gst in india.pptx

8/14/2019 GST in India.pptx

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Indian Taxes

Direct

Central

Income Corporate FBT

Indirect

Central

BCD Excise CST ServiceR&DCess

State

VATWork

ContractEntry Ancillary

Local

Octroi

Upto 32 Tax Laws at Province level in addition to various central & state taxes !2


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* CENVAT: 12.36 % + VAT;12.5 % =26.40%)

10.012.5 13.0

14.0 15.017.0 17.5

19.0 19.6 20.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Australia

New

Zealand

Canada

South

Africa

Mexico

China

UK

Germany

France

Italy

India

12

15

26.4

3


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Source : DHL 4


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Centre and State to legislate, levy and administer

Central taxesGST

SGST, CGST, IGST

State taxes

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1) A dual GST structure2) Have two components,

a) Central GST (CSGT) and State GST (SGST)

b) Implemented through multiple statutes.

3) Applicable to all transactions of goods and services exceptfew exempted goods / services, goods outside the purviewof GST

4) Exemptions under Central Excise to be aligned with current

exemptions under VAT which would ensure alignment ofCGST and SGST exemptions.

5) The CGST and SGST are to be paid to the accounts of theCentre and the States separately.

6) Cross utilization of ITC between the CGST and the SGSTwould not be allowed. 6

HIGHLIGHTS


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1) For goods- Two rate structure-

a) lower rate for necessary items and items of basicimportance

b) standard rate for goods in general

There will be a special rate for precious metals and also a

list of exempted items

2) For services a single rate for CGST and SGST

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Goods

Lower

Goods

Standard

Services

Year - 1 12% 20% 16%

Year - 2 12% 18% 16%

Year - 3 16% 16% 16%

Source- Finance Ministersspeech at the meeting with State Finance Ministerson Jul 21, 2010 9


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Supply chain PurchaseValue ofInput

Value

addnValue to

next

stage

Rate

of GST

GST

Amount

Input tax

credit

Net GST

Manufacturer 100 30 130 20% 26 20 (20% of

100 inputs)

26-20=6

Whoesaler 130 20 150 20% 30 26 (20% of

130 inputs)

30-26=4

Retailer 150 10 160 20% 32 30 (20% of

150 inputs)

32-30=2

Total GST 20+6+4+2=

32

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Goods will be cheaper Household services-Telephone, mobile, cable, insurance will

be costlier since presently the service tax @12.36%

The impact may not be 4% if service providers pass onbenefit of tax on procurements

A 2% point rate difference between goods and services wouldmean that the classification of certain items (e.g. intangibles)

as goods or services would continue to be relevant underGST.

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Exemption threshold and composition forsmall dealers-

Threshold for both goods and services atINR 1 million for CGST and SGST.

Composition to be made available to small

dealers up to an agreed common limit under both

CGST and SGST to bring simplification andimprove compliance.

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In line with the Thirteenth Finance Commissionsrecommendations, States would be compensatedfor initial four years for loss of VAT and Purchase

tax revenues.

This will remove the apprehension of states thatGST would adversely affect their revenue and will

ensure speedy implementation

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Agriculture Industry

Exporters

Entrepreneurs Traders

Common consumers

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- for All


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Cost of procurement

Discontinuance ofCST / SAD

Flexibility inselection of vendor

Sourcing

Discontinuance ofarea basedexemption

Consolidation ofmfg loc based onnetwork design

Manufacturing

Potentialimprovement inchannel DistributionStrategy

Review of Currentnetwork structure

and warehouselocation

Sales &Distribution

Revise pricingstrategies

Sales promotionschemes

Pricing

Revisit existing ERP

IT

Testing & Analysisexemption

Services


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1. Finance & Taxation

2. Operational

3. Documentation

4. Information Technology

5. Logistics

6. Legal

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Integration of Order

Management and Cash

cycle through O2C

technology

Customer

Segmentation fordifferential service

offering

Network

Rationalization

Inventory Optimization

Infrastructure Health

check and enhancement

Transportation

augmentation20


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"We know that the Central duties are rebated but the State duties are notrebated. We were hoping that the government will come with a scheme theneverybody thought that GST will be put in to place. I personally dontfeel that wewould see the GST in 2014 or 2015,"-Ajay Sahai, Director General, Federation of Indian Exports Organization (FIEO).

Parthasarathi Shome, one of the architects of the proposed goods and servicetax, does not expect the government to implement GST regime before 2014 as thenext Lok Sabha election may delay preparations for the eagerly awaited taxreform.

The Director and chief executiveof Indian Council for Research on InternationalEconomic Relations (ICRIER) said the country is most unlikely to put up a fine-tuned administrative setup before 2014even as the Parliamentary Committee onFinance has completed its hearings on GST and is expected to table report before

the Monsoon session. 21

industry views


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1) A Dual GST model with appropriate binding mechanism toharmonize the various aspects of GST

2) A dual GST structure shall have two components, CentralGST (CSGT) and State GST (SGST) which would be

implemented through multiple statutes.3) Applicable to all transactions of goods and services exceptthe exempted goods / services, goods outside the purview ofGST and the transactions below the prescribed thresholdlimits.

