Goods and Service Tax (GST)-Awareness Programme

CA Chandra Kishore Bajpai
M.Com. FCA, DISA(ICAI), L.L.B.
Certificate in International Taxation
NEW DELHINEW DELHI
7599 03 7599 ,95600 37408
contact@cackbajpai.com
kb lcackbajpai@gmail.com
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Welcome to Mewar Group of
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Goods and Service Tax -GSTGoods and Service Tax GST
1. Present Indirect Tax Structure of India
2. Why GST
3. Roadmap of GST in India
Ch ll i GS i h4. Challenges in GST i.e. what next
5. What is GST and how it works
6. Proposed GST Model in India (Sub-contents in next slides)6. Proposed GST Model in India (Sub contents in next slides)
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Goods and Service Tax -GST
GST Discussion started first time when FM announce it in Feb 2007 to
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GST Discussion started first time when FM announce it in Feb 2007 to
implement by April 2010

Present Indirect Tax Structure
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Present Indirect Tax Structure
Excise Service VAT (Sale Custom
Tax
Central
Excise
(CENVAT)
Service
Tax
Central State
VAT (Sale
Tax)
Custom
Duty
Central
Levied by
Entry in
C tit ti
Entry 84
f Li t I f
Central
Govt.
Central
Govt.
Residuary
entry-97 of
Entry 54 of
List II & 92A
State
Govt.
Central
Govt
Entry 83
f Li t I fConstituti
on
Taxable
M f t
of List I of
Sch. VII
entry 97 of
List I of
Sch.-VII
Rendition
S l
List II & 92A
of List I (CST)
of Sch.-VII
of List I of
Sch.VII
ImportTaxable
Event
Tax Rate
Median
Manufacture
Rendition
of Service
Single
0% to
12 5% &
Sale
Import
and Export
Median
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Tax Rate
12.5 %
g
Rate 15%
12.5% &
20%
rate 24%

Why we
dneed
GST???GST???
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 Overlapping of tax in various transactions i.e.
multiplicity of taxes
T C diTax Cascading
Ineligibility of ITC for SPs & CENVAT for Traders
 Complexity in determining the nature of transaction –
S l SSale vs. Service
 Lack of Uniformity in Provisions and Rates
 Inability of States to levy tax on Service
 Complex Tax Administration
Interpretational issue

There is a saying in Kautilaya's Arthshastra, that the best taxation regime is the one which
is "liberal in assessment and ruthless in collection". The proposed GST seems to be based
on this very principle.
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Roadmap of GSTRoadmap of GST
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What Next
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Govt. outlines road-map for GST roll-out by April 2017
The entire process has been identified into three broad categories,
i.e. Legal framework,
IT infra and
change management with tentative timeline against each of them.change management with tentative timeline against each of them.
Challenges involved in the process of GST implementation
were also highlighted.
► Ratification of the Constitution Amendment Bill by 16 States within 30
days
► Presenting all legislative bills in the winter session of the Parliament
and the State assembliesand the State assemblies
► Constitution of GST Council within 60 days of enactment
► Establish GST Network and States IT back-end by November 2016
► Testing of software with live transactions by January 2017
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Key challenges indicated are with reference to
change management :g g
► GST rate structure
► Calculation of revenue base and the compensation
► List of exemptions
► Consensus on GST Law
► Consensus on threshold limit
► Administrative control over scrutiny cases by Centre and State
Government seems keen to put all its effort to meet the deadline.
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What is GST
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What is GST
 Goods & Service Tax (GST) as the name suggests, is
a tax on supply of goods or service.
 A tax only on value addition at each stage
 Supplier at each stage is permitted to set-off Supplier at each stage is permitted to set off,
through a tax credit mechanism, the GST paid on the
is purchase.
 The final consumer bear GST charged by the last
dealer in the supply chain, with set-off benefits at all
th i t
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the previous stages.

