2. GST – FIRST CUT

3. VAT in INDIA…  1986 – modvat for inputs  1994 – modvat for capital goods  2002 & 2003 – service tax credit  2004 – cross-sectoral credit  2005 – VAT  2010 (?) – GST

4. GST JACKPOT…  Centre : - Tax till “retail”  State : - Tax “services”  Trade :- No “Tax on Tax”  Consultants :- Eternal Business

5. TODAY …  C.Ex duty is part of the price for VAT  CST is part of the cost as there is no VAT credit  VAT has a cascading effect, since sale price includes C.Ex duty / CVD

6. TODAY in C.EX…  Sec 2 (f) (i), (ii) & (iii)  Sec 3 & 3A  Sec 4, 4A & Valuation Rules

7. TODAY in VAT…  Multiple rates  Different rates in different states  Different definitions  Border controls

8. TODAY in CST…  No credit on CST purchases leading to cascading effect  Complex law on stock transfer and transit sales

9. TODAY in ST…  Selective services under tax net  Inclusive definitions  Cenvat credit disputes  Freak valuation  Reverse charge

10. SALE vs SERVICE…  Software  Works contract

11. GST - Made in India !  Dual GST structure proposed  Centre & State to have concurrent jurisdiction  Power of Centre & State to tax widened  Win – win model for both Centre and State

12. Central GST (CGST)  To be levied by the Centre through a separate statute on all transactions of goods and services made for a consideration  To cover end – 2 end transactions across value chain  Exempted goods and services, non - GST goods and transactions within threshold limits are to be out of CGST

13. CGST … Central Excise Duty Additional Excise Duties The Excise Duty (M & TP Act) Service Tax CVD SAD Surcharges & Cesses

14. State GST (SGST)  To be levied by the State through a separate statute on all transactions of goods and services made for a consideration  To cover end 2 end transactions across value chain  Exempted goods and services (uniform across all States!), non - GST goods and transactions within threshold limits are to be out of SGST

15. SGST …  Each State to have a separate statute  Uniformity on basic features.  Would be paid to the accounts of respective States

16. SGST … VAT / Sales Tax Entertainment Tax Luxury Tax Lottery Tax Betting Tax Gambling Tax State Cesses & Surcharges Entry Tax ( not in lieu of Octroi)

17. GST exclusions …  Petroleum products i.e. crude, motor spirit, ATF, HSD / Alcohol / Tobacco  Centre / States could also continue its levies  Tobacco would be subjected to GST with ITC  Centre to be allowed to levy extra levy on tobacco without ITC  Purchase tax ???

18. Integrated GST (IGST Integrated GST (IGST)  For inter-state transactions  Centre to levy IGST which would be CGST + SGST  Appropriate provision for consignment sale/stock transfer  Inter-state dealer will pay IGST after adjusting IGST, CGST and SGST credit on purchase

19. IGST …  The seller in State X will pay the IGST to the Centre  While paying IGST, seller will adjust his lying IGST/CGST/SGST credit  State X will have to transfer the credit of SGST used by the seller for payment of IGST to the Centre

20. IGST IGST …  Buyer in State Y can avail credit of IGST  Buyer in State Y can use the IGST to discharge his output tax liability  Centre has to transfer credit of IGST used for payment of SGST to State Y  A clearing house has to be formed for facilitating IGST

21. Set - off …  CGST against CGST  SGST against SGST  No Cross sectoral set-off between CGST & SGST  IGST for CGST/SGST & vice versa

22. @ …  Lower rate for necessary items and goods of basic importance  Standard rates for goods in general  Special rates for precious metals  Exports/clearnces to SEZ would be zero rated  No benefits to sales from SEZ to DTA

23. Tax free schemes …  Tax exemption would be converted into cash refund scheme after initial payment  Schemes to continue up to notified expiry  No new exemption in future

24. GST on Imports…  Both CGST and SGST would be levied on import of goods and services  Tax would be based on destination principle  Tax revenue of SGST would accrue to the State where the imported goods / services are consumed  Full set-off of GST on imports available

25. Compounding …  Interest of small traders and SSI to be protected  Upper ceiling on gross annual turnover and a floor tax rate to be prescribed  Compounding cut off at Rs. 50 lakhs with a floor rate of 0.5% across the States

26. Threshold exemptions…  10 lakhs limit for goods and services across all States / UT for SGST  1.5 crore for SSI manufacturers on CGST  CGST exemption limit on services to be increased (presently at 10 lakhs)

27. Illustration … Stage of Supply chain Pur. value of input Value addn. Value of supply of G & S made to next stage Rate of GST GST on output Input tax credit Net GST Mfr1003013010%13103 Whlsr.1302015010%15132 Retlr.1501016010%16151 Total6

28. Constitutional Amendments…  Entry 84 of Union List to amend to empower Centre to levy tax on SALE of goods.  Entry 54 of State List to amend to empower State to levy tax on SERVICES.  Entry 92A of Union List to amend to empower Centre to levy tax on inter – state SERVICES.  Article 286 to amend to empower State to levy tax on imports.  3/4 th majority in Parliament & 50% collegium of State Assembly ratification.

29. Bottlenecks…  Transitional credit  High sea sales  Stock transfers  FOC clearances  Additional considerations

30. THANKS