Transcript goods and service tad (gst)

GOODS AND SERVICE TAX
(GST)
CONCEPT, MODEL AND PRESENT STATUS
December, 2015
By
Sushil Solanki
Principal Commissioner of Service Tax
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PRESENT LAWS AND DISTORTIONS
Multiplicity of Indirect Taxes
Cascading taxation
Varying VAT rates in different States
Credit of CST not available to buyers
Service Tax credit not available to traders
Uneconomic activities like opening of branches
to save CST, Purchase from within State
No set off ---no invoice – parallel economy
Plethora of forms required for movement of
goods within States, Inter States, through State
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GST : PERCEIVED BENEFITS
To Trade
Development of common national market.
Reduction of Procurement cost.
Efficient use of Resources & Economy of scale.
Reduction in multiplicity of taxes.
Mitigation of cascading/double taxation.
More efficient neutralization of taxes especially for
exports.
Simpler tax regime
 Fewer rates and exemptions
 Conceptual clarity (Goods vs. Services)
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GST : PERCEIVED BENEFITS
To Government
 Enhanced GDP growth by increase in economic
activities and efficient use of resources.
 Simpler Tax system
Broadening of Tax base
Improved compliance & revenue collections
To Consumer
Transparency as total taxes paid available in
invoice.
Total Tax burden to reduce.
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Features of GST……(1)
Destination-based Taxation
Applies to all stages of value chain – primary, secondary &
tertiary including retail
 Applies to all supplies of goods / services (as against
manufacture, sale or provision of service) made for a
consideration except –
 Exempted goods / services – common list for CGST &
SGST
 Goods / services outside the purview of GST
 Transactions below threshold limits
Dual GST having two concurrent components
 Central GST levied & collected by Centre
 State GST levied & collected by States
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Features of GST ……(2)
IGST (CGST + SGST) applicable to
Inter-State supplies of goods / services in India
Inter-state stock transfers of goods
Import of goods / services
IGST levied & collected by the Centre
Additional Tax not exceeding 1% on inter-state
supply of goods – to be levied & collected by the
Centre but assigned to originating State
Export of goods / services – Zero rated
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Products under GST
 All
goods or services likely to be covered under
GST except:
Alcohol for human consumption - State Excise + VAT
Electricity - Electricity Duty
Real Estate - Stamp Duty + Property Taxes
Petroleum Products – to be brought under GST
from a later date on recommendation of GSTC
Tobacco Products – under GST + Central Excise
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TAXES TO BE SUBSUMED INTO GST
CENTRAL TAXES
Central Excise duty (CENVAT)
Additional duties of excise
Excise duty levied under
Medicinal
&
Toiletries
Preparation Act
Additional duties of customs
(CVD & SAD)
Service Tax
Surcharges & Cesses
STATE TAXES
State VAT / Sales Tax
Central Sales Tax
Purchase Tax
Entertainment Tax (not levied
by local bodies)
Luxury Tax
Entry Tax (All forms)
Taxes on lottery, betting &
gambling
Surcharges & Cesses
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GST Rates
GST Rates – Merit Rate/Standard Rate/Precious
Metal
Floor rate with a small band of rates for
standard rated goods / services for CGST & SGST
Common Threshold exemption for CGST and
SGST.
Compounding scheme for taxpayers having
taxable turnover up to a certain threshold above
the exemption
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Other Features of GST
 Existing area based tax exemption likely to be
made into Refund mechanism.
C/F/H forms likely to be abolished
Multiple statutes – one for Centre & one for every
State
Place of Supply Rules
 to determine Place of Supply of goods or services
 to determine whether the supplies are intra-State or
inter-State
HSN Code to be used for classification of goods
Present system of classification of services to be
used
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Integrated GST (IGST)
To be levied on interstate supply of goods and services
GST being destination based tax, tax paid in exporting
State needs to reach the importing State.
Tax paid in the exporting state would be available as input
tax credit in the importing State.
IGST can be paid by using credit of IGST, CGST or SGST.
In the returns, invoice wise supply details and importing
state wise details required to be mentioned for settlement
of tax credit amongst the States.
On import of goods, IGST would be levied in lieu of CVD
and SAD.