GST Model Internationally
GST Model Feature Countryy
National GST Tax levied by Centre with provisions for
revenue sharing with Provinces/States
Australia,
China
State GST Tax levied by Provinces/States USA
Non-concurrent
Dual GST
GST on Goods levied by State &
on Services levied by CentreDual GST on Services levied by Centre
Concurrent Dual
GST
Tax levied by Centre & State on
both Goods & Services
―India‘s Proposed Model
Brazil &
Canada
―India s Proposed Model
Quebec Model Separate legislation for Federal/
Provinces –Tax collection, Administration,
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Enforcements, etc. by Provinces

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GST-Rate
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Revenue Neutral Rate
The golden rule for collection of tax is given by world’s oldest
economist Sage Kautilya alias Chanakya Muni more than 2000
H id h h Ki h ld ll f diffyears ago. He said that the King should collect tax from different
persons as the humble bee collects honey from different flowers
without making any harm to them. Thus, all efforts should be
made to keep the GST rate as low as possiblemade to keep the GST rate as low as possible.
It is the rate at which tax revenue remains the same despite
giving credit of duty paid on inputs and other factorsgiving credit of duty paid on inputs and other factors.
The success of GST will largely depend on the determination of
ideal rate at Central level as well as State level which should be
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acceptable to the public and revenue neutral to Government.

P b bl fProbable propose rate of tax
Rate Goods and services
Zero Rate Exports, Goods & service to SEZ or UNO or Foregion Diplomatic Mission etc
Government supplies such as water services, drainage services etc.
Health, education, religious supplies Financial Services and residential
rentingrenting
Vegetable, fruit, meat
1% to 2% Gold and Silver ornaments, precious and semi-precious stones
18% Standard GST rate on all goods and services (distributed in CGST & SGST)
Without Tobacco, Cigarettes, Lottery tickets, betting and gambling etc
Restriction
To be covered
in Future
Petroleum and Petroleum products
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Out of GST Alcoholic Liquor for Human Consumption

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Levy in Goods and Service Tax
(GST) Regime(GST) Regime
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Levy in Goods and Service Tax
(GST) Regime(GST) Regime
There shall be levied a tax called the
Central/State Goods and Services TaxCentral/State Goods and Services Tax
(CGST/SGST) on all intra-State supplies
of goods and/or services at the rateg /
specified in the Schedule . . . to this Act and
collected in such manner as may be
ib dprescribed.
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m
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Goods Vs. Service
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Time Of SupplyTime Of Supply
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m
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Place Of SupplyPlace Of Supply
GOODS SERVICE
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Place of Supply of Goods
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Place of Supply of SERVICEPlace of Supply of SERVICE
Contd.
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Place of Supply of SERVICE
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Valuation of Supplypp y
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Transaction
Sole
Unrelated Value ofTransaction
Value
Considera
tion
Unrelated
Party
Value of
Supply
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i lTransaction Value
Shall Include Shall not Include
•Amount paid by recipient instead of
supplier and not included in price
•Value of goods / services supplied by
the recipient free of charge or at
•Post supply discount
known before supply
and linked to invoices
the recipient free of charge or at
reduced cost
•Royalties and License fees related to
and as a condition to supply
•Any discount allowed
before or at the time
of supply as recorded
•Taxes and duties other than GST
•Incidental costs/ expenses (such as
commission, packing, royalties etc.)
•Subsidies linked to the supply
in invoice
•Subsidies linked to the supply
•Reimbursable expenses incurred on
behalf of the supplier
•Discount or incentive allowed after
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the supply

Input Tax Creditp
i.e.
Credit Mechanism
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Credit Mechanism under GST Law
CGST CGST
SGSTSGST
IGSTIGST
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N
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N
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Tax Administration
 A uniform procedure for registration, payment of taxes and filing of
returns would be prescribed in the respective legislations governingreturns would be prescribed in the respective legislations governing
IGST, CGST & SGST
 CGST and SGST are to be paid to the accounts of the Central and the
State separately, though may be through a single Challan using thep y g y g g g
respective codes.
 A national level Information Technology Infrastructure under the name
of GSTNET is proposed to be established
 The assessee in GST regime may be required to file periodic returns for The assessee in GST regime may be required to file periodic returns for
all the three legislation namely IGST, CGST and SGST
 PAN-linked Taxpayers Identification Number (TIN) i.e GSTIN
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RegistrationRegistration is required if aggregate turnover in a financial year exceeds
Rupees Nine Lakhs Rupees Four Lakhs if a taxable person conducts hisRupees Nine Lakhs. Rupees Four Lakhs if a taxable person conducts his
business in any of the North Eastern States including Sikkim,
No threshold limit for the person:
making any inter-State taxable supply;making any inter-State taxable supply;
casual taxable persons;
who are required to pay tax under reverse charge;
non-resident taxable persons
who are required to deduct tax under section 37 (TDS);who are required to deduct tax under section 37 (TDS);
who supply goods and/or services on behalf of other registered taxable
persons whether as an agent or otherwise;
input service distributor;
persons who supply goods and/or services, other than branded services,p pp y g / , ,
through electronic commerce operator;
every electronic commerce operator;
an aggregator who supplies services under his brand name or his trade
name; and
h h l f b f d b h /such other person or class of persons as may be notified by the CG/SG on
the recommendations of the council.
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f h Separate Registration for each State
the taxable person will have to take a
separate registration
 Application for registration shall be
d i hi 30 d f h dmade within 30 days from the date
when he becomes liable for registration
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Return under GST Model law
Description Return Form Due Date
Monthly Statement of Outward Supply GSTR-1 10th of Next month
Monthly Statement of Inward Supply GSTR-2 15th of Next month
Monthly return GSTR-3 20th of Next month
Return for Composite Dealer GSTR-4 18th of Next month
Return for Input Service distributor GSTR-6 15th of Next month
TDS Return GSTR-7 10th of Next month
Annual return GSTR-8 By 31st Dec of Next Financial
Year
Final Return (no Prescribed Form) within 3 Months from the date of cancellation
or order of cancellation whichever is Later
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or order of cancellation whichever is Later
Foreign Non-Resident Taxpayer (GSTR-5)

