A breif description about gst and composite scheme.

1. GOODS & SERVICES TAX - GST
A PRESENTATION BY
AMAR SHAW
FIEM,16/CSE/77

2. Goods & Services Tax Law in India is
a comprehensive, multi-
stage, destination-based tax that is
is levied on every value addition.
In simple words, Goods & Services Tax is
an indirect tax levied on the supply of
goods and services. This law has replaced
many indirect tax laws that previously
existed in India.
GST is one indirect tax for the entire
country.
So, before Goods and Service Tax, the
pattern of tax levy was as follows:
1. What is GST?

3. Under the GST regime, the tax will be levied at every point of sale. In case of interstate sales, Central GST and State GST
will be charged. Intra-state sales will be chargeable to Integrated GST.
Now let us try to understand the definition of Goods and Service Tax – “GST is a comprehensive, multi-
stage, destination-based tax that will be levied on every value addition.”
Goods and ServicesTax will be levied on each of these stages, which makes it a multi-stage tax.
Multi-stage
There are multiple change-of-hands an item goes
through along its supply chain: from manufacture to final
sale to the consumer.
Let us consider the following case:
•Purchase of raw materials
•Production or manufacture
•Warehousing of finished goods
•Sale to wholesaler
•Sale of the product to the retailer
•Sale to the end consumer

4. History
Of
GST

5. 3. Advantages Of GST
GST will mainly remove the
Cascading effect on the sale of
goods and services. Removal
cascading effect will directly
the cost of goods. The cost of
should decrease since tax on
eliminated in this regime.
GST is also mainly
driven. All activities like
return filing, application for
and response to notice needs
done online on the GST Portal.
will speed up the processes.

6. 4. What are the components of GST?
There are 3 taxes applicable under this system: CGST,SGST,IGST.
•CGST: Collected by the Central Government on an intra-state sale (Eg: Within West Bengal)
•SGST: Collected by the State Government on an intra-state sale (Eg: Within West Bengal)
•IGST: Collected by the Central Government for inter-state sale (Eg: West Bengal to Tamil Nadu)
In most cases, the tax structure under the new regime will be as follows:
Transaction New Regime Old Regime Description
Sale within the State CGST + SGST VAT + Central
Excise/Service tax
Revenue will be shared equally
between the Centre and the State
Sale to another State IGST Central Sales Tax +
Excise/Service Tax
There will only be one type of tax
(central) in case of inter-state
sales. The Center will then share
the IGST revenue based on the
destination of goods.
Illustration:
•Let us assume that a dealer in West Bengal had sold the goods to a dealer in Punjab worth Rs. 50,000.
The tax rate is 18% comprising of only IGST.
In such case, the dealer has to charge Rs. 9,000 as IGST. This revenue will go to the Central
Government.
•The same dealer sells goods to a consumer in West Bengal worth Rs. 50,000. The GST rate on the
good is 12%. This rate comprises of CGST at 6% and SGST at 6%.
The dealer has to collect Rs. 6,000 as Goods and Service Tax. Rs. 3,000 will go to the Central

7. 5. Tax Laws before GST
In the earlier indirect tax regime, there were many indirect taxes levied by
and center. States mainly collected taxes in the form of Value Added Tax
state had a different set of rules and regulations.
Interstate sale of goods was taxed by the Center. CST (Central State Tax)
in case of interstate sale of goods. Other than above there were many
like entertainment tax, octroi and local tax that was levied by state and
This lead to a lot of overlapping of taxes levied by both state and center.
For example, when goods were manufactured and sold Excise Duty
center was charged by the center. Over and above Excise Duty, VAT was
the State. This lead to a tax on tax also known as cascading effect of

8. The following is the list of indirect taxes in the
pre-GST regime:
•Central Excise Duty
•Duties of Excise
•Additional Duties of Excise
•Additional Duties of Customs
•SpecialAdditional Duty of Customs
•Cess
•StateVAT
•Central SalesTax
•PurchaseTax
•LuxuryTax
•EntertainmentTax
•EntryTax
•Taxes on advertisements
•Taxes on lotteries, betting, and gambling
All these taxes have been replaced with CGST,
SGST, and IGST.
However, the CST at concessional rate of 2% by
issue and utilization of c-Form is still prevalent for
certain Non-GST goods such as:
(i) Petroleum crude
(ii) High-speed diesel
(iii) Motor spirit (commonly known as petrol);
(iv) Natural gas
(v)Aviation turbine fuel and
(vi)Alcoholic liquor for human consumption.
in respect of following transactions only:
•Resale
•Use in manufacturing or processing
•Use in the telecommunication network or in
mining or in the generation or distribution of
electricity or any other power

