DEFINATION GST is one indirect tax for the whole nation, which will make India one unified common market. Goods and Services Tax (GST) is an indirect tax applicable throughout India which replaced multiple cascading taxes levied by the central and state governments. It is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

The Journey So Far MAR 2016 AUG 2016 2013 2009 2014 2011 2006 12 GST Council Meeting AUG 2016 Constitution Amendment Bill passed 2013 Three Committees constituted by EC and GSTN set up 2009 First Discussion Paper (FDP) released by EC CGST, SGST, UTGST, IGST Compensation cess bills recommended 2014 Constitution (122nd Amendment) Bill (CB) introduced in Lok Sabha 2011 Constitution (115th Amendment) Bill introduced 2006 Announcement to introduce GST by 2010

The Effort and Work Done on GST till now 10 Years in Making 30 + sub-groups & committees 31000 + industry professionals trained 18000 + man hours of discussion by GST council 14 empowered committee meetings 175 + officers meetings 51000 +officers trained Constitution amendment and 5 laws Approved by collaborative effort

The Effort and Work Done on GST till now Consists of Finance Minister, the MOS (Finance) and the Minister of Finance/Taxation of each State Chairperson – Union FM Vice Chairperson –to be chosen amongst the Ministers of State Government Quorum is 50% of total members Decision by 75% majority Council to make recommendations on everything related to GST including laws, rules and rates etc

Five Easy Steps in understanding GST GST (Goods & Services Tax), a single unified indirect tax system aims at uniting India’s complex taxation structure to a ‘One Nation- One Tax’ regime. Destination based tax on supplies of goods and services. It will be levied on all supplies with seamless flow of credit (for both goods & services) till it reaches the end consumer Only value addition will be taxed and burden of tax is to be borne by the final consumer. GST would replace indirect taxes ○ Central Excise Duty ○ CVD & SAD ○ CST & VAT ○ Entry Tax & Octroi ○ Surcharges & Cess ○ Service Tax

GST Rate Tax Rate Structure is as follows : Type Rate Goods and Services* Zero Rated 0% Essential items including food (Export, SEZ) Merit Rate 5% Commonly used items (Spices, Tea, Sugar etc.) Standard Rate 12% Bulk of the goods and services. This includes fast-moving consumer goods. (Smartphone, CCTV, Soaps, etc.) 18% Demerit Rate 28% Refrigerator, vacuum cleaner, dishwasher, weighing machine, washing machine, AC and aerated drinks Additional Cess 15% luxury cars, tobacco, and aerated drinks

GST Slab Percentage of Goods Falling Under Various Tax Slab : 7% item fall under the 0% tax rate 14% item fall under the 5% tax rate 17% item fall under the 12% tax rate 43% item fall under the 18% tax rate 19% item fall under the 28% tax rate

CURRENT TAX STRUCTURE Current Tax Structure is shown below : CURENT TAX STRUCTURE CENTRAL TAX EXCISE DUTY SERVICE TAX ADE SURCHARGES & CESS CVD & SAD STATE TAX VAT CST PURCHASE TAX LUXURY TAX ENTRY TAX

Taxes Subsumed Under GST Central Goods & Services Tax(CGST) Excise Duty ADE Service Charge Surcharge and Cess State/Union Goods & Services Tax(SGST) VAT Purchase Tax Luxury Tax Entry Tax Integrated Goods & Services Tax(IGST) CST CVD and SAD

CGST SGST IGST Tax Components of GST CGST stands for Central GST This is applicable on supplies within the state Tax collected will be shared to Centre SGST SGST stands for State GST Tax collected will be shared to State IGST IGST stands for Integrated GST This is applicable on interstate and import transactions Tax collected will be shared between Centre and State

Understanding CGST, SGST, UTGST & IGST STATE 1 STATE 2 UNION TERRITORY FOREIGN TERRITORY IGST IGST CGST + SGST IGST IGST CGST + SGST

Central Taxes : State Taxes : Following Taxes Not Likely to be Subsumed under GST Central Taxes : Customs Duty Other Customs Duty like anti-dumping duty, Safeguard duty etc. Export Duty State Taxes : Road & Passenger Tax Toll Tax Property Tax Stamp Duty Electricity Duty Stamp Duty & Registration Fees

Alcohol for Human Consumption Following Goods Not Covered under GST 5 Petroleum Products Petrol Diesel Petroleum Crude Aviation fuel Natural Gas Alcohol for Human Consumption Power Sector

Benefits of GST for Business and Industry Easy compliance : A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent. Uniformity of tax rates and structures : GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.

