3/4th majorityFormula:WT = WC + WS WC = 1/3 = 33.33%WS = (WST*SF)/SPWST = 2/3 = 67.67%

BILL: Salient features20Article 366: Definitions12A: goods and services tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;;26A: Services means anything other than goods;26B: State with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature;.BILL: Salient features211% additional tax (non-vatable) on inter-State supply of goods for 2 years, or such other period as recommended by the GST Council1% additional tax to be credited to the State of originGST compensation to States for 5 yearsBILL: Salient features22Legal FrameworkJoint Committee on Model GST Laws: Report to be submitted shortlySGST law would be enacted by the States, and CGST & IGST laws would be passed by the Centre based on recommendations of GST Council IT FrameworkGSTN incorporated in March 2013 as private ltd. company SPV for providing shared IT infrastructure and services to Central and State Governments, tax payers, and other stake holdersEnvisaged as a common GST portal Taxation authorities to develop their own backend systems

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