Title: GST Overview - Know All About Goods and Service Tax Smart Taxation System in India
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2Meaning
- Goods and Services Tax (GST) is a value added tax
and a comprehensive tax levy which is levied on
the supply of goods and services all across the
country. It will be levied only on the value
added as against tax levied at each stage.
3Indirect Tax structure in India before GST
- The earlier indirect tax framework in India
suffered from various shortcomings. Under the
earlier indirect tax structure, the various
indirect taxes being levied were not necessarily
mutually exclusive. - Example When goods were manufactured and sold,
both Central Excise Duty (CENVAT) and State Level
VAT were levied. Though both were essentially
value added taxes but set off of one against the
credit of another was not possible as CENVAT was
a central levy and VAT was a state levy.
4Issues in Pre-GST regime
- Cascading effect
- Complexity
- Lack of uniformity
- Corruption (Under GST tax payers and department's
dealing reduced radically) - Tax Evasion (GST introduced dual checks for
Central Government and State Governments) - Complexity in determining the nature of
transaction (eg. restaurant services)
5The Cascading Effect
Producer / Manufacturer Cost of input Value of output Tax rate Selling price including tax rate Tax burden
Producer A -- 1000 10 1100 (1000 10 of 1000) 100
Producer B 1100 1500 10 1650 (1500 10 of 1500) 150
Producer C 1650 2000 10 2200 (2000 10 of 2000) 200
6Constitutional Amendments
- Introduction of the GST required amendment in the
Constitution so as to enable integration of the
central excise duty including additional duties
of customs, state VAT and certain state specific
taxes and service tax levied by the center into a
comprehensive GST and to empower both center and
the state to levy and collect it. - Consequently, Constitution (101st Amendment Act),
2016 was passed.
7Taxes subsumed in GST
- Service Tax
- Excise Duty
- VAT/Sales Tax
- CVD and SAD
- Octroi and Entry Tax
- Additional Excise duty
- Excise duty under medicinal Act
- Entry tax other than levied by local bodies
8Acts governing the GST regime
- The Central Goods and Services Tax Act, 2017
- The Integrated Goods and Services Tax Act, 2017
- The Union Territory Goods and Services Tax Act,
2017 - The State Goods and Services Tax Act, 2017 (for
each State) - The Goods and Services (State Compensation) Tax
Act, 2017
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10Taxable event Supply
- One of the very important features of the GST
regime is the complete change in the taxable
event. The taxable event in the GST would be the
supply of goods and/or services. - Continued...
11Taxable event Supply (Contd.)
- Supply includes
- (a) all forms of supply of goods and/or services
such as sale, transfer, barter, exchange,
license, rental, lease or disposal made or agreed
to be made for a consideration by a person in the
course or furtherance of business, - (b) importation of services, for a consideration
whether or not in the course or furtherance of
business, and - (c) a supply specified in Schedule I, made or
agreed to be made without a consideration.
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17Goods and Services Tax Network (GSTN)
- GSTN is the backbone of the Common Portal which
is the interface between the taxpayers and the
government. The entire process of GST is online
starting from registration to the filing of
returns. - The GSTN will handle
- Invoices
- Various returns
- Registrations
- Payments Refunds
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19Types of taxes and cess under GST
- CGST To be levied on all intra-state supplies.
- SGST/UTGST To be levied on all intra-state/UT
supplies - IGST To be levied on all inter-state/UT supplies
and import of goods and services. - GST Compensation CESS would be applicable on
both supply of goods or services that have been
specified luxury and demerit goods such as pan
masala, tobacco, aerated waters, and motor cars
etc.
20Goods kept outside the purview of GST
- Alcoholic liquor for human consumption (will
continue to cover under State Excise and
VAT/CST). - Petroleum Products (will come under the GST
purview from a date notified by the GST Council).
