gst-the basics
DESCRIPTION
GST is an indirect taxation which is going to replace other indirect taxes such as Excise,VAT,Service Tax.This slide is just a basic about it.TRANSCRIPT
TAXES
DIRECT
INCOME TAX
WEALTH TAX
INDIRECT
SALES TAX/VAT
CSTCENTRAL
EXCISE DUTY
SERVICE TAX
CUSTOM
TAXES
DIRECT
INCOME TAX
WEALTH TAX
INDIRECT
SALES TAX/VAT
CSTCENTRAL
EXCISE DUTY
SERVICE TAX
CUSTOM
TAXES
DIRECT
INCOME TAX
WEALTH TAX
INDIRECT
CUSTOM
GST
Ref. Tax Levy by Levied on
Credit
can be
set-off
against
Covered by
GST
1Central
Excise duty CentreManufacture 1,2 Yes
2Service Tax Centre
Providing
services1,2 Yes
3Customs Centre Import
-No
4 CVD* under
Customs Centre
Import
(compensating
Excise)1,2 Yes
5
SAD* under
Customs
Centre
Import
(compensating
Sales Tax)1 Yes
6CST Centre
Inter-State
sales- Yes
7VAT State
Sales within a
state7 Yes
(* CVD-CounterVailing Duty;Sad-Special Additional Duty)
THE PRESENT SYSTEM OF INDIRECT TAXATION
THE NEED FOR GST
REMOVE CASCADING EFFECT OF
TAXES
Price=100+taxes@10%=110
Purchase Price 110+Tax@10%=121
CB
A
PurchasePrice 121+Tax@10%=133
Transaction NEW System OLD System Comments
Sale within the state SGST
CGST
VAT &Excise/
ST
Under the new system, a transaction of sale within the state shall have two taxes, SGST-which goes tothe State; and CGST which goes to the Centre
Sale outsideThe state
IGST CST &Excise/
ST
Under the new system, a transaction of sale from one state to another shall have only one type of tax, the IGST-which goes to the Centre
A(MUMBAI)
Sale Price=100
B(PUNE)
Sale Price=200
C(NAGPUR)
SGST@8%=8CGST@8%=8
SGST@8%=16-Input SGST=8CGST@8%=16-Input CGST=8
CENTRAL
MumbaiMAHARASTR
A
A(INDORE)
Sale Price=100
B(BHOPAL)
Sale Price=200
C(LUCKNOW)
SGST@8%=8CGST@8%=8
IGST@16%=32-SGST & CGST=16
CENTRAL
MADHYA PRADESH
Transfer ofcredit : SGST
A(DELHI)
Sale Price=100
B(JAIPUR)
Sale Price=200
C(JODHPUR)
IGST@16%=16
CGST@8%=16-Input IGST(8)=8CGST@8%=16-Input CGST(8)=8
CENTRAL
JaipurRAJASTHAN
Transfer ofCredit : IGST
Reduction in prices Increase in Government Revenue Less compliance and procedural cost Taxes which cannot be set off will reduce All India tax will be based on value added No value added implies no tax to be paid to the
government Creation of a tax neutral supply chain. You follow any route; the tax given to the government will
remain the same. Entry tax, Octroi etc. Will be there, but as is evident, these
are also being slowly removed. This will make the supply chain perfectly neutral to taxes
Factors to be kept in mind about GST
All the states implement the GST together and that too,at the same rates.
For smooth functioning, the GST legislation clearly sets out the taxable event.
It should be clearly identifiable as to where the goods are moving.
CAs will have to take the onus to spread the awareness about GST.