Benefits of GST for Business and Industry Removal of cascading : A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business. Improved competitiveness : Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.

Benefits of GST for Business and Industry Gain to manufacturers and exporters : The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.

Benefits of GST for Central and State Governments Simple and easy to administer : Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far. Better controls on leakage : GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders. Higher revenue efficiency : GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.

Benefits of GST for the Consumer Single and transparent tax proportionate to the value of goods and services : Due to multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer. Relief in overall tax burden : Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.

Taxation of imports under GST The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

Main Features of the GST Act GST to be levied on supply of goods or services All transactions and processes only through electronic mode – Non - intrusive administration Registration only if turnover more than Rs. 20 lac PAN Based Registration Option of Voluntary Registration Deemed Registration in three days Input Tax Credit available on taxes paid on all procurements (except few specified items) Credit available to recipient only if invoice is matched – Helps fight huge evasion of taxes Automatic generation of returns Composition taxpayers to file Quarterly returns Set of auto – populated Monthly returns and Annual Return GST Practitioners for assisting filing of returns

Main Features of the GST Act GSTN and GST Suvidha Providers (GSPs) to provide technology based assistance Separate electronic ledgers for cash and credit of 90% refund to exporters within 7 days Interest payable if Tax can be deposited by internet banking, NEFT / RTGS, Debit/ credit card and over the counter Cross utilization of IGST Credit first as IGST and then as CGST or SGST /UTGST Concept of TDS for Government Departments Concept of TCS for E – Commerce Companies Refund to be granted within 60 days Refund to be directly credited to bank accounts Provisional release refund not sanctioned in time ComprehensivetransitionalprovisionsforsmoothtransitionofexistingtaxpayerstoGST regime Special procedures for job work System of GST Compliance Rating Anti – Profit earning provision

GST Network (GSTN) A section 25 private limited company with Strategic Control with the Government To function as a Common Pass – through portal for taxpayers Submit registration application- File returns Make tax payments To develop back end modules for 25 States (MODEL – II) Infosys appointed as Managed Service Provider (MSP) 34 GST Suvidha Providers (GSPs) appointed

Role of CBEC Role in Policy making: Drafting of GST Law, Rules & Procedures – CGST, UTGST & IGST Law Assessment, Audit, Anti – evasion & enforcement under CGST & IGST Law Levy & collection of Central Excise duty on products outside GST – Petroleum Products & Tobacco Levy & collection of Customs duties Developing linkages of CBEC – GST System with GSTN Training of officials of both Centre & States Out reach programs for Trade and Industry

DEMERITS OF GST GST does have its own disadvantages and demerits. Petroleum Products : The government has left petroleum out of GST for now until all states are agreed to it. Multiple State Registration : Businesses are required to register for GST in each state they operate in. Professional Assistance : New startups or small businesses who lack knowledge of GST may require hiring professionals for managing their taxes. Computerized GST : Small businesses, taxpayers do not have much knowledge about online registration and filing returns. They will have to depend on professional assistance.

DEMERITS OF GST Luxury items to get costly : Drinking tea/coffee at branded cafes, staying in luxury hotels, electronic devices, bikes with engine capacity more than 350cc, Movie tickets etc. will be costlier with GST bill. Unstable economy : Right after implementation demonetization bill and now GST bill India’s economy will take approximately 1-2 years to become stable.

Way Forward Passage of CGST, UTGST, IGST & Compensation Law by Parliament and passing of SGST laws by State Legislatures. Rules relating to registration, returns, valuation, transitional, Input Credit etc. to be finalized. Outreach program for trade and industry. GST Council to fit tax rates to various categories of Goods or Services. Migration and handholding of existing tax payers. Change Management.

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