‘ G’ - Goods ‘S’ - Services ‘T’ - Tax JYOTI RAJ ADVOCATE

COUNTRYRATE OF GST: Australia10% France19.6% Canada5% Germany19% Japan5% Singapore7% New Zealand15%

Benefits of GST:  Wider the tax base, lower the tax rates.  Removing cascading effects.  Resolving dispute related to classification.  Rationalization of tax structure & simplification of compliance procedure.  Reduction in duplicity of information & compliance costs.  Increase in product competitiveness in international market.

 Rate of GST: It’s on higher side.  Decision making process in GST Council.  Compensation to loss making States for five years.  Not friendly to important service sector like banks.

 Most of the taxes will be subsumed in GST.  Good for all the businessmen including traders & manufacturers.  One will get credit of taxes paid, which are part of expenses in present taxation system.  Taxes paid will not be part of the purchases for manufacturer & traders.  Tax on Goods & Services will be merged.

PARTICULARSUnder VATUnder GST Manufacturer to Wholesaler Cost of Production 1,00,000 Add: CST Paid on import 1,00014%14,000 MANUFACTURER Margin 20%20,20020,000 TOTAL 1,21,2001,20,000 Service Tax 100 Add: Excise Duty 12%14,544 Total Value 1,35,8441,20,000 VAT 13.50%18, CGST 14%16,800 SGST 10%12,000 Invoice Value 1,54,182.91,48,800

PARTICULARSUnder VATUnder GST Wholesaler to Retailer Cost to Wholesaler 1,35,8441,20,000 Profit of Wholesaler 10%13, ,000 TOTAL 1,49,428.41,32,000 VAT 13.50%20, CGST 14%18,480 SGST 10%13,200 INVOICE VALUE 1,69,601.21,63,680 Retailer to Consumer Cost to Retailer 1,49,428.41,32,000 Profit of Retailer 10%14, ,200 Total Value 1,64,371.21,45,200 VAT 13.50%22, CGST 14%20,328 SGST 10%14,520 Price to the Consumer 1,86,561.41,80,048

Present indirect tax structure

‘ G’ – Goods ‘S’ – Services ‘T’– Tax G’ – Goods ‘S’ – Services ‘T’– Tax

There are two types of GST: Single GST Model Dual GST Model

Dual GST model

India is adopting a dual GST system Features of proposed Indian Dual GST: Single Registration. Uniform Method. One Common Return. Classification of goods & services. Administration.

State taxes which will be subsumed in GST:  VAT/ Sales Tax.  Entertainment Tax (unless it is levied by local bodies).  Luxury Tax.  Taxes on lottery, betting & gambling.  State cess & surcharges to the extent related to supply of goods & services.  Entry tax not on in lieu of octroi.

Central Taxes which will be subsume in GST: CCentral Excise Duty. AAdditional Excise Duty. TThe Excise Duty levied under the medical & Toiletries Preparation Act. SService Tax. AAdditional Customs Duty, Commonly known as Countervailing Duty (CVD). SSpecial Additional Duty of customs (SAD). EEducation Cess. SSurcharges.

Type of taxes under GST: a) SGST……………..State Goods & Service Tax b) CGST……………..Central goods & Service Tax c) IGST………………Integrated Goods & Service Tax

Three-rate structure – a) Special rate for precious metals b) A list of exempted items. c) General rate of GST from 18% to 24% & Additional 1%

How GST operates? Case 1: Sale in one state, resale in the same state

Case 2: sale in one state resale in another state

Case 3: sale outside the state, resale in that state

Tax Credit Mechanism CGST SGST CGST IGST SGST CGST IGST CGST SGST IGST

GST & ITS IMPACT ON VARIOUS SECTORS 1. Impact of GST on Revenue States. 2. GST to reduce Manufacturing cost. 3. Implications of GST on imports & exports. 4. Impact on EOU’s. 5. Impact on Pharma Industry. 6. Impact on unit enjoying exemption.

MY VIEW It is a three story building constructed jointly by State & Central Government.  Ground Floor is for Excise.  First Floor is for Commercial Tax.  Second Floor is for Service Tax.  Where as Building have been named as GST.

let’s hope gst is- “ good & simplified tax”

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