GST : Introduction, structure and its likely impact on agriculture

1. SEMINAR ON
GOODS AND SERVICES TAX:
INTRODUCTION, STRUCTURE AND
ITS LIKELY IMPACT ON
AGRICULTURE
Presented by
Nisha
(L-2015-BS-72-D)

2. AGENDA
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 POWER TO TAX IN INDIA
 SHORT COMINGS IN CURRENT SYSTEM
 JOURNEY SO FAR
 WHAT IS GST
 MAIN FEATURES OF GST
 STRUCTURE OF GST
 LIKELY IMPACT OF GST

3. POWER TO TAX IN INDIA
• Central Government and the State Governments under Part XI
of Indian Constitution have power to levy taxes.
• Legislative power & Administrative power
• Legislative power has three lists:-
 Union list,
 States list and
 Concurrent list
• Union list consists of 100 items
• State list consists of 66 items
• Concurrent list consists of 47 items
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4. POWER TO TAX IN INDIA
• India has a two tier federal power to collect tax –
 the Union Government,
 the State Governments including urban/rural local
bodies
• Presently goods are liable to Vat / Excise / Customs duty while
taxable services attract service tax.
• Certain transactions subject to both - Vat and Service tax
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5. SHORT COMINGS IN CURRENT TAX
SYSTEM
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Tax Cascading (Tax on Tax)
Taxation at Manufacturing Level
Exclusion of Services
Tax Evasion
Confusion and Mistrust
Complex and lacking in stability
Hidden tax on exports, no state tax on imports
High transaction costs
Too much litigations
High corruption

6. CASCADING EFFECT OF
PRESENT TAX SYSTEM
Producer/manu
facturer
Cost of
input
Value of
output
Tax rate Selling
price
(including
tax rate)
Tax burden
Manufacturer _ 100 10% 110
(100+10%
of 100)
10
Wholesaler 110 150 10% 165
(150+10%
of 150)
15
Retailer 165 200 10% 220
(200+10%
of 200)
20
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Table : 1 Cascading effect(Tax on Tax) of sales tax( Amount in Rs.)