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Credit Utilization of CGST, SGST & IGST
ITC of CGST for CGST & SGST for SGST - no cross
utilization
ITC of IGST allowed for payment of IGST, CGST &
SGST in that order
ITC of CGST allowed for payment of CGST & IGST in
that order
ITC of SGST allowed for payment of SGST & IGST in
that order
No ITC of Additional Tax
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Registration Return, Other Process
State wise registration
 Business Vertical-wise registration allowed
 LTU status
 Amendment in Registration details- Except 3-4 details, no
approval required
 Registration to be applied 30 days prior to specified date for
taking registration
 ITC allowed only after date of Registration application
Common GST Return for CGST, SGST, IGST, ADDL TAX
Common e-payment facilities for all taxes
Annual Return for comparison with Financial Records
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Input Tax Credit Changes & ISD Provisions
 ITC available on the basis of supplier uploading
invoices and payment of taxes, like TDS credit in Income
Tax
Seller/Supplier to upload invoice wise detail for all B-2B sale and in other specified cases
 Rating of Dealers and black listing of dealers
 ISD registration permitted for transfer to credit on
services only.
ITC transfer allowed from one to other registration only
on supply/use of services.
 For goods transfer, normal branch transfer procedure
to follow.
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Constitutional Amendment
• Concurrent jurisdiction for levy and collection of GST
by the Centre and States.
• Centre to levy and collect IGST and the tax to be
apportion between Centre and State.
• Upto 1% additional tax to be collected by Centre but
to be assigned to originating tax.
• Compensation to States for five years.
• Power to impose surcharge by Parliament removed.
• Concept of declared goods done away with.
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Constitutional Provision - GST COUNCIL (GSTC)
Consist of Union FM, Union MOS (Revenue)
and State Finance Ministers.
Union Finance Minister as Chairperson
Vice Chairperson from States
Weightage for votes provided.
Decision by majority of 75% of weighted votes
of members present and voting.
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Functions of GST COUNCIL
Council to make recommendations on
Taxes, etc. to be subsumed in GST
Exemptions & thresholds
GST rates
Band of GST rates
Model GST Law & procedures
Special provisions for certain special category
States like North East, J &K, HP, Uttrakhand.
Date from which GST would be levied on
petroleum & related products
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GST NETWORK (GSTN)
GSTN incorporated on 28th March, 2013 as Section 25
Private Limited Company.
Central Government, State Government and Financial
Institution are equity holders.
GSTN to develop and operate a common IT portal to : Submit registration applications
 File returns
 Make tax payments.
Registration, return and payment information to be passed
on to Central and State Tax authorities.
GSTN to develop IT platform for verification of CENVAT
credit availment.
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Current Status & Way Forward
CAB introduced in parliament on 19th
December, 2014
Passed by Lok Sabha and pending in
Rajya Sabha
To be ratified by at least 50% of the State
Legislatures
Assent of President of India
GST Council to be constituted
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Current Status & Way Forward ---(2)
Report on Return, Registration and Refund placed in
public domain
Drafting of GST legislation – Completed by Centre & State
Govt representatives. Discussion for final draft underway
GSTC to recommend GST Law and Procedure.
GST law to be introduced in Parliament / State
Legislature.
GST Rates, Exemption to be decided
Consultation with Trade & Industry
Training of Officers & Trade
GSTN Portals to be made operational and to link with
existing portals of Centre and State Government
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Preparation by Industry
• Review of Procurement decisions
• Review of Logistic Requirements like Warehousing, Storage,
Transport
• Costing of Products for future orders for export, etc
• Industry specific issues like Area based Exemption, MRP
based assessment requiring abatement % to be represented
to the Govt
• Exemption from Excise, Service Tax, VAT, to be taken up with
Govt
• Decision for business vertical registration & Preparedness for
State level registration
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Modification of IT systems
•Provision for CGST & SGST on Sales
•Interstate Sale – IGST
•Capture of registration no. of buyer
•Sales Invoice to be uploaded
•Comparison of ITC as per Company record &
as per GST ledger of Govt
•Tracking of ITC for invoices not uploaded by
supplier
•Tracking of blacklisted Suppliers
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Thanks
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