Present VsPresent Vs
ProposedProposed

Practical Example
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Particulars Under Present Proposed
(I) Manufacturer (D1) to Wholesaler (D2)
Cost of Production 90,000 90,000 90000 90000
Input Tax Credit (Assuming nil) ‐ ‐ 0
Add : Profit Margin 10,000 10,000 10000 10000
Producers Basic Price 1 00 000 1 00 000 100000 100000Producers Basic Price 1,00,000 1,00,000 100000 100000
Add: Central Excise Duty @ 12% 12000 0
Total 112000
Add : Value Added Tax @ 14.5% 16240
Add : Central GST @ 12% 12000
Add : State GST @ 12% 12000
Sale Price 128240 124000
(II) Wholesaler (D2) to Retailer (D3)
Cost of Goods to D2 1,12,000 1,00,000 112000 100000
Available Input Tax Credit for set off Rs.16,240, Rs.24,000
Total 1,17,000 1,05,000 117000 105000, , , ,
Total Price to the Retailer 133965 130200
(III) Retailer (D3) to Final Consumer (C)
Cost of Goods to D3 1 17 000 1 05 000 117000 105000Cost of Goods to D3 1,17,000 1,05,000 117000 105000
Input Tax Credit Rs.16,965, Rs.25,200
Total 1,22,000 1,10,000 122000 110000
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Total Price to the Consumer 139690 136400

Ill t ti 2 I t St t ( t id th t t ) T di f G dIllustration 2: Inter State (outside the state) Trading of Goods
Particulars Present Scenario GST Scenario
Input Manufacture
Cost 9000 9000
Margin 1000 1000
Value 10000 10000Value 10000 10000
Excise @10% 1000
CGST@10% 1000
VAT @10% 1100
SGST @10% 1000
Total 12100 12000
Output Manufacturer
Cost 10000 10000
Margin 2000 2000
Value 120 Value 120 12000 12000
Excise @10% 1200
IGST@20% 2400
CST @ 2% 264
Sale Price 13464 14400
Dealer Dealer
Purchase Cost 13464 12000
E t T 3 60 E t T Nil 364Entry Tax 3.60 Entry Tax Nil 364
Landed cost 13828 12000
Margin 10 Margin 10 1000 1000
Value 14828 13000
VAT @10% 1482.8
CGST@10% 1300
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CGST@10% 1300
SGST @ 10% 1300
Total amount Paid by Customer 31139 28600
B
A
C
K

N
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N
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Sector Specific Impact
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N
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N
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For further information and our services,
lplease contact:
CA Chandra Kishore Bajpai
M.Com. LLB. FCA.
Certificate in International Taxation
Supertech Livingston
Crossing Republik Ghaziabad (U P )Crossing Republik, Ghaziabad (U.P.)
9560037408,7599037599
contact@cackbajpai.com, cackbajpai@gmail.com
• Purpose of this presentation is to give a highlights of the proposed GST
regime in India .
• Prior professional advice is recommended before implementation of the
t d d thi t tiaspects covered under this presentation
• The instant presentation is just sharing information based on compilation
from different sources for benefit of readers.
• We are under no obligation to update this presentation for future changes.
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Goods and Service Tax (GST)-Awareness Programme

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