21GST on Import and Export
- Countervailing Duty (CVD) and Special Additional
Duty (SAD) on imports have been replaced with
IGST. - Any supply made by a registered dealer as an
export or supply to an SEZ qualifies for Zero
Rated Supplies in GST. The rate of tax on such
supplies is Zero or we can say the supplies are
tax-free.
22GST World Wide
- France was the first country to implement GST in
1954.Within 64 years of itsadvent, about 160
countries acrossthe world have adopted GST. - India, Canada and Brazil have adopted dual GST
model. - The World Banks says, India has most complex GST
structure in the world with not only highest tax
rates but also a number of tax slabs.But, it
will boost the GDP as well.
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24Introduction
- GST Council is a constitutional body for making
recommendations to the Union and State Government
on issues related to Goods and Services Tax. - GST Council is a joint forum of the Center and
the States, shall consist the following members - Union Finance Minister
- Union Minister of State in charge of Revenue or
Finance - Minister in charge of Finance or Taxation or any
other Minister nominated by each State Government.
25Role of GST Council
- GST Council shall make recommendations to the
Union and the States on the following matters - taxes, cesses, and surcharges levied by the
Union, the States and the local bodies which may
be subsumed in the GST - goods and services that may be subjected to, or
exempted from the GST - threshold limit of turnover below which goods and
services may be exempted from goods and services
tax - continued...
26Role of GST Council (Contd.)
- Any special rate or rates for a specified period,
to raise additional resources during any natural
calamity or disaster - Special provision with respect to the States of
Arunachal Pradesh, Assam, Jammu and Kashmir,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,
Tripura, Himachal Pradesh and Uttarakhand - Council shall recommend the date on which GST be
levied on petroleum products.
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29Introduction
- GST Compensation Cess is an additional cess
levied on certain notified goods in addition to
GST applicable on it. Due to the implementation
of GST many states faced a decrease in revenue as
it is a consumption based tax. Thus, states which
were manufacturing oriented faced a loss in
revenue. - To compensate these states, an additional tax by
the name GST compensation cess is levied. It is
imposed on certain notified goods and revenue
collected from it is distributed amongst these
states. This Cess will be levied for 5 years from
the date of implementation of GST.
30Goods liable for GST Cess
- Pan Masala
- Tobacco and tobacco products
- Cigarettes
- Coal
- Aerated water
- Motor vehicles
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34ITC not available on the following items
- Motor vehicle except when they are used for
making the following taxable supplies - - Further supply of such vehicles or conveyances
or - - Transportation of passenger or
- - Imparting training on driving such vehicles
- - Used for transportation of goods
- Goods or services on which the tax is paid under
composition scheme. - Goods or services used for personal consumption.
- Goods lost, stolen, destroyed, written off or
disposed of by way of gift or free samples. - Certain other supplies.
35Tax Invoices and Vouchers
- Tax Invoice (For sale of goods or services)
- Bill of Supply (Other than Tax Invoice)
- Receipt Voucher (For Advance Payment)
- Refund Voucher (For returning)
- Invoice for Purchase from Unregistered Person
- Payment Voucher for purchase from Unregistered
Person
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37Composition Scheme Introduction
- It is a simple and easy scheme for small
taxpayers whose turnover is less than Rs. 1.50
crore. - Persons ineligible for this scheme
- Supplying exempt goods/services
- Supplier of services other than restaurant
related services - Manufacturer of ice cream, pan masala, or tobacco
- Casual taxable person or a non-resident taxable
person - Supplier of goods through e-commerce operator.
38Composition Scheme Conditions
- ITC cannot be claimed
- Cannot issue tax invoice
- Cannot make any inter-state supply of goods.
- Cannot supply GST exempted goods
- Taxpayer has to pay tax at normal rates for
transactions under Reverse Charge Mechanism (RCM) - If a taxable person has different segments of
businesses under the same PAN, then all such
businesses under the scheme collectively or opt
out of the scheme. - Taxpayer has to mention the words composition
taxable person on every notice or signboard
displayed prominently at their place of business. - Taxpayer has to mention the words composition
taxable person on every bill of supply issued by
him.
