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Overview of this

sensitization program

Session
1
Sessions
3, 5

Sessions
6, 7, 8
Constitution
al Powers

Legal
Framework

GST

Administrati
ve
Preparednes
s

This is
where
we are!

IT
Framework

Session
4

GST
Taxation of
Services

Session 2

Overview of GST
Session 1

Contents
What is GST?
Why do we need GST?
Brief Background and Chronology
The Road to GST
Amendment of Constitution
Salient Features and present status

Legal framework
IT framework

Interaction with the Panel

Present indirect tax system


Multiplicity of taxes and
rates
Entry barriers across
States
Cascading of taxes

What is gst?
Single tax on goods and services
Simultaneous powers to States
and Centre to levy and collect tax
throughout the value chain
Tax is on value addition at each
stage of transaction: from raw
material supplier to final consumer
Input Tax Credit Tax already paid
at one stage is deducted at the
next stage

Major Benefits of GST


Trade:
Simplification of indirect tax
regime by subsuming of
many indirect taxes
Harmonization of duty
structure
No cascading of taxes

Major Benefits of GST


Economy:
Broadening of tax base with minimal
exemptions
Better compliance due to input credit
utilization and robust IT infrastructure
India will become one common
market
Efficiency and competitiveness of
economy will improve
Consequent growth in the economy

Brief Background and


chronology
2006-07
April 2008
November
2009
March
2011
November
2012

Proposal first mooted in the Budget Speech for the


financial year
Empowered Committee of State Finance Ministers
(EC) engaged
First Discussion Paper released by EC
Constitution (115th Amendment) Bill on GST
introduced in Lok Sabha
First meeting of Union Finance Minister with State
Finance Ministers to push GST negotiations
Two Committees Constituted:
Committee on CST compensation
Committee on GST design

Brief Background and


chronology
January 2013

Reports of the two Committees presented to EC in


Bhubaneswar
Three Committees Constituted:
Committee on Revenue Neutral Rates and Place of
Supply Rules
Committee on Dual Control, Threshold and Exemptions

August 2013
September
2013
March 2014

Committee on IGST and GST on imports


Parliamentary Standing Committee submits its report to
Lok Sabha
Revised Constitution (Amendment) Bill sent to EC for
consideration
After incorporating comments from EC and the Ministry of
Law, revised version of the Bill sent to EC

Brief Background and


chronology
June 2014

July 2014
December,
2014

May, 2015

After incorporating opinion of the Attorney


General and certain other amendments, a
further revised version of the Bill sent to EC on
20th June, 2014
Meeting of Union Finance Minister with State
Finance Ministers
Two meeting of Union Finance Minister with
State Finance Ministers on 11.12.2014 and
15.12.2014.
Introduction
of
Constitution
(122nd
Amendment) Bill, 2014 in Parliament.
Lok Sabha passes the Constitution (122nd
Amendment) Bill, 2014

The Road to GST


Amendment of Constitution
Salient Features
Legal framework
IT framework
Administrative preparedness

BILL: Salient features


Article 246A: Dual GST Model
CGST to be levied and collected by
Centre across the value chain
SGST to be levied and collected by
State across the value chain

Article 269A: Integrated GST (IGST)


for inter-state transactions
To be between the Union & States
Unions share to be devolved

BILL: Salient features


Taxes to be subsumed
Centre:
Central excise duty
Additional excise duty
Service tax
Additional customs duty (CVD)
Special additional duty of customs
(SAD)
Central cesses and surcharges

BILL: Salient features


Taxes to be subsumed
States:
VAT/sales tax
Central Sales Tax (levied by the Centre,
collected by the States)
Entertainment tax
Luxury tax
Taxes on lottery, betting and gambling
Entry tax (all forms)
State cesses and surcharges

BILL: Salient features


All goods and services to be
included, except:
Petroleum and petroleum products
Constitutionally included in GST
GST to be levied on petroleum
products from the date to be
recommended by GST Council
Alcohol to be outside GST
Constitutionally

BILL: Salient features


GST Council comprising FMs of all
States and headed by Union FM, to be
set up under proposed Article 279A
GST Council to recommend:
Taxes, Cesses and Surcharges to be
subsumed;
Exempted goods and services;
Model GST laws CGST, SGST and IGST
laws

BILL: Salient features


GST Council to recommend:
Rates including floor rates with
bands of GST;
Any special rate or rates for a
specified period, to raise additional
resources during any natural
calamity or disaster;
Special provision with respect to J&K,
NE States, Sikkim, Uttarakhand and
Himachal Pradesh

BILL: Salient features


GST Council Voting Pattern:
1/3rd vote with Centre
2/3rd vote with States
decision to be taken with 3/4th
majority

Formula:
WT = WC + WS
WC = 1/3 = 33.33%
WS = (WST*SF)/SP

BILL: Salient features


Article 366: Definitions
12A: goods and services tax means
any tax on supply of goods, or services
or both except taxes on the supply of
the alcoholic liquor for human
consumption;;
26A: Services means anything other
than goods;
26B: State with reference to articles
246A, 268, 269, 269A and article 279A

BILL: Salient features


1% additional tax (non-vatable)
on inter-State supply of goods
for 2 years, or such other period
as recommended by the GST
Council
1% additional tax to be credited
to the State of origin
GST compensation to States for
5 years

Legal Framework
Joint Committee on Model GST
Laws: Report to be submitted
shortly
SGST law would be enacted by
the States, and CGST & IGST
laws would be passed by the
Centre based on
recommendations of GST Council

IT Framework
GSTN incorporated in March 2013 as
private ltd. company
SPV for providing shared IT
infrastructure and services to Central
and State Governments, tax payers,
and other stake holders
Envisaged as a common GST portal
Taxation authorities to develop their
own backend systems

Thank you!