GST In India

Prepared by:-
Shubham Sharma
 Topics
•Indian Economy- An overview
•Taxonomy of Indian taxation
•Present – tax system suffer from
•Need for GST
•What is GST and its key features
•GST- Global perspective
•More About GST
•GST - Issues yet to be decided
 Indian Economy – An overview
• India’s economy is the 11th largest economy in the world and
the third largest by purchasing power parity (PPP)

• G-20 major economies and a member of BRICS

• World is presently facing recession-II but Indian economy is

still better than comparable economies.

• Agriculture, services and industry are the major sector of

India an economy. Contribution of different sectors in March,
2012 was :

• Agriculture 19%
• Services 59%
• Industry 22%
 Agricult ure
19%

Service
Sect or
Indust ry 59%
22%

GDP C O MPO SITIO N IN MARC H, 2012

Growth in Tax GDP Ratio – Slow but Steady

Years Tax GDP ratio

2003-04 9.2%
2007-08 11.9%
2009-10 9.7%
2010-11 10.3%
2011-12 10.1%
 Tax Structure in India
• Direct Tax :
e.g.: Income Tax, Corporate Tax, Wealth Tax

• Indirect Tax :
e.g.: Excise duty, custom duty, Service Tax, VAT.
 Tax Structure

Direct Tax Indirect Tax

Income Tax
Wealth Tax Central Tax State Tax

Entry Tax,
Excise Service Tax Custome VAT luxury tax,
Lottery Tax, etc.
 Short comings in current
Tax System
 Tax Cascading (Tax on Tax)
 Complexity
 Taxation at Manufacturing Level
 Exclusion of Services
 Tax Evasion
 Corruption
 Goods and Service Tax (GST)
• The Goods and Service Tax (GST) is a Value
Added Tax (VAT) to be implemented in India, from
April 2016.
• GST is comprehensive tax mechanism where in all
major indirect taxes are clubbed into one,
whether they are levied on services(service tax)
or goods(excise and vat).
• Government had promised that GST will reduce
the compliance burdens at present.
• One of the aims of introducing GST is to reduce
the cascading effects of taxes which is the
primary focus of VAT but vat system is not
comprehensive enough to do so.
 GST – Why ?
 Reduce barriers of inter-state trade & create a
Common National Market
 Redress the imbalance in taxation between
manufacturing & the service sector
 Private Investment choices should be influenced by
economic considerations and not by tax rates or tax
exemptions
 Reduce multiplicity of taxes and ensure
transparency
 Reduce the incidence of taxation by expanding the
taxable base
 Mitigation of cascading / double taxation 11
 Tax Structure

Indirect Tax =
Direct Tax GST (Except
customs)

Income Tax
Wealth Tax Intra- state Inter State

CGST
SGST (State) IGST (Central)
(Central)
Subsuming of Existing Taxes
• Central Excise
• Additional duties of Custom (CVD)
CGST • Service Tax
• Surcharges and all cesses

• VAT/sales tax
• Entertainment Tax
• Luxury Tax
• Lottery Tax
• Entry Tax
SGST • Purchase Tax
• Stamp Duty
• Goods and passenger Tax
• Tax on vehicle
• Electricity, banking, Real state

• CST
IGST
 Flaws of GST Model
• Major flaw of this model is Local Dealers have to pay
CGST in addition to SGST.
• In Addition to this, CGST mainly represents the
Excise/service tax and SGST mainly represents the VAT
portion but, because of ‘No differentiation between
Goods and Services’ service supply within the state would
attract SGST as GST is levied at each stage in the supply
chain and Assessee have to Pay CGST as well SGST.

Download Source- www.taxguru.in

 Benefits of GST
Transparent Tax System
Uniform Tax system Across India
Reduce Tax Evasion
Export will be more competitive
 GST Global Scenario
More than 140 countries have already
introduced GST/National VAT.
France was the first country to introduce GST
system in 1954.
Typically it is a single rate system but
two/three rate systems are also prevalent.
Canada and
Brazil alone have a dual VAT.
Standard GST rate in most countries
ranges between 15-20%.
India's GST structure is complex, says
IMF
• Report says the proposed GST structure will require
the centre to coordinate with 30 states, which is an
administrative challenge.

• Even as the international monetary fund (imf) says

the proposed goods and services tax (gst) will
improve tax compliance and enhance economic
growth by 1-1.5 per cent over time, it finds the
structure of the indirect tax regime in india
complex.
 Summary
• We all will pay GST on every product or service we
buy/ consume
• All indirect taxes levied by the states and the centre
will
be merged into one GST, we would exactly know how
much tax we pay which at present is difficult to
understand.
• The sellers or service providers collect the tax from
their customer.
• Before depositing the same to the exchequer, they
deduct the tax they have already paid.
• The success of GST would rest upon efficiency, equity
and Simplicity.
THANK YOU
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