Download pdf - Gst presentation

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Roadmap to Goods & Roadmap to Goods & Service TaxService Tax

-- By CA Raghav BajajBy CA Raghav Bajaj

© Copyright Raghav Bajaj

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2 things bound to happen in a human’s life

Death Taxes

Doesn’t

get worse

every

year!!! “The hardest thing in the world to

understand is the income tax.”


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Objectives ofObjectives ofThe paperThe paper

GST-What & Why?? The GST model Conclusion

Cascading Effect of taxes

Multiple levels of taxation

Treating goods & services on the same

footing

Ensuring that the credit chain doesn’t

break

Reduction in inflation

Rate Structure

Inter State Transactions

Minimal exemptions

The Indian Constitution

Extinction of CST © Copyright Raghav Bajaj

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GST-What & Why??



Treating goods & services on the same footing

Ensuring that the credit chain doesn’t break



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Cascading EffectCascading Effect

Centre cannot levy tax beyond point of Centre cannot levy tax beyond point of manufacturing.manufacturing.

States cannot levy tax on services.States cannot levy tax on services.

Unfriendly input tax credit rules.Unfriendly input tax credit rules.


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Cascading Effect (Cascading Effect (contd.contd.) – Illustration) – Illustration

Rajasthan Chattisgarh

Goods manufactured in RajasthanGoods manufactured in Rajasthan 100.00100.00

Add: - Excise Duty @ 10%Add: - Excise Duty @ 10% 10.0010.00

Total CostTotal Cost 110.00110.00

Add: - CST @ 2% on 110 (Add: - CST @ 2% on 110 (inter state salesinter state sales)) 2.202.20

Purchase price in ChattisgarhPurchase price in Chattisgarh 112.20112.20

Add: - Value Added by buyer in ChattisgarhAdd: - Value Added by buyer in Chattisgarh 40.0040.00

Total CostTotal Cost 152.20152.20

Add :- VAT levied @ 10% on 152.2Add :- VAT levied @ 10% on 152.2 15.2215.22

TotalTotal 167.42167.42

CST

levied on

excise

also

VAT

levied on

prior

taxes also

Goods sold


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Cascading Effect (Cascading Effect (contd.contd.) – Illustration) – Illustration

Who bears the Ultimate Burden

???

Final Consumer!!

No credit of excise in CST

No credit of excise & CST in VAT


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Harmonization & Simplification ofIndirect Taxation

Subsumes various central and state statues Subsumes various central and state statues Central StatuesCentral Statues State StatuesState Statues

The Excise Law The Excise Law State VAT State VAT

Additional duties of customs Additional duties of customs Entry Taxes not in lieu of OctroiEntry Taxes not in lieu of Octroi

The Service Tax The Service Tax Taxes on lottery etc. Taxes on lottery etc.

CST CST Entertainment taxes Entertainment taxes

Purchase tax, Octroi might Purchase tax, Octroi might notnot be subsumedbe subsumed

Basic Custom duties

will remain outside

the GST regime


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Objectives ofObjectives ofThe paperThe paper

GST-What & Why?? The GST model Conclusion



Treating goods & services on the same

footing

Ensuring that the credit chain doesn’t

break


Rate Structure


Minimal exemptions


Extinction of CST © Copyright Raghav Bajaj

1010

The GST model

Rate Structure

Inter State Transactions - IGST

Minimal exemptions


Extinction of CST


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Rate ForGST

CGST – Central GST SGST – State GST


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Expected GST RateExpected GST Rate

16%-16%-18%18%


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Inter state GST - IGSTInter state GST - IGST


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The GST model

Rate Structure


Minimal exemptions


Extinction of CST


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Minimal exemptions in GST

More exemptions = More problems


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The GST model

Rate Structure


Minimal exemptions


Extinction of CST


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Constitutional Amendment Bill (CAB)

Presently, the centre can impose taxes on manufactured goods and services;

While states can only tax sales of goods. At present, the States do not have the power to levy taxes on services.

The CAB was tabled before the Parliament of India on 22 March 2011 by the Finance Minister of India.

The CAB needs to be passed by a 2/3rd majority in both Houses of Parliament.

Subsequently it needs to be ratified by at least 50% of the state legislative assemblies before it can legally amend the present provisions of the Constitution.

After ratification of the CAB, the center and state assemblies will have to pass the GST legislation.


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GST and the Constitution of India

The amendments have 3 components: 1. Grant of new powers to the Centre

and the states to levy GST, 2. Deletion of powers to levy taxes that

are to be subsumed by the GST, and 3. Empowering the finance ministries

to collectively determine the design of GST

18© Copyright Raghav Bajaj

1919

The GST model

Rate Structure


Minimal exemptions


Extinction of CST


Changes to the Finance Bill 2011-2012 for introducing GST

IT infrastructure Number of exceptions to excise duty

have been reduced Negative list of services (27 services

proposed under 9 broad categories)[Source: http://www.cbec.gov.in/taxservices-negativelst.pdf]

Definition of service


http://www.cbec.gov.in/taxservices-negativelst.pdf

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Expectations from GST

Cost of production

Rise in demand

Competitiveness

Govt. revenues


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Yes to GST but when???? The introduction of a new GST has been

long-awaited in India. But the burning question is — what is the expected time line for its implementation?

The government has expressed its intention to introduce a national-level GST by 1 April 2012.

However, the implementation has been delayed in the past and this may not be a firm date.


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Conclusion

Reduction in compliance costs


Opportunity for CA’s

Globally fruitful results


GST – a weapon against corruption

Reduction in the ‘cash’ component of the economy

Heavy reliance on technology PAN based GST registration Shifting from origin to destination

based taxation


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Thanks!!