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40Who is liable to be registered?
- Any business whose annual turnover is Rs. 20
lakhs (Rs. 10 Lacs for special category states) - Anyone registered under the previous regime, for
example, VAT or Service Tax. - Casual taxable person
- Non-Resident taxable person who doesnt have a
fixed place of business - Taxable person under reverse charge
- Input service distributor
- Continued...
41Who is liable to be registered? (Contd.)
- E-commerce operator
- Inter-State supplier of goods
- Suppliers who supply through an e-commerce
operator - A person who supplies on behalf of some other
taxable person (i.e. an agent of a principal). - TDS Deductor
- Supplier of online information and database
access or retrieval (OIDAR) services from outside
India to a non-registered person in India - any person may voluntarily obtain registration.
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43Documents Required for GST Registration
- Aadhaar card
- Address proof of the place of business
- Bank account statement/cancelled cheque
- Identity and Address proof of Promoters/Director
with photographs - Digital Signature
- Proof of business registration or incorporation
certificate - PAN Card of the Business or Applicant
- Letter of Authorization/Board Resolution for
Authorized Signature
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46Types of Returns
- GSTR - 1 Outward Return
- GSTR - 2 Inward Return
- GSTR - 3 Monthly Return
- GSTR - 3B Summary Return
- GSTR - 4 For composition dealer
- GSTR - 5 For NRTP
- GSTR - 6 For ISD
- GSTR - 7 For Tax Deductor
- GSTR - 8 For Tax Collector
- GSTR - 9 Annual Return
- GSTR - 10 Final Return
- GSTR - 11 For persons having UIN
Abbreviations NRTP Non-resident Taxable
Person ISD Input Service Distrbutor UIN Unique
Identification Number
47Due Dates of Returns
Types of GST Returns Due Date
GSTR - 1 10th of the next month
GSTR - 2 15th of the next month
GSTR - 3 20th of the next month
GSTR - 3B 20th of the next month
GSTR - 4 18th of the month following the end of the quarter
GSTR - 5 20th of the next month
GSTR - 6 13th of the next month
GSTR - 7 10th of the next month
GSTR - 8 10th of the next month
GSTR - 9 31st December of the end of the financial year
GSTR -10 within 3 months of the cancellation of the registration
GSTR - 11 28th of the month following the month in which inward supply received
48Challenges under GST
- Lack of clarity on GST provisions and rules.
- Robust and efficient IT infrastructure is
required to manage the central database. - E-commerce giants like Flipkart, Amazon also have
not escaped the after effects of GST roll-out. - Multiple returns are required to be filed.
- Small Scale Industries suffered at the initial
stage of introduction.
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50Introduction and Applicability
- Normally, the supplier of goods or services pays
the tax on supply. In the case of Reverse Charge,
the receiver becomes liable to pay the tax i.e.
the chargeability gets reversed. - Reverse Charge is applicable in the following 3
cases - Supply from an Unregistered dealer to a
Registered dealer (Suspended till Sept 30th,
2018) - Services through an e-commerce operator
- Supply of certain goods and services specified by
CBIC (formerly known as CBEC).
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53National Anti-Profiteering Authority (NAA)
- If NAA finds that entity has not passed on GST
benefits, it will either direct entity to pass on
benefits to consumers or if beneficiary cannot be
identified, it will ask the entity to transfer
amount to consumer welfare fund within
specified timeline. - NAA has power to cancel registration of any
entity or business if it fails to pass on to
consumers benefit of lower taxes under GST
regime, but it will probably be last step against
any violator. - NAA will suggest return of undue profit earned
from not passing on reduction in incidence of tax
to consumers along with an 18 interest, and also
impose penalty.
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55HSN SAC
- Harmonized System of Nomenclature (HSN) and
Service Accounting Code (SAC) will be new
concepts for most businesses, even though they
have been borrowed from existing systems.