9. 6. What changes has GST brought in?
In the pre-GST regime, tax on tax was calculated and paid by every purchaser including the final
tax is called Cascading Effect of Taxes.
GST avoids this cascading effect as the tax is calculated only on the value-add at each stage of
transfer of ownership.
This indirect tax system will improve the collection of taxes as well as boost the development of
removing the indirect tax barriers between states and integrating the country through a uniform tax
Illustration:
Based on the above example of biscuit manufacturer along with some numbers, let’s see what
goods and the taxes in the earlier and current regimes.
Action Cost 10% Tax Total
Manufacturer 1,000 100 1,100
Warehouse adds label and
repacks @ 300
1,400 140 1,540
Retailer advertises @ 500 2,040 204 2,244
Total 1,800 444 2,244
Tax calculations in earlier regime:
Along the way, the tax liability was passed on at every stage of the transaction and the final
liability comes to rest with the customer. This is called the Cascading Effect of Taxes where a tax
is paid on tax and the value of the item keeps increasing every time this happens.

10. Action Cost 10% Tax Actual Liability Total
Manufacturer 1,000 100 100 1,100
Warehouse adds label and repacks @ 300 1,300 130 30 1,430
Retailer advertises @ 500 1,800 180 50 1,980
Total 1,800 180 1,980
Tax calculations in current regime:
In the case of Goods and Services Tax, there is a way to claim credit for tax paid in
happens in this case is, the individual who has paid a tax already can claim credit for this
submits his taxes.
In the end, every time an individual is able to claim input tax credit, the sale price is
price for the buyer is reduced because of a lower tax liability. The final value of the
reduced from Rs. 2,244 to Rs. 1,980, thus reducing the tax burden on the final customer.

11. GST Composition Scheme
Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST
formalities and pay GST at a fixed rate of turnover.This scheme can be opted by any taxpayer whose turnover is less
than Rs. 1.5 crore*.
1. Who can opt for Composition Scheme
A taxpayer whose turnover is below Rs 1.5 crore* can opt for Composition Scheme. In case of North-Eastern states and
Himachal Pradesh, the limit is now Rs 75* lakh.
Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover.
2. Who cannot opt for Composition Scheme
The following people cannot opt for the scheme:
•Taxpayer supplying exempt supplies.
•Supplier of services other than restaurant related services
•Manufacturer of ice cream, pan masala, or tobacco
•Casual taxable person or a non-resident taxable person
•Businesses which supply goods through an e-commerce operator

12. 3. What are the conditions for availing Composition Scheme?
The following condition must be satisfied in order to opt for composition scheme:
•No Input Tax Credit can be claimed by a dealer opting for composition scheme
•The taxpayer cannot make any inter-state supply of goods.
•The dealer cannot supply GST exempted goods
•Taxpayer has to pay tax at normal rates for transactions under Reverse Charge Mechanism
•If a taxable person has different segments of businesses (such as textile, electronic accessories,
the same PAN, they must register all such businesses under the scheme collectively or opt out of
•The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard
prominently at their place of business.
•The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply issued
•Those supplying goods can provide services of upto Rs. 5 lakh,
4. What is the tax rate applicable to a Composition Dealer?
Please use the chart below to understand the tax rate on turnover applicable:

13. CONCLUSION
One of the main objective of Goods & Service Tax(GST) would be to eliminate the doubly
taxation i.e. cascading effects of taxes on production and distribution cost of goods and
services. The exclusion of cascading effects i.e. tax on tax till the level of final consumers
will significantly improve the competitiveness of original goods and services in market
which leads to beneficial impact to the GDP growth of the country. Introduction of a GST to
replace the existing multiple tax structures of Center and State taxes is not only desirable
but imperative. Integration of various taxes into a GST system would make it possible to
give full credit for inputs taxes collected. GST, being a destination-based consumption tax
based on VAT principle.
GST will simplify India of its complex and complicated indirect tax structure and will ensure
a single unified tax regime, which will be reshaping India’s indirect tax structure.

14. BIBLOGRAPHY
• https://services.gst.gov.in
• http://www.cbec.gov.in
• https://www.google.co.in
• https://www.quora.com

15. THANK YOU
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