After a decade of negotiations, hectic parleys, many climb down and heart burn, India is ready to bring in what has been touted as Independent India's most celebrated tax reform, the Goods and Services Tax.

1. GST
VIJAY KAMBOJ
+919466500020
EVERYTHING YOU WANTED TO KNOW

2. Indirect taxes today
• 1. CENTRAL
• 2. STATE
1. CENTRAL :-
(a) Central excise duty
(b) Service tax
(c) Additional customs duty
(d)Special additional duty of customs
(e) Central sales tax
(f) Central surcharge and cesses

3. Indirect taxes today
EXPECTED COLLECTION AS INDIRECT TAXES
BY THE CENTRAL GOVERNMENT IN 2016-17
AS BUDGET ESTIMATES
Rs. 7,79,670
CRORE

4. Indirect taxes today
• 2. STATE :-
(a) Value-added tax
(b)Octroi and entry tax
(c) Purchase tax
(d)Luxury tax
(e) Taxes on lottery, betting & gambling
(f) State cesses & surcharges
(g)Entertainment tax

5. Why do we need GST???
• (a) As business have evolved, taxation lines
between Centre & State have blurred, leading to
double taxation and litigation.
• (b) Multiplicity of taxes and their non-
creditable nature has a cascading effect
• (c) Massive disparities in the rate of taxes
levied by states

6. Why do we need GST???
• (d) State VAT laws were designed for uniform
application but they have amended their laws,
leading to multiple compliance requirements
• (e) The current tax system is origin based, not
destination based like GST

7. EXISTING TAX RATES
15
PER CENT
ON INDIA’S
SERVICE SECTOR
12.36
PER CENT
STANDARED
EXCISE
ON GOODS
14.5
PER CENT
STANDARED
VAT
BY STATES

8. WHAT IS PROPOSED
• (a) Goods & Services tax will replace most
indirect taxes levied by the Centre & States
• (b) It will be dual tax, a Centre GST and a state
GST. Centre to levy CGST and states, SGST
• (c) Central taxes subsumed include central
excise duty, additional excise duty, service tax,
additional custom duty and special additional
duty.

9. WHAT IS PROPOSED
• (d) State level taxes subsumed include VAT or
sales tax, central sales tax, entrainment tax,
entry tax, purchase tax, luxury tax and octroi
• (e) Inter- state supplies within India would
attract an integrated GST. It will be levied by
the Centre
• (f) Alcohol, real estate, five petroleum
products, electricity have been kept out of GST

10. WHAT IS PROPOSED
• (g) Tax collection will be done by GSTN ( Goods
and services Tax Network)
• (h) Administration of GST will be responsibility
of the GST Council- consisting of Union finance
and state finance ministers

11. IDEAL GST AND ITS IMPLICATIONS
• (a) It will make India a common market,
facilitating movement of goods from one state
to another.
• (b) A World Bank report cites a study stating
that one of the cited causes for freight delays
is inefficiencies in customs and state border
check posts. Nearly a quarter of the transit
time is spend at check posts, state borders, city
entrances and other regulatory stoppages.

12. IDEAL GST AND ITS IMPLICATIONS
• (c) Will lead to simplified tax regime, making
compliance easier
• (d) Input credits will reduce production costs
• (e) There will be no cascading taxes
• (f) Will widen the tax base and increase
revenue collection.

13. The big ifs
• (a) No agreement on GST rates : The Arvind
Subramanian panel has recommended a
standard rate of 18 percent while the National
Institute of Pubic Finance and Policy favors
23-25 per cent.
• (b) While GST is supposed to promote easing
of doing business, the draft model law
recommends a registration and tax returns
structure which, it is feared, will increase cost
of compliance.

14. The big ifs
• (c) Input tax credit is the lifeline of GST. The
current model law makes it difficult for
companies with multi-state operations to
claim credit and makes a mockery of the GST
ideal of a common market.

15. Who Gets What ?
GST could give manufacturing sector a
boost and make service more expensive.
The real benefit would be in the area of
tax governance.

16. Who Gets What ?
• 1. INDUSTARY:-
• (a) Input tax credit will bring down cost of
production
• (b) Restrictions on input tax credits and
exclusion of sectors will have a top- sided
impact on production cost.
• (c) A single GST rate without any exemption
will ensure a lower rate of tax.

17. Who Gets What ?
• (d) Exclusion of four sectors could mean a
higher tax rate.
• (e) With no 1 per cent inter- state levy on
movement of goods, India will be a unified,
common market.
• (f) Higher exemption limit.
• (g) Lower threshold would bring more
business in the GST net and add to compliance
cost.

18. Who Gets What ?
• (h) Services should ideally be taxed lower
than goods. GST is doing just the opposite.
• (i) More services will come under the tax net
and are likely to pay more than the 15 per
cent service tax they currently pay.

19. Who Gets What ?
• 2. CONSUMERS :-
• (a) Consumer should pay a low rate of tax on
goods and services
• (b) Initially, GST will have an inflationary
impact. The 13th finance commission
estimates price of agriculture goods to
increase by 0.061 per cent to 1.18 per cent

20. Who Gets What ?
• (c) The poorest should pay the least in taxes
• (d) As more products and services come under
the tax net, lower income groups are likely to
be most affected as 80 per cent of their
consumption basket comprise basics such as
food, clothing, footwear.
Rs
1.8 Lakh Crore
VALUE OF THE 300 CATEGORIES CURRENTLY
EXEMPTED FROM EXCISE

21. Who Gets What ?
• 3. STATES :-
• (a) States have been assured of compensation
in case of revenue loss after GST for five years
• (b) States will have control over collection of
taxes from small traders with a turnover of Rs
1.5 crore in a year
• (c) States will continue to have control over
tax collection from lucrative sectors- alcohol,
real estate, electricity and petroleum products

22. Who Gets What ?
• (d) States are also bargaining for flexibility to
increase tax rates, i.e., no constitutional cap
• (e) GST council recommendations will not be
binding on states
• (f) Most states have poor capabilities in tax
administration; with GSTN, greater
administrative efficiencies will kick in

23. Three- tier proposed GST structure
12
PER CENT
GST PROPOSED FOR
ESSENTIAL GOODS
40
PER CENT
GST PROPOSED ON
LUXURY ITEMS (
TOBACCO, LUXURY
CARS)
17-18
PER CENT
GST PROPOSED ON
REMAINING
GOODS AND
SERVICES