A brief study on GST, sectoral impacts, winners and losers of GST, rates of GST, Taxes subsumed by GST, areas of impact in banking and financial services, advantages of GST, challenges of GSt

1. A STUDY ON GST AND ITS IMPACT
ON BANKING AND FINANCIAL
SERVICES
Prepared by: Swapna.M

2. TIMELINE OF GST

3. 2000
• Initiating discussions on GST
• Appointment of Empowered committee
2004
• Recommendations for GST to replace
existing Tax regime
28 Feb
2006
• Appearnce of GST in Budget speech
• Preparation of road map for GST
28 Feb 2007
• Submission of GST road map model to
Govt.
10 Nov 2008
• Empowered committee submits a
discussion paper inviting debate.

4. Feb 2010
• Launching of computerisation of
commercial taxes.
29 Mar
2011
• Bill referred to standing
committee on finance
Nov 2012
• Government resolve to introduce
GST
Feb 2013
• Lapse of bill
Aug 2013
• Cabinet approval for the
constitution amendment bill

5. 18 Dec
2014
• Amendment Bill in the Lok Sabha
19 Dec
2014
• Bill passed by Lok Sabha
6 May 2015
• Bill presented in Rajaya Sabha
3 Aug
2016
• President signed
8 Sep
2016
• GST council constituted
1 July
2017
• GST implemented

6. Winners
• Cement
• Media
• Automobiles
• E- Commerce
• FMCG
• Tech
Losers
• Airlines
• Insurance
• Telecom
GST

7. PRESENT TAX STRUCTURE

8. GST FRAMEWORK IN INDIA
• Dual GST: Central GST (CGST) and State GST (SGST) to
operate concurrently on supply of goods and services
• Inter-State transactions subject to Integrated GST (IGST)
which will be aggregate of CGST and SGST
• Taxable event of ‘supply’ as against manufacture (excise),
sales (VAT) and service (service tax)
• Existing industrial incentives to be continued by way of ‘refund’
mechanism
• Cross utilization of CGST and SGST credit will not be permitted
except under IGST
• Exports and supplies to SEZ to be zero-rated
• Imports would be subjected to IGST on destination principle;
SGST component of IGST to be appropriated by State where
supplies get consumed

10. GST-ONE DIRECT TAX FOR THE
WHOLE NATION
• comprehensive, multi-stage, destination-based
tax that will be levied on every value addition.

11. BENEFITS OF GST
1. Easy compliance
2. Uniformity of tax
rates and structures
3. Removal of
cascading
4. Improved
competitiveness
5. Gain to
manufacturers and
exporters
1. Simple and easy to
administer
2. Better controls on
leakage
3. Higher revenue
efficiency
1. Single and
transparent tax
proportionate to value
to goods and services
2. Relief in overall tax
burden

12. TAXES SUBSUMED BY GST
Note:
1) Alcoholic beverages for human consumption are proposed to be kept out of
the purview of GST
2) GST on petroleum products would be levied from a notified date
recommended by the GST Council
3) * Includes Excise duty levied under Medicinal & Toilet Preparations (Excise
Duties) Act, 1955

13. TAXES THAT REMAIN

14. DUAL GST WITHIN STATE

15. IGST

16. What impact GST will have on pricing of
products as compared to current
scenario?

17. GST TERMS
• Taxable person
• GSTIN
• Reverse Charge
• Mixed supply and composite supply
• Continuous supply
• GST compliance rating
• GST Suvidha provider (GSP)

18. GOODS AND SERVICE TAX NETWORK
GSP as a term has been tossed by GSTN (Goods and Service Tax Network)
which is a private company in which central and state government collectively
holds 49.5% stake. GSTN has been set up with the sole objective of
development and maintenance of IT infrastructure for Goods and Services Tax
implementation in India. This is in-line with Digital India initiative for a paperless
tax compliance regime and brings more ease in doing business.

19. GSP- GST SUVIDHA PROVIDER

20. GST RATES

21. GST IMPACT ON SERVICE SECTOR

22. GST IMPACT ON INFRASTRUCTURE
SECTOR

23. TECHNOLOGY ALIGNMNET

24. CHALLENGES TO OVERCOME UNDER
GST REGIME
• Change in business software
• GST compliance
• Increase in operating cost
• Policy change during the middle of the year
• Online procedure
• Higher tax burden for manufacturing SME’s
• No clarity on tax holidays
• Disruption to business

25. POSITIVE ASPECTS OF GST
• The main reason to implement GST is to abolish the cascading effect on tax.
• The GST is being introduced to create a common market across states, not only
to avoid enfeebled effect of indirect tax but also to improve tax compliance.
• GST will lead a more transparent and neutral manner to raise revenue.
• Price reduction as credit of input tax is available against output tax.
• Simplified and cost saving system as procedural cost reduces due to uniform
accounting for all types of taxes. Only three accounts; CGST, SGST, IGST have to
be maintained.
• GST is structured to simplify the current indirect system. It is a long term strategy
leading to a higher output, more employment opportunities, and economic boom.
• GST is beneficial for both economy and corporations. The reduced tax burden on
companies will reduce production cost making exporters more competitive.

26. NEGATIVE ASPECTS OF GST
• GST is being referred as a single taxation system but in reality it is a
dual tax in which state and centre both collects separate tax on a
single transaction of sale and service.
• At present the main Indirect tax system of central Government is
central excise. All the goods and commodities are not covered by the
central excise and further there is an exemption limit of Rs. 1.50
Crores in the central excise and further traders are not liable to pay
central excise. The central excise is payable up to the stage of
Manufacturing but now GST is payable up to the stage of sale.
• Majority of dealers are not covered with the central excise but are
only paying VAT in the state. Now all the Vat dealers will be required
to pay “Central Goods and service tax”.

27. • The calculation of RNR (Revenue Neutral Rate) is very difficult and
further Govt. wants to enhance its revenue hence rate of Tax will be a
problem. As per the News reports the proposed rate for State GST is
12% and Central GST is 14% Plus Govt. wants to impose 1% CST at
the initial stage of GST on the interstate sale of Goods and services.
So the normal rate of overall tax will be 26%. This rate is very high
comparing to the fact that small and medium Industries are at present
not covered by the central excise and most of the Goods such as
agricultural products are out of the preview of the Central Excise.
• Improvement in the Manufacturing and distribution of Goods and
service, increase in exports, various reforms, check on corruption,
less Government control are some of the factors which are
responsible for the economic growth of the country. A tax system can
make a revolution in the economy of the country is “rarest of the rare”
thing.

28. IMPACT OF GST ON BANKING AND
FINANCIAL SERVICES

29. • Place of supply of financial service products
• Intermediary services
• Interest Income
• Free supply of services
• Sale of securities
• Securitization transaction
• Finance lease transactions
• Sale of repossessed assets
• Input Tax Credit

30. • Penal/ overdue Interest
• Supply to one’s own branch
• Centralized registration
• Tax Invoice
• Bill of Supply
(Prepared based on comparison between existed tax
regime and model GST law)