1. 1 Overview of GST

2. 2 Goods & Services Tax

3. Problem in current indirect tax structure 3  CENVAT has yet not been extended to include chain of value addition in the distributive trade below the stage of production.  Credit in respect of VAT and CENVAT is still not available against each other.

4. Problem in current indirect tax structure (Cont.) 4  CENVAT has also not included several central taxes, such as additional excise duties, additional customs duty, surcharges etc. in the overall framework of CENVAT.  Several State taxes (e.g. luxury tax, entertainment tax, etc.) have still not been subsumed under VAT and hence credit chain is broken in this respect.

5. GST – Answer to all problems 5  With the introduction of GST, a continuous chain of set-off from the original producer’s point and service provider’s point upto the retailer’s level would be established, eliminating the burden of all cascading effects including the burden of CENVAT and service tax.

6. 6  The dealer has to get the registration within 30 days.  Government entities / PSUs, etc. not dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non –GST goods or services would not be required to obtain registration.  Each taxpayer will be allotted a state-wise PAN based 15- digit, goods and services taxpayer identification number (GSTIN). Registration

7. 7 First two digits – State Code Thirteenth digit - Entity code Fourteenth & Fifteenth digit – Check Code In case of existing registrants, who are either registered with the state or centre, their data will be migrated to the GST common portal.

8. Features 8  GST shall have two components:- o Central GST - Levied by the Centre; and o State GST- Levied by the States.  Central GST and the State GST would be applicable to all transactions of goods and services made for a consideration.

9. Taxes to be Subsumed Under GST 9 Central Taxes:- Central Excise Duty Service Tax Additional Customs Duty (CVD) Special Additional Duty of Customs - 4% (SAD) Additional Excise Duty Cesses levied by the Union e.g., Cess on rubber, tea, coffee, etc.

10. Taxes to be Subsumed Under GST (cont.) 10 State Taxes:- Value Added Tax / Sales tax Entertainment tax Luxury tax Taxes on lottery, betting and gambling. Entry tax not in lieu of Octroi. Purchase Tax State Excise Duty except on liquor

11. Taxes which are out of Purview of GST: 11  Basic Customs Duty- It will continue to be levied under Customs Act, 1962 at the time of importation of goods.  Export Duty- It will continue to be levied under Customs Act, 1962 at the time of exportation of specified goods.  Stamp Duty- It will continue to be levied as per Indian Stamp Act,1899.

12. Taxes which are out of Purview of GST: (Cont.) 12  Tax on Petroleum Products- It is decided that the basket of petroleum products, i.e. crude, motor spirit and HSD would be kept outside GST. Sales Tax and Excise duty would continue.  Tax on items containing Alcohol- Sales Tax/VAT continued to be levied. Excise duty may also continue.

13. GST Rate Structure 13  HSN system will be implemented.  Taxation of Goods- Different Rates Lower Rate for goods of basic importance. Standard Rate for goods in general. Special Rate for Precious Metals.  Taxation of Services- One Rate

14. Tax credit 14  Taxes paid against Central GST shall be allowed to be taken as input tax credit for Central GST and could be utilized only against the payment of Central GST.  Taxes paid against State GST shall be allowed to be taken as input tax credit for State GST and could be utilized only against the payment of State GST.

15. 15 Tax credit (Cont.)  Cross utilization of credit between Centre and State would not be allowed, except under IGST.  Problems related to accumulation of credit on account of refunds would be avoided.  Refund/adjustment of Central GST and State GST would be completed in time bound manner in case of exporters, taxpayers purchasing capital goods and tax payers paying input at higher rate than output tax.

16. Illustration on Tax Credit SupplierInput Cost Value added Sale price Rate of GST GST - output Tax credit Net GST payable Manufactu rer 1003013010%131013-10 = 3 Whole seller 1302015010%151315-13 = 2 Retail Seller 1501016010%161516-15 = 1 16

17. GST on Exports 17  Exports would be tax exempt.  Benefits to be given to SEZ’s. However, such benefit will only be allowed to their processing zones.  No benefit allowed to the sales from an SEZ to Domestic Tariff Area (DTA).

18. GST on Imports 18  Both Central GST & State GST to be levied on import of Goods & Services.  Full set-off is allowed on GST paid on import of Goods & Services.  Tax revenue in State GST will accrue to the State where Goods & Services are consumed.