7. GOODS & SERVICE TAX (GST)
A Common Tax on
7
GOODS SERVICES
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9. WHAT IS GST
• The Goods and Service Tax (GST) a 122nd Constitutional
amendment to be implemented in India, from July 1 2017.
• “Goods and Service Tax” (GST) is a comprehensive tax to be
levied on manufacture, sale and consumption of goods and
service at a national level
• GST is a tax on goods and services with value addition at each
stage.
• It is to be levied at each point of sale or provision of service.
• At the time of sale of goods or providing the services the seller
or service provider can claim the input credit of tax which he
has paid while purchasing the goods or procuring the service
• This is simply very similar to VAT. It can be termed as
National level VAT on Goods and Services.
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10. CENTRAL TAXES
• Central Excise duty
• Additional duties of
excise
• Excise Duty levied under
Medicinal & Toiletries
Preparation Act.
• Service Tax
• Additional Customs Duty
• Special Additional Duty
of Customs – 4% (SAD)
• Surcharges and
• Cess
STATE TAXES
• VAT/Sales Tax.
• Entertainment Tax (unless
levied by local bodies.)
• Luxury Tax
• Taxes on Lottery, betting
and gambling.
• State Cess and surcharges
related to supply of goods
and services.
• Entry tax not in lieu of
Octroi.
CENTRAL & STATE TAXES TO BE SUBSUMED
UNDER GST
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11. MAIN FEATURES OF THE GST
ACT
• GST to be levied on supply of goods or services
• Electronic mode for all transactions and processes only
through electronic mode
• PAN Based Registration
• Registration only if turnover is more than Rs. 20 lac (in north
east India limit is 10 lakh)
• Option of Voluntary Registration
• Deemed Registration in three days
• Input Tax Credit available on taxes paid on all procurements
• Credit available to recipient only if invoice is matched –
Helps fight huge evasion of taxes
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12. MAIN FEATURES OF THE GST
ACT
• Set of auto-populated Monthly returns and Annual Return
• Composition taxpayers to file Quarterly returns
• Automatic generation of returns
• GST Practitioners for assisting filing of returns
• GSTN and GST Suvidha Providers (GSPs) to provide
technology based assistance
• Separate electronic ledgers for cash and credit
• Tax can be deposited by internet banking, NEFT / RTGS,
Debit/ credit card and over the counter
• Cross utilization of IGST Credit first as IGST and then as
CGST or SGST /UTGST
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13. MAIN FEATURES OF THE GST
ACT
• Refund to be granted within 60 days
• Provisional release of 90% refund to exporters within 7 days .
• Interest payable if refund not sanctioned in time
• Refund to be directly credited to bank accounts
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14. WHAT ARE CGST, SGST AND IGST
• India is a federal democracy that is one which has clear
demarcation of powers, responsibility and revenue collection
between the states and the Centre in its constitution. The
Central GST or CGST is the areas where the Centre has the
powers .
• State GST where the State has taxation capabilities
• The IGST or Integrated GST is for movement of goods within
the states of the Indian union. This will be collected by the
union however will be transferred over to the states.
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17. APPLICABILITY OF GST
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18. STRUCTURE OF GST
GST STRUCTURE
CENTRE GST
TO BE LEVIED BY
CENTRE
STATE GST
TO BE LEVIED BY
STATE
DUAL GST
TO BE LEVIED BY
BOTH STATE AND
CENTRE
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19. STRUCTURE OF GST
• The Goods and Services Tax (GST) will be levied at multiple
rates ranging from 0 per cent to 28 per cent.
• a four-tier GST tax structure of 5%, 12%, 18% and 28%
will be followed.
• lower rates will be for essential items
• the highest rates for luxury and de-merits goods that would
also attract an additional cess.
• Service tax will go up from 15% to 18%. The services being
taxed at lower rates, owing to the provision of abatement, such
as train tickets, will fall in the lower slabs.
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20. Contd….
• In order to control inflation, essential items including food,
which presently constitute roughly half of the consumer
inflation basket, will be taxed at zero rate.
• The lowest rate of 5% would be for common use items.
• Highest tax slab will be applicable to items which are
currently taxed at 30-31% (excise duty plus VAT).
• Ultra luxuries, demerit and sin goods (like tobacco and aerated
drinks), will attract a cess for a period of five years on top of
the 28 per cent GST.
• The collection from this cess as well as that of the clean
energy cess would create a revenue pool which would be used
for compensating states for any loss of revenue during the first
five years of implementation of GST.
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21. Definition of Agriculture under GST
• As per the Model GST law “agriculture" , includes :
floriculture, horticulture, sericulture, the raising of crops, grass or
garden produce and also grazing.
• does not include
dairy farming, poultry farming, stock breeding, the mere cutting of
wood or grass, gathering of fruit, raising of man-made forest or
rearing of seedlings or plants.
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22. CURRENT TAX LAWS
• There are certain food items like rice, sugar, salt, wheat, flour
which are exempted from CENVAT.
• Under the state VAT, cereals and grains are taxed at the rate of
4%.
• Agricultural products go through a lot of licensing, no. of
indirect taxes(VAT, excise duty, service tax) under the current
tax laws.
• State VAT is currently applicable to all the agricultural goods
at each state, it passes through prior to final consumption.
Although there are certain exemptions available from state
VAT for certain unprocessed food products like meat, eggs,
fruits, vegetables etc.
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23. GST RATES FOR DAIRY PRODUCTS
 Nil GST RATE;
 Fresh milk and pasteurized milk, including separated milk, milk and
cream, not concentrated nor containing added sugar or other
sweetening matter, excluding Ultra High Temperature (UHT) milk
[0401]
 Eggs Birds' eggs, in shell, fresh, preserved or cooked [0407]
 Curd [0403, 0406],
 Lassi [0403],
 Butter milk [0403]
 Chena or paneer [0406], other than put up in unit containers and
bearing a registered brand name.
 Natural honey, other than put up in unit container and bearing a
registered brand name.
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24. • 5% GST RATE;
• All goods not specified elsewhere.
• Ultra High Temperature (UHT) milk [0401]
• Milk and cream, concentrated or containing added sugar or other
sweetening matter including skimmed milk powder, milk food for
babies, excluding condensed milk.
• Cream, yogurt, kephir and other fermented or acidified milk and
cream, whether or not concentrated or containing added sugar or
other sweetening matter or flavoured or containing added fruit,
nuts or cocoa
• Chena or paneer put up in unit container and bearing a registered
brand name [0406].
• Birds' eggs, not in shell, and egg yolks, fresh, dried, cooked by
steaming or by boiling in water, moulded, frozen or otherwise
preserved.
• Natural honey, put up in unit container and bearing a registered
brand name.
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25. • 12% GST RATE;
• Butter and other fats (ghee, butter oil, etc.) and oils derived
from milk; dairy spreads [0405]
• Cheese [0406]
• 18% GST RATE;
• Condensed milk [04029110, 04029920]
• Milk, Cheese, Egg and Honey falls under HSN code chapter
04 of GST commodity tariff schedule. The details about GST
rate changes for sale of Milk, Cheese, Egg and Honey are
being updated here. The notification changes on exemptions
for GST for sale of Milk, Cheese, Egg and Honey and other
circulars related to GST for diary products are updated in this
website.
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26. NATIONALAGRICULTURAL
MARKET(NAM)
 A scheme for the promotion of National Agricultural Market
(NAM) is introduced by the central government.
Involving all the farmer and traders in the regulated markets
with a common e-commerce platform
for a transparent, impartial trade of agri-commodities can be termed as National
Agricultural Market.
 e-NAM is platform to trade food commodities, which are exempt
from GST. e-NAM will help in escaping mandi taxes, linking
farmers with buyers and improving market efficiency, hence
benefiting both farmers and buyers.
 In NAM once the registration of the seller or buyer is done in one
mandi, he can trade to or from any of the mandi of the NAM
network in the country. The trader need not to register at different
mandies and pay fee to different mandies for the trading.
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LIKELY IMPACT OF GST
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29. IMPACT
• GST would provide each trader, the input credit for the tax
paid on every value addition. This will create a transparent,
hassle free supply chain which would lead to free movement
of agri-commodities across India.
• Most of the agricultural commodities are perishable in nature.
An improved supply chain mechanism due to GST, would
reduce the time taken for inter-state transportation. Benefit of
reduction in time would be passed on to the farmers/retailers.
• food grains will be exempted from tax. The lowest slab of 5
per cent will be for items of common consumption which
include several food items. These include various items such
as meat, fish, poultry, grains, cereals, dairy products and milk,
confectionary, snacks, candy, etc.
• taxes like purchase tax, market fee (mandi tax), and
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30. • The GST Council fixed a 12% rate on fertilizers, up from the
current 4-8% rates depending on raw materials used and in
which states the products are sold. For urea, the most
commonly used fertilizer, prices may go up by Rs300 to Rs400
per tonne.
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Thank you