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Contents
Journey of GST at a Glance Taxes subsumed in dual GST GST Rates Global Scenario GST Overview Proposed GST Model in India Proposed GST Model in India salient features Key Issues and Challenges Current Developments
CST will be phased out Toll Tax, stamp duty, passenger tax, road tax are not proposed to be included in GST
GST Overview
Justification of GST & How does it works!!! Burden of Tax fall under GST Benefit of GST : - To industry, trade, exporters & agriculture - Small entrepreneurs and small trader - Common consumers Salient features of proposed GST model Why is Dual GST required? How would a particular transaction of goods and services be taxed under CGST and SGST Taxes proposed to be subsumed under GST
GST Overview
Rate structure proposed under GST Concept of providing threshold exemption for GST Scope of composition and compounding scheme under GST How will imports be taxed under GST? Cross utilization of credits between goods and services under GST??? Taxation of Inter-state transactions of goods & services under GST Introduction of GST require a constitutional amendment why?? Legislative steps being taken for CGST and SGST how? How will the rules for administration of CGST and SGST be framed?
Goods
GST: 16%
GST: 16%
8% - CGST 8% - SGST
8% - CGST 8% - SGST
No GST
GST
Classification - HSN to form the basis of classification of goods under Central and State GST - Classification of services based on global best practices and Indian realities Rates - Uniform rates for services - Multiple rates for goods
Input tax Credits (ITC) - Full credits under the Central and the State GST that will operate in parallel - Cross-utilization of credits between Central GST and State GST not permitted - Refund of unutilized accumulated ITC Export
SGST SGST against IGST This is transferred by the State of seller to Centre
IGST
IGST
against
CGST
SGST
Compliance - PAN based identification number, with two extra digits to distinguish between Central & State GST - One periodic return to Central & State
GST on imports - Central & State GST on imports to replace Countervailing duty (CVD) and Additional Duty of Customs (ADC) currently levied on import of goods as part of customs duties - GST paid on imports available as input tax credits - Place of supply rules to determine the State in which the SGST on imports is payable
Inter-State transactions Goods - Goods to be taxed in the destination / importing State - Zero rating in the originating State - Tax of the importing State to be charged on inter-State supplies - Tax to be collected and deposited with designated Banks in the exporting State but to the credit of the importing State - Full offset against State GST at the time of supply in that State
Inter-State transactions (Contd.) Goods - Tax of the importing State to be charged on inter-State supplies - Tax to be collected and deposited with designated Banks in the exporting State but to the credit of the importing State
Inter-State transactions (Contd.) Goods - Administratively convenient No fund transfers between State Governments No requirement for prepare declaration forms No possibility of revenue leakages - Strong IT infrastructure is necessary to facilitate information exchange
Treatment of Services - Any economic activity which is not a supply of goods is a supply of services - All services to be taxed with few exceptions - Central GST on services relatively easy to collect - Services to be taxed in the State of consumption - State GST on services will be far more complex particularly on cross-border services
Cross-border services - Taxed at the place of consumption of services - Difficult to determine the actual place of effective use/enjoyment of services - Rules for place of supply of services to be framed - Currently no uniform practice exists - Administrative convenience + convenience of trade and industry to be factors in determining the place of collection of service tax.
Thresholds - Rationalization of thresholds across excise, service tax and VAT Continuation of area specific exemptions Central GST and State GST Taxation of Inter-State supplies of Goods and Services - Significant challenge due to its complexity
Current Developments
FM Pushes for Single-rate GST for Goods & Services Doubts for April 2010 deadline to roll-out GST Proposals of EC Comments of Union Government
A threshold of Rs. 10 Lakh for states and Rs. 1.5 A uniform threshold of Rs. 10 lakh or more for Crore for the Centre to protect small traders both the Centre and the states to avoid distortions VAT, entertainment tax, luxury tax, tax on Electricity duty, Octroi, purchase tax and taxes lottery, state cess, surcharge and entry tax to be levied by local bodies should also be subsumed subsumed in GST under GST Some states said they earn good revenue from Keeping purchase tax outside GST will give purchase tax and it should not be subsumed states a loophole to impose the tax on any under GST commodity. Alcoholic beverages may be kept out of the These should be brought under GST to remove purview of GST and sales tax/VAT continued to the cascading effect on GST paid on inputs be levied on it. Petroleum products should be kept outside GST These may be levied to GST and in select cases as is the prevailing practice and sales tax credit of GST paid on these items may be continued to be levied disallowed
never enough................