Businesses need to determine the HSN and or SAC
of the goods and services that they sell, since
these are mandatory fields in a GST compliant
invoice. - It is a multipurpose international product
nomenclature developed by the World Customs
Organization (WCO). HSN is assigned to goods by
organizing them in a hierarchical manner and is 8
digits long. Depending on the turnover or nature
of sale, a business might be required to quote a
2-digit HSN, a 4-digit HSN or an 8-digit HSN
(mandatory for exports). Continued...
56HSN SAC (Contd.)
- Small businesses under composition scheme will
not be required to mention HSN codes in their
invoices. - A business whose turnover is less than INR 1.5
crore need not quote HSN in the invoice - A business with turnover between INR 1.5 crore
and INR 5 crore will need to quote a 2-digit HSN - A business with turnover equal to or greater than
INR 5 crore will need to quote a 4-digit HSN - All exports will need to quote 8-digit HSN in the
invoice - SAC is the nomenclature adopted by the GST
Council for identifying services delivered under
GST. This is similar to the classification that
was in existence under the Services Tax regime.
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58Introduction and Applicability(suspended till
Sept 30th, 2018)
- TDS is one of the ways to collect tax based on
certain percentages on the amount payable by the
receiver on goods/services. Tax so deducted need
to deposited with the revenue authority by the
due dates so prescribed. - Following persons are liable to deduct TDS
- A department or an establishment of the
Government or - Local authority or
- Governmental agencies or
- Such persons or category of persons as may be
notified. (Such as Societies, PSUs etc.)
59When will the liability to deductTDS be
attracted? What is the rate of TDS?
- TDS is to be deducted at the rate of 2 per
cent(CGST SGST) on payments made to the
supplier of taxable goods and/or
services,where the total value of such supply,
under anindividual contract, exceeds Rs.
250,000/-. - No deduction of Tax is required when the location
of supplier and place of supply is different from
the State of the registration of the recipient.
(refer chart)
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62TCS compliance for e-commerce sector (suspended
till Sept 30th, 2018)
A clause has been inserted under GSTlaw for all
the e-commerce aggregators. E-commerce
aggregators are made responsible under the GST
law fordeducting and depositing tax at the rate
of 2 (CGSTSGST) from each of the transaction.
Any dealers/traders selling goods/services online
would get the payment after deduction of 2 tax.
Continued...
63TCS compliance for e-commerce sector (Continued)
It is a significant change which wouldincrease a
lot of compliance andadministration cost for
online aggregatorslike Flipkart, Snapdeal,
Amazon etc. Theywould need to deposit the tax
deducted bythe 10th day of the next month. All
the traders/dealers selling goods/services online
would need to get registered under GST even if
their turnover is less than 20 Lakhs for claiming
the tax deducted by Ecommerce operators.
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65Introduction
- E-Way Bill is an electronic way bill for movement
of goods which can be generated on the E-Way Bill
Portal. Transport of goods of more than Rs.
50,000 (Single Invoice/bill/delivery challan) in
value in a vehicle cannot be made by a registered
person without an e-way bill. - E-Way bill can also be generated or cancelled
through SMS, Android App and by Site-to-Site
Integration(through API). When an e-way bill is
generated a unique e-way bill number (EBN) is
allocated and is available to the supplier,
recipient, and the transporter.
66Who should Generate an E-Way Bill?
- Registered Person E-Way bill must be generated
when there is a movement of goods of more than
Rs. 50,000 in value to or from a Registered
Person. A Registered person or the transporter
may choose to generate and carry e-way bill even
if the value of goods is less than Rs. 50,000. - Unregistered Persons Unregistered persons are
also required to generate e-Way Bill. However,
where a supply is made by an unregistered person
to a registered person, the receiver will have to
ensure all the compliances are met as if they
were the supplier. - Transporter Transporters carrying goods by road,
air, rail, etc. also need to generate e-Way Bill
if the supplier has not generated an e-Way Bill.
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69Thank You