understanding goods & services tax (gst), india
TRANSCRIPT
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GOODS AND SERVICES TAX, INDIA
PREPARED BY:ANKITA MAHAJAN
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PRESENT TAXATION SYSTEM
LIMITATIONS OF PRESENT SYSTEM
PROPOSED GST TAXATION SYSTEM
CURRENT STATUS
CONCLUSION
INTRODUCTION
AGENDA
ADVANTAGES AND DISADVANTAGES
HOW GST SOLVES PRESENT PROBLEMS
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• DIRECT V/S INDIRECT TAXES• DEFINITION• SUBSUMED TAXES• GOALS• EXCLUSIONS AND ZERO-RATED
Tax
Indirect
A tax levied on the price of a good or
service
Central – Service tax, Excise, CST
State – VAT, Entry tax
Town/Municipal -
Octroi
Direct
A tax levied directly on personal or corporate
income
Income Tax
EXCLUSIONS• ALCOHOL FOR HUMAN CONSUMPTION –
STATE VAT PLUS EXCISE WOULD LEVY• ELECTRICITY – ELECTRICITY DUTY WOULD
LEVY• REAL ESTATE – STAMP DUTY PLUS
PROPERTY TAX• PETROLEUM PRODUCTS – WOULD BE
APPLICABLE FROM A DATE IN FUTUREZERO-RATED• EXPORTED GOODS AND SERVICESCONCESSIONAL THRESHOLD• TAXPAYERS WITH A TURNOVER BELOW A
COMMON THRESHOLD, (RS 5 LAC FOR NORTH-EAST AND RS 10 LAC FOR OTHERS), WOULD BE EXEMPTED FROM GST
• Empowered Committee of State Finance Ministers (EC) was requested to design road-map and structure of GST
• GST was first mooted in Budget of 2006-07• First Discussion Paper (FDP) on GST
was released in November, 2009• Objectives:
Elimination of cascading effect of taxes
Simplification of tax-compliance
INTRODUCTIONGoods and Services Tax (GST) is a nationwide comprehensive, value-added, indirect tax that will be levied on sale, manufacturing and consumption of goods and services, from April 2016. It will subsume the following:
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PRESENT TAXATION SYSTEM
TAX STRUCTURE
DIRECT TAX
INCOME TAX
INDIRECT TAX
CENTRAL TAX
EXCISE
SERVICE TAX
CUSTOM
STATE TAX
VAT/SALES/CST
ENTRY TAX, LUXURY TAX, LOTTERY TAX,
ETC.
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PRESENT TAXATION SYSTEM• CASCADING EFFECT OF TAXES• INTRODUCTION OF VAT: TO REDUCE CASCADING• SET-OFF OR TAX-CREDIT: “OUTPUT-MINUS-INPUT”
VAT-TO-VAT CST-TO-CST EXCISE/SERVICE-TO-EXCISE/SERVICE
• SELLER A ADDS SALES TAX AT 10% AND SELLS GOODS WORTH RS 100 TO B AT RS 110 (100+10).
• B ADDS SALES TAX ON PURCHASE PLUS PROFIT, AND RE-SELLS TO C AT RS 132 (100+10+10+12).
• TAX-LIABILITY OF A IS RS 10 AND B IS RS 12
CASCADING EFFECT(Tax-on-tax)
Tax-Paid-to-A
TAX-LIABILITY OF A IS RS 10 AND B IS RS 2
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LIMITATIONS OF PRESENT TAX SYSTEM
CROSS-UTILIZATION OF CREDITS BETWEEN
STATE AND CENTRAL TAXES
NO TAX CREDIT FOR INTER-STATE TRADE
DEPOSIT TAX, IRRESPECTIVE OF
PAYMENT
COMPLIANCE COST AND ADMINISTRATION
DIFFICULTIES
FILE MULTIPLE RETURNS
LACK OF IT INFRASTRUCTURE
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HOW GST SOLVES PRESENT PROBLEMS
UNIFIED AND
COMPREHENSIVE
SIMPLIFY TAX STRUCTURE
CROSS-UTILIZATION
ADMINISTRATIVE
CONVENIENCEREDUCE
COMPLIANCE COST
FILE A SINGLE RETURN
VALUE-ADDED
CHARGEABLE AT EACH
TRANSACTION
DIRECT SALES
STOCK TRANSFER
DESTINATION-BASED,
CONSUMPTION TAX
TAXABLE EVENT IS “SUPPLY”NOT SALES,
MANUFACTURE OR RENDER
GST
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PROPOSED GST TAXATION SYSTEM
TAX STRUCTURE
DIRECT TAX
INCOME TAX
INDIRECT TAX = GST (EXCEPT
CUSTOMS)
INTRA-STATE
CGST (CENTRAL)
SGST (STATE)
INTER-STATE
IGST (CENTRAL)
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PROPOSED GST TAXATION SYSTEMSALE IN ONE STATE, RE-SALE IN THE SAME STATE
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PROPOSED GST TAXATION SYSTEMSALE IN ONE STATE, RE-SALE IN ANOTHER STATE
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PROPOSED GST TAXATION SYSTEMSALE OUTSIDE THE STATE, RE-SALE IN THAT STATE
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ADVANTAGES OF GST
GST
CROSS UTILIZATION
LESS MFT COST
IMPORT & EXPORT
INDUSTRIAL GROWTH
MONITORING
TAX COMPLIANC
E
LESS PRICES
MORE REVENUE
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CHALLENGES
CHALLENGES
ADMINSTRATIVE
STATE RESISTANCE
POLITICALIT
INFRASTRUCTU-RE
EXEMPTIONS
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CURRENT STATUS & WAY FORWARD
THE GST 122ND CONSTITUTION AMENDMENT BILL PASSED BY LOK SABHA
PROPOSED STANDARD GST RATE 27%
CURRENTLY TABLED IN RAJYA SABHA
GST COUNCIL (GSTC) TO BE CONSTITUTED
GST NETWORK TO BE GIVEN AUTONOMY
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CONCULSION
INVESTMENT & EMPLOYMENTSIMPLIFICATION OF TAXESINDUSTRIAL GROWTHINCREASE IN TAX BASE
GDP GROWTH
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QUESTIONS
THANK YOU