1. CA. SANJEEV MALHOTRA, skm123@vsnl.com
TOWARDS GST
CA. SANJEEV MALHOTRA,

2. Expectations from GST
Abolition of multiple types of taxes.
One or two floor rate of taxes.
Removes cascading effect.
Neutral to Business models and processes
Zero rating of exports and inter state sales.
Common law and procedure
Single administration.

3. Decisions till date Dual GST structure Rate of tax
CGST and SGST.
Rate of tax
16-18% total
4% on manufacturing inputs (Desired).
Service tax levy by States.

4. International Experience
Canada Model
Dual GST
Central Level GST extending to all goods and Services.
In addition there is tax at Provincial level in different forms.

5. International Experience – Contd.
European Union (EU) Model
EU is akin to a country and nations akin to States.
All have agreed to adopt common principles to tax goods and services.
EU has only state level VAT.
Special Rules for inter member state transactions.

6. Central Taxes Central GST will subsume following Central Taxes.
Central Excise Duty and AED
Additional Customs duty (in nature of countervailing duty)
CVD or other taxes (imposed on imports for level playing.)
Cess levied by Union
Surcharge levied by Union
Service Tax levied under Finance Act 1994

7. State Taxes State GST will subsume the following taxes. State VAT
Purchase Tax
State Excise duty
Entertainment tax
Luxury tax
Octroi
Entry tax in lieu of Octroi
Taxes on Lottery etc.
Tax on consumption or sale of electricity

8. GST Administration
CGST by Union department and SGST by State Revenue deptt.
Cases with turnover upto 1.5 crores exclusively with State Revenue deptt.
Union to deal only with Enterprises having Pan India presence.
Routine matters with State and monitoring with Union.

9. Inter State Sale under GST
Likely subject to tax at rates applicable to sale within State.
Input tax credit likely to be eligible in destination state.
Modalities of collection, remittance of tax and mechanism for availment of ITC yet to be worked out.

10. Stock transfer under GST
Likely to be same as Inter State Sale with Input tax Credit in destination State.

11. Imports under GST
CVD as at present to continue with Credit of CVD to importer.
Tax equal to State GST to be levied.
Modalities of tax collection and distribution are being worked out.

12. Exports under GST Continue to be zero rated as at present.
Input Tax Credit will be eligible for adjustment or Refund.

13. Implementation Status
State Governments concern of revenue loss not addressed yet.
I.T infrastructure not ready yet.
Reqd. Constitutional amendments.
WILL THERE BE PARTIAL ROLL OUT WITH SOME STATES OPTING OUT?

14. Prerequisites for Success of GST
Dematerialization of Forms C and F (if not dispensed)
Single Return for Central GST and State GST.
Uniform State GST legislations.
Uniform procedures and return formats.
Tax Administration to be faceless.
Disposal of all pending work under present Acts.

15. Issues and Concerns
Will states continue to refund unutilised ITC ? – not likely.
Carry over of transition CENVAT / ITC.
Supply to Government / Charitable institutions.
Treatment of existing tax concessions.
Threshold limit for registration under Central and State GST.
Continuance of Composition Schemes.
Classification of Goods.
Exemption to goods and services – will it be uniform across states.

16. Challenges Ahead Is Central & State Administrations ready?
Efficient computerisation essential to track & monitor inter state sale and availment of credit. – Verification Agency.
Educating officials at grass root level.
Efficient and fast system of Advance Ruling and Dispute resolution.
Educating all stake holders.

17. GST Transition planning – Impact Analysis
Transition will pose significant challenges to trade and industry.
Impact can not be generalised. – Needs to be analysed on individual business model.
Marginal impact on small organisations procuring and selling within State.
Impact will be substantial on organisations with multi locational operations in India.