Good and services tax is likely to be implemented from 1st April 2017. In this presentation, an attempt is made to understand the benefits of the GST over the present indirect tax system

1. Goods and Services Tax in the Indian context
By
Dr. Sanjay P Sawant Dessai
Associate Professor/Vice Principal
At VVM
Shree Damodar college of Com & Eco
Margo Goa
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2. Contents
• Introduction to GST
• Present tax structure in India
• Present tax collection data
• Objectives of GST
• Benefits of GST
• GST at Global level
• Current status of GST
• Comparison between present tax system and
proposed GST
• Conclusion
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3. Introduction to GST
• GST is Tax on goods and services as a one unit .
• Essentially a tax on value added at each stage.
• It allows the supplier at each stage to set-off the taxes paid at previous levels in
the supply chain.
• Consumer will bear only the GST charged by the retailer in the supply chain.
• Complete overhaul of the current indirect tax system.
• It will replace all indirect taxes levied on goods and services by the Indian Central
and State governments.
• significant step in the field of indirect tax reforms in Indian economy
• The Goods and Service Tax likely to be implemented in India, from April 2017
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4. Present tax structure in India
Central Government taxes
• Income Tax
• Customs duties
• Central excise
• Service tax
• Central sales tax
State Governments taxes
• Value Added Tax (VAT
• Stamp duties and Land Revenue
• State Excise
• Entertainment tax
• Octroi and Entry tax
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5. Present Tax collection of central Govt.
Tax Head 2014-15
Actual
(crore)
2015-16
Revised Estimate
(crore)
2016-2017
Budget
(crore)
Corporate tax 4,28,925 4,52,970 4,93,923
Income tax 2,65,733 2,99,051 3,53,174
Customs 1,88,016 2,09,500 2,30,000
Union excise 1,89,952 2,84,142 3,18,670
Service tax 1,67,969 2,10,000 2,31,000
Total 12,40,595 14,55,663 16,26,767
% of excise and
service tax to total
taxes
29 34 34
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6. Objectives of GST
• To create a common market across the
country
• To Prevent unhealthy competition among the
States
• To Simplify tax administration and compliance
• To give input tax credit across the value at
every stage
• To minimise cascading effect on taxation
• To minimise tax slab rates an increase tax base
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7. GST will subsume following taxes
Central taxes
• Central excise
• Sales tax
• Service tax
• Central excise duty
State taxes
• Vat/ Sales tax
• Entertainment tax
• Luxury tax
• Entry tax
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8. Impact of GST
Will Impact the tax structure, incidence,
computation, payment, compliance, and
reporting
Will Create positive impact on
 Product – more demand
 Price – reduced price
 Distribution –– easy distribution without
checkpoints/ octroi
 Supply chain management - Seamless inter-state
flow
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9. Benefits to Economy
• Higher GDP growth – GDP growth is expected to
be increase by 1 to 2 percent annually
• Increase in tax revenue –is projected due to
better compliance and broader tax base
• Unified market - amalgamation of various taxes
into one will simplify the procedure and help in
evolution of a common market at national level
• Benefits to customer- The burden of tax on
goods is expected to fall under GST leading to
benefits to the consumers
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10. Benefits to Economy
• Simplified and rational tax structure
• Reduced Costs for businesses in compliance
• Simple tax administration at reduced cost
• Reduced litigation from easier to follow tax
laws
• Widening of the tax base as simpler, cheaper
compliance makes it easier to catch
defaulters.
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11. GST at global level
• France was the first country to introduce in year
1954
• Almost 150 countries have adopted GST
• Majority countries follows unified GST
• Brazil and Canada follow dual system
• India to have dual system ( State and Central)
• GST Rates(in%) – China 25, UK 20, France 19.6 ,
Germany 19, Australia 10, USA 7.5, Canada and
Japan 5 %
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12. Proposed GST rates in India
• GST council proposed 4-tire tax structure
• Essential items including food will be taxed at
zero rate.
5 percent – essential goods
12 percent ( Standard rates FMCG items )
18 percent (Standard rates – services
28 percent ( White goods- washing machine air
conditioner , shampoo, soap etc )
• Cess to be applicable to Demerit goods or sin
goods – luxury cars , Pan Masala , Tobacco
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13. Comparison between present tax
system and GST
Manufacture to wholesaler
Particulars Without GST ( RS) With GST(Rs)
Cost of goods to Manufacturer 10,000 10,000
Add : – Profit Margin 20 percent 2,000 2,000
Manufacturing cost 12,000 12,000
Excise duty @ 12 percent 1,440 ------
Total value 13,440 12,000
Add VAT at 12.5 percent 1680 -----
Add :CGST 9 percent ---- 1080
Add: SGST 9 percent ------ 1080
Invoice Value 15120 14160
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14. Comparison between present tax
system and GST
Wholesaler to retailer
Particulars Without GST (Rs.) With GST ( Rs.)
Cost of goods to retailer ( without vat and GST ) 13,440 12,000
Add : – Profit Margin at20 percent 2,688 2,400
Total value 16,128 14,400
Add:- VAT at 12.5 percent 2,016 -------------
Add :CGST 9 percent -------- 1296
Add: SGST 9 percent ------------ 1296
Invoice Value 17,144 16992
Input tax credit available to wholesaler is Rs. 1,680 in present system And Rs. 2,160 under GST
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15. Comparison between present tax
system and GST
Particulars Without GST With GST
Retailer to consumer Rs Rs
Cost of goods to retailer ( without vat and GST ) 16,128 14,400
Add : – Profit Margin at 20 percent 3,225 2,880
Total value 19,353 17,280
Add:- VAT at 12.5 percent 2,420
Add :CGST 9 percent 1,555
Add: SGST 9 percent 1,555
Total price to the final consumer 21,773 20390
Cost of saving to consumer 1,383
Percentage of cost saving 6.35
Input tax credit available to retailer is Rs. 2,016 under current system and Rs. 2,592 under GST
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16. Conclusion
• With GST in place from 1st April 2017
 No more competition among States
 Single market across country.
 Higher revenue to the Govt. with simplified tax administration.
 free movement and supply of goods in every part of the country.
 Positive for producer, supplier, consumer and Govt.
 Reduced tax liability for manufacturer
 No more cascading effects of taxes on customers
 More money in the hands of consumer
 Higher spending
 Higher GDP growth for country
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