GOODS AND SERVICES TAX

(GST) IN INDIA

A Presentation by
Mr. Nitin More
Sr. Officer
The MMCPL, Nasik
 Concept of GST

 It is a Dual GST (SGST, CGST & IGST)

 GST is a destination based Tax on consumption of
goods & services.
 It is Proposed to be levied at the each stage of
business
 From manufacture to final consumption with credit
of Taxes paid at previous stages available as setoff.
 That means only Value addition will be taxed and
burden of tax is to be by the final consumer.
What about taxes that exist today?

VAT
Excise
Purchas CST
e Tax

CGST State Enterta

Surcha
SGST inment
Tax
rge

Service
Luxury
tax Entry/ tax
Octroi Lottery
tax
 GST Model

Dual GST

Intra State Inter State

Transactions Transactions

CGST SGST IGST

 Tax Levy under GST

 The Central GST and the State GST would be levied

simultaneously
 Further both would be levied on the same price
 CGST, SGST would be chargeable only when the
supplier and the recipient are both located within
state.
 IGST will be charged for Interstate Transactions and
Imports.
 Main Benefit of GST

 To avoid cascading effect

 To make a Simplification
 Many tax clubbed in Single Tax
 Its Transparent Character, GST would be easier to
administer
 It can be Spur economic growth
 Commodities proposed to be kept
outside the purview of GST

 Alcohol for Human Consumption

 Petroleum Products like Crude, Petrol, Diesel,
Natural gas, Aviation turbine fuel
 Electricity
 The existing taxation system will continue in respect
of the above commodities after GST
 Tax on Tobacco products: Tobacco products would be
subjected to GST with ITC. Centre may be allowed to
levy excise duty on tobacco products over and above GST
with ITC.
 Ten Important things About GST

1) GST Applicable on Supply

2) GST payable as per time of supply
3) Determining Place of Supply Could be the Key
4) Valuation in GST
5) ITC in GST
6) Inter State supply of goods for consideration to attract
additional Tax
7) There would be 33 GST laws in India
8) Rate of GST is not yet specified in the draft GST law
9) Time limit for show cause notices (SCN)
10) Some old Provisions re-introduced
 GST applicable on “supply‟

1) In GST Regime all supply such as sale, transfer, barter, lease,

Import of services etc. of goods and/ or services made for a
consideration will attract CGST and SGST.
 A supply specified in Schedule – I made or agreed to be made
without consideration.
2) Schedule II in respect of matters mentioned therein shall
apply for determining What is, or is to be treated as a supply
of goods or a supply of services.
3) Following activities shall be treated neither as a supply of
goods nor a supply of services.
-a) activities or transactions specified in scheduled III or
-b) activities or transactions undertaken by the central Govt., a
State Govt. or any local authority in which they are engaged as
public authorities as specified in scheduled IV.
 Goods and/or Services

 Goods (49)
 Means every kind of movable property other than
money and securities but includes actionable claims,
growing crops, grass and things attached to or
forming part of the land which are agreed to be
severed before supply or under a Contract of supply.
 Service (92)
 Services means anything other than goods (
Services include transactions in money but does not
include money and securities)
 Schedules – I
(Supply without Consideration)

 Permanent transfer/disposal of business assets

where ITC has been availed on such assets.
 Supply of goods and services between related
persons, or between distinct persons as specified in
section 10 when made in the course of business.
 Supply of Goods- By a principal to his agent or by an
agent to his principal.
 Scheduled – II
(Matters to be treated as goods or services)

 Goods:- Transfer of title in goods, Transfer at a

future date, Transfer at a future date, Banks selling
assets.
 Services:- Transfer of right in goods without transfer
of title, Lease of Immovable Property/Land, Use of
business assets for private purpose, Declared
Services, Treatment/Process which applied to
another persons goods.
 Scheduled – III (Following shall be treated
neither as a supply of goods nor a supply of services.)

 Services by an employee to the employer in the course of

or in relation to his employment.
 Services by any court or tribunal established under any
law for the time being in force.
 The Functions performed by MP, MLA, Members of
Panchayat/Muncipalities/Local Authorities etc.
 The duties performed by any person as a
Chairperson/Member/Director in a Body established by
the CG or SG or Local Authority
 Services by a foreign diplomatic mission located in India.
 Services of Funeral, Burial, Crematorium or mortuary
including transportation of the deceased.
 GST Payable as per time of Supply

 The Liability to pay GST arises at the earliest

 A) Goods :- Removal of goods or receipt of payment

or issuance of Invoice or Date on which buyer shows
receipt of goods

 B) Services :- Issuance of invoice or receipt of

payment or date on which recipient shows receipt of
services.
Determining Place of Supply could be the Key

 At present Inter State supply of goods attract CST

Now its provides that an inter state supply of goods
and / or services will attract IGST.
 In case of goods the place of supply would be
location where the goods are delivered.
 And In case of Services the place of supply would be
Location of Service Recipient.
 Valuation in GST

 GST would be payable on the ‘Transaction value’ is the

price actually paid or payable for the said supply of goods
and/or services between un-related parties.
 Includes packing, commission, subsidies and
discounts/incentives if it is allowed after supply
 Excludes Discounts/Incentives given before or at the
time of supply will be permissible as a deduction from
transaction value.
 Where the value of the supply of goods or services can
not be determined under sub-section (1) the same shall
be determined in such manner as may be prescribrd.
 Input Tax credit in GST

Manner of utilization of Credit

1) IGST

2) CGST
IGST 3) SGST

1) CGST

CGST 2) IGST

1) SGST

SGST 2) IGST
 There would be 33 GST laws in India

 In GST regime there will be one CGST and 31 SGST

law for each of the States including two Union
Territories and One IGST Law governing Inter State
supplies of goods and services.
 Rate of GST is not yet specified in the draft
GST law.