19. Integrated Goods and Service Tax (IGST) 19  Interstate transactions would be taxed as per a new and innovative model of Integrated GST.  Integrated GST would be levied by centre.  IGST = Centre GST + State GST.  IGST will apply on all inter-state supplies of taxable goods and services.  Person making sale would charge IGST and he can utilize input IGST, Centre GST and State GST in order to discharge the output IGST.

20. Miscellaneous:- 20  Taxpayer would have to maintain separate details in books of account for utilization or refund of credit.  Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits.

21. Miscellaneous (Cont.) 21  The administration of the Central GST would be with the Centre and for the State GST with the States.  Central GST and State GST are to be paid to the accounts of the Centre and the States separately.

22. Benefits of GST 22  GST structure would be a simple and transparent tax structure;  Reduction in the number of taxes at the Central and state levels;  Cut in effective tax rate for many goods;  Removal of the current cascading effect of taxes; and  Increased tax collections due to wider tax base and better compliance.

23. Road Blocks for GST 23  Agreement on GST rates among states and Centre.;  Constitutional amendments empowering states to levy tax on services & empowering centre to levy tax on sales.;  Compensation to be given by the Centre to States incurring revenue losses on implementation of GST.

24. Rate structure  The rate of GST is not specified in draft GST law, however the general rate could be 17%-18%.  Lower rate (of 12%-14%) - concessional goods  Higher rate (upto 40%) - luxury goods (such as luxury cars, tobacco products etc). 24

25. 25 Case 1: Sale in one state, resale in the same state In the example illustrated below, goods are moving from Mumbai to Pune. Since it is a sale within a state, CGST and SGST will be levied. The collection goes to the Central Government and the State Government as pointed out in the diagram. Then the goods are resold from Pune to Nagpur. This is again a sale within a state, so CGST and SGST will be levied. Sale price is increased so tax liability will also increase. In the case of resale, the credit of input CGST and input SGST (Rs. 8) is claimed as shown; and the remaining taxes go to the respective governments

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27. 27 Case 2: Sale in one state, resale in another state In this case, goods are moving from Indore to Bhopal. Since it is a sale within a state, CGST and SGST will be levied. The collection goes to the Central Government and the State Government as pointed out in the diagram. Later the goods are resold from Bhopal to Lucknow (outside the state). Therefore, IGST will be levied. Whole IGST goes to the central government. Against IGST, both the input taxes are taken as credit. But we see that SGST never went to the central government, still the credit is claimed. Since this amounts to a loss to the Central Government, the state government compensates the central government by transferring the credit to the central government

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29. 29 Case 3: Sale outside the state, resale in that state In this case, goods are moving from Delhi to Jaipur. Since it is an interstate sale, IGST will be levied. The collection goes to the Central Government. Later the goods are resold from Jaipur to Jodhpur (within the state). Therefore, CGST and SGST will be levied. Against CGST and SGST, 50% of the IGST, that is Rs. 8 is taken as a credit. But we see that IGST never went to the state government, still the credit is claimed against SGST. Since this amounts to a loss to the State Government, the Central government compensates the State government by transferring the credit to the State government.

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31. 31 Refund Procedure Export Tax Credit on input used for creating tax free or Non GST supplies Refund Of Carry Forward Input Tax Credit Refund for International Tourists Refund On Account Of Year End Or Volume Based Incentives Excess payment of taxes

32. Returns 32  There will be a common e-return for CGST, SGST, IGST and Additional Tax.  There would be no revision of Returns. Changes to be done in subsequent Returns.  Every registered dealer is required to file return for the prescribed tax period. A Return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period of return.  Government entities / PSUs, etc. not dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non –GST goods or services would neither be required to obtain registration nor required to file returns under the GST law.

33.  Importers have to register under both CGST and SGST as well.  Slabs rate 33 Annual TurnoverTax Rate Upto 25 LacsExempted 25Lacs to 75 LacsFlat 1% or GST 75 Lacs to 150 LacsGST rate Above 150LacsGST rate

34. 34 ReturnForDue Date GSTR 1 Outward supplies made10th of next month GSTR 2 Inward supplies received15th of next month GSTR 3 Monthly return20th of next month GSTR 4 Quarterly return for compounding taxpayer 18th of the month next to quarter GSTR 5 Periodic return by Non-resident Foreign Taxpayer Last day of registration GSTR 6 Return for Input Service Distributor (ISD)15th of next month GSTR 7 Return for Tax Deducted at Source (TDS)10th of next month GSTR 8 Annual Return31st Dec of next financial year

35. Time limit for show cause notice 35 CasesTime limit Fraud, suppression 5 Years Other than Fraud, suppression 3 Years

36. THANK YOU 36