4) The CGST and SGST are to be paid to the accounts of theCentre and the States separately.

5) Cross utilization of ITC between the CGST and the SGSTwould not be allowed.

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(i) Taxes or levies to be subsumed should be primarily in thenature of indirect taxes, either on the supply of goods or onthe supply of services.

(ii) Taxes or levies to be subsumed should be part of the

transaction chain which commences with import/manufacture/ production of goods or provision of services atone end and the consumption of goods and services at theother.

(iii) The subsumation should result in free flow of tax credit inintra and inter-State levels.

(iv) The taxes, levies and fees that are not specifically relatedto supply of goods & services should not be subsumed underGST.

(v) Revenue fairness for both the Union and the Statesindividually would need to be attempted.

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Central Level GST

State Level GST

Centre and State to legislate, levy and administer

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1. Excise Duty2. Service Tax

3. Additional Custom Duty (CVD)4. Special Additional Duty (SAD)5. Surcharges6. Cesses

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1. VAT/Sales Tax2. Entertainment Tax

3. Luxury Tax4. Entry Tax/Octroi5. Taxes on lotteries6. State surcharges and cesses relating to

goods and services

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1. For goods- Two rate structure-

a) lower rate for necessary items and items

of basic importance

b) standard rate for goods in general

There will be a special rate for precious metals and also alist of exempted items

2. For services a single rate for CGST and SGST

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GoodsLower

GoodsStandard.

Services

Year1

12% 20% 16%

Year

2

12% 18% 16%

Year

3

16% 16% 16%

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Finance Ministers speech at the meeting with

State Finance Ministers on July 21, 2010

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Supplychain

PurchaseValue ofInput

Valueaddition

Value tonextstage

RateofGST

GSTAmount

Input taxcredit

Net GST

Manfacturer 100 30 130 20% 26 20 (20% of100 inputs)

26-20=6

Whoesaler 130 20 150 20% 30 26 (20% of130 inputs)

30-26=4

Retailer 150 10 160 20% 32 30 (20% of

150 inputs)

32-30=2

Total GST 20+6+4+2=32

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Goods- cheaper Household services-Telephone, mobile,

cable, insurance will be costlier sincepresently the service tax @12.36% The impact may not be 4% if service

providers pass on benefit of tax onprocurements

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A 2% point rate difference between goods andservices would mean that the classification of

certain items (e.g. intangibles) as goods or services

would continue to be relevant under GST. One would hope that the GST law would provide

absolute clarity on the distinction between goods

and services, to ensure that there is no ambiguity

over classification.

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Exemption threshold and composition forsmall dealers-

- Threshold for both goods and services atINR 1 million for CGST and SGST. - Composition to be made available to small

dealers up to an agreed common limit under

both CGST and SGST to bringsimplification and improve compliance.

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In line with the Thirteenth FinanceCommissions recommendations, Stateswould be compensated for initial four years

for loss of VAT and Purchase tax revenues. This will remove the apprehension of states

that GST would adversely affect their revenue

and will ensure speedy implementation

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Exemptions under Central Excise to bealigned with current exemptions under VAT

which would ensure alignment of CGST andSGST exemptions.

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Agriculture, industry, trade Exporters

Entrepreneurs Traders Common consumers

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"W k th t th C t l d ti b t d b t th


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"We know that the Central duties are rebated but theState duties are not rebated. We were hoping that thegovernment will come with a scheme then everybodythought that GST will be put in to place. I personallydont feel that we would see the GST in 2014 or2015," said Ajay Sahai, Director General, Federation of

Indian Exports Organization (FIEO) recently.

Parthasarathi Shome, one of the architects of the proposed goods and service tax, does not expectthe government to implement GSTregime before 2014 as the next Lok Sabhaelection may delaypreparations for the eagerly awaited tax reform.The director and chief executive of Indian Council for Researchon International Economic Relations (ICRIER) said the country is most unlikely to put up a fine-tuned administrative setup before 2014even as the Parliamentary Committee on Financehas completed its hearings on GST and is expectedto table report before the Monsoon session.
http://economictimes.indiatimes.com/topic/Parthasarathi%20Shomehttp://economictimes.indiatimes.com/topic/GSThttp://economictimes.indiatimes.com/topic/Lok%20Sabhahttp://economictimes.indiatimes.com/topic/Indian%20Council%20for%20Researchhttp://economictimes.indiatimes.com/topic/ICRIERhttp://economictimes.indiatimes.com/topic/Parliamentary%20Committee%20on%20Financehttp://economictimes.indiatimes.com/topic/Parliamentary%20Committee%20on%20Financehttp://economictimes.indiatimes.com/topic/ICRIERhttp://economictimes.indiatimes.com/topic/Indian%20Council%20for%20Researchhttp://economictimes.indiatimes.com/topic/Lok%20Sabhahttp://economictimes.indiatimes.com/topic/GSThttp://economictimes.indiatimes.com/topic/Parthasarathi%20Shome


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gst in india.pptx

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