 Proposed Rates
Particular Rates Reference
Nil Rate 0% Food Grains
Concessional Rates 5% Mass Consumption products
used by common people
Standard Rate 12%
Standard Rate 18%
Luxury goods 28% + Cess Luxury items
Other rates
Composition Scheme 2.5%/1% Limit 50 lacs Turnover
TDS 1%
 Time Limit for show cause notices

 Time limit for issuance of SCN is generic cases (i.e.

other than fraud, suppression etc.) would be 3 years
and in fraud, suppression etc cases it would be 5
Years.
 Old provisions re-introduced

 Most of the current provisions such as reverse

Charge, Tax deduction, Pre-deposites, Prosecution,
arrest etc. have been continued in the proposed draft
GST law.
 Sectors Excluded from GST

 1) Alcoholic Liquor for Human consumption

 2) Petroleum 5 key Products

a) Crude Oil b) Petrol c) Diesel d) Natural Gas e)Aviation
turbine fuel

 3) Electricity Duty

 4) Tobacco
 Act’s

Supply

Intra-State Inter-State

CGST SGST IGST

CGST Act SGST Act IGST Act

 Model Overview

 CGST/SGST
 197 Sections
 4 Schedules
 Valuation Rules
 Total 163 Pages

 IGST Act
 24 Sections
 28 Pages
 Concept of GST

 All goods and services, barring a few exceptions, will be brought into the GST
base. There will be no distinction between goods and services.

 Under GST, the taxation burden will be divided equitably between manufacturing
and services, through a lower tax rate by increasing the tax base and minimizing
exemptions.

 However, the basic features of law such as chargeability, definition of taxable event
and taxable person, measure of levy including valuation provisions, basis of
classification etc. would be uniform across these statutes as far as practicable.

 The existing CST will be discontinued. Instead, a new statute known as IGST will
come into place on the inter-state transfer of the Goods and Services.

 By removing the cascading effect of taxes (CST, additional customs duty,

surcharges, luxury Tax, Entertainment Tax, etc. ),CGST & SGST will be charged
on same price .
 Existing Tax structure in India

Tax Structure

Direct Tax Indirect Tax

Income Tax Central Tax State Tax

Entry Tax, luxury tax,

Excise Service Tax Custome VAT
Lottery Tax, etc.
Subsuming of Existing Taxes
•Central Excise

CGST •Additional duties of Custom (CVD)

•Service Tax
•Surcharges and all cesses

•VAT/sales tax
•Entertainment Tax
•Luxury Tax
•Lottery Tax

SGST •Entry Tax

•Purchase Tax
•Stamp Duty
•Goods and passenger Tax
•Tax on vehicle
•Electricity, banking, Real
state

IGST • CST
Proposed Tax Structure in India

Tax
Structure

Direct Dual
Tax GST

Income Intra- Inter

Tax state State

CGST SGST IGST

(Central) (State) (Central)
Stakeholder in Business Chain

1.
Manufacturer

5.Government
2. Wholesaler
and Banks
Goods
+
Services

4.Consumer 3.Retailer
 GST Set off Chain

• Input Credit of Goods+ services

• After taking set off of Input credit, pay the Output Liability on value addition
Manufacturer

• Input Credit of Goods+ services from manufacturer

• After taking set off of Input credit, pay the Output Liability on value addition
Wholesaler

• Input Credit of Goods+ services from wholesaler

Retailer
• After taking set off of Input credit, pay the Output Liability on value addition

Consumer
• Ultimate Output Liability recovered from consumer
 Set off Heads

IGST Input CGST Input SGST Input

IGST IGST IGST

Output Output Output

CGST CGST CGST

Output Output Output
 GST on Export of Goods and Services

 GST on export would be zero rated.

 Similar benefits may be given to Special Economic Zones (in
processing zones only).
 No benefit to the sales from an SEZ to Domestic Tariff Area
(DTA).
 GST paid by Exporter on the procurement of goods and
services will be refunded.
 Rate of Tax

 The combined GST rate is being discussed by government.

The rate is expected around 16 per cent. After the total GST
rate is arrived at, the States and the Centre will decide on the
CGST and SGST rates. Currently, services are taxed at 12 per
cent and the combined charge indirect taxes on most goods are
around 20 per cent.

 Today the Rate of GST in some countries are Australia10%,

France19.60%, Canada5%, Germany19%, Japan5%,
Singapore7%, Sweden25%, New Zealand15% & Pakistan17%
 Exemption of Goods and Services
Alcohol, tobacco, petroleum products are likely to be out of the GST regime.

Tax on items containing Alcohol: Alcoholic beverages would be kept out of the purview of
GST. Sales Tax/VAT could be continued to be levied on alcoholic beverages as per the existing
practice. In case it has been made VA table by some States, there is no objection to that. Excise
Duty, which is presently levied by the States may not also be affected.
Tax on Petroleum Products: Petroleum and petroleum products have also been
constitutionally brought under the GST. However, it has also been provided that petroleum and
petroleum products shall not be subject to the levy of GST till notified at a future date on the
recommendation of the GST Council.

Tax on Tobacco products: Tobacco products would be subjected to GST with ITC. Centre
may be allowed to levy excise duty on tobacco products over and above GST with ITC.

Taxation of Services: As indicated earlier, both the Centre and the States will have concurrent
power to levy tax on goods and services. In the case of States, the principle for taxation of
intra-State and inter46 State has already been formulated by the Working Group of Principal
Secretaries /Secretaries of Finance / Taxation and Commissioners of Trade Taxes with senior
representatives of Department of Revenue, Government of India. For inter-State transactions an
innovative model of Integrated GST will be adopted by appropriately aligning and integrating
CGST and IGST.