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Taxes are the governments way of earning an


income
Helps boost the countrys economy or its people ie,
for public expenditure
The government cannot impose any tax that it
wishes to.
All the taxes imposed by the government must be
laws
Taxes are of two distinct types:
1.Direct
2.Indirect

Direct Tax

These taxes are levied directly on an entity or an


individual and cannot be transferred onto anyone else

Income Tax
Capital Gains Tax
Securities Transaction Tax
Perquisite Tax
Corporate Tax
Wealth Tax

INDIRECT TAX
Taxes that are levied on goods or services
They differ from direct taxes because they are not
levied on a person who pays them directly to the
government, they are instead levied on products and
are collected by an intermediary, the person selling
the product
These taxes are levied by adding them to the price
of the service or product which tends to push the
cost of the product up

Sales Tax
Service Tax
Value Added Tax
Custom duty
Excise Duty

Goods and services tax- Overview

Features:

GST COLLECTION IN INDIA


India shall adopt a Dual GST model, meaning that the GST would be
administered both by the Central and the State Governments.

They are,

SGST State GST, collected by the State Govt.


CGST Central GST, collected by the Central Govt.
IGST Integrated GST, collected by the Central Govt

Motives behind the GST


Subsume all indirect taxes at the centre and state level.
Subsume all indirect taxes at the centre and state
One-Country-One-Tax.
level.
Reduces the cascading effects of taxes on taxes.
One-Country-One-Tax.
Increases the productivity and transparency;increase
Reduces the cascading effects of taxes on taxes.
tax_GDP ratio.
Increases the productivity and transparency;increase
Reduce/Eliminate tax evasion and corruption.
tax_GDP ratio.
Reduce/Eliminate tax evasion and corruption.

A healthier business platform.


Similar tax rate over the nation.
Can unite the whole nation from economic point of view.
Simple tax structure.
More number of taxpayers.

Increased tax revenues.


Competitive pricing.
Boost to exports.
GST will improve Ease of starting a business in India.
Build a transparent and corruption free administration.

For Example ,

Taxes that are going to be replaced


At Central level

Central Excise Duty


Service Tax

CVD (levied on imports in lieu of


Excise duty)

SACD (levied on imports in lieu


of VAT)
Central Sales Tax

Excise Duty levied on


Medicinal and Toiletries
preparations,
Surcharges and cesses

At State level
VAT/Sales tax
Entertainment tax (unless it is
levied by the local bodies)
Luxury Tax
Taxes on lottery, betting and
gambling
Entry tax not in lieu of Octroi

Administration: CGST and IGST will be administered by Central

Government; and SGST will administered by the respective State


Governments
Interstate transactions in GST: All the inter-State transactions of
goods and services would attract IGST (which would be CGST plus SGST).The inter-State seller
will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on
his purchases. The Exporting State will transfer to the Centre the credit of SGST used in
payment of IGST. The Importing dealer will claim credit of IGST while discharging his output
tax liability in his own State. The Centre will transfer to the importing State the credit of IGST
used in payment of SGST.

Inter-State supply of goods for


consideration to attract additional tax

An additional tax upto 1% will be levied by Centre on


inter-State supply of goods (and not on services) made
for consideration. Thus, this additional tax will be
assigned to States from where the supply of goods
originates.

Exports :
Exports would be zero rated,as currently they
re.
Imports:
Even under GST regime, Customs duty would
be levied on import of goods in India. Currently,
on import of taxable services, Service tax is
attracted. In GST regime, both CGST and SGST
would be levied on import of goods and
services.

Special Area Schemes: The exemptions


available under Special Industrial Area
Schemes would continue up to legitimate
expiry time both for the Centre and the States

Current Rates

Supply Chain and GST

An inter-State sale of goods is liable to Central Sales


Tax @ 2% (subject to declaration forms).

Given this, to avoid the applicable CST of 2%, most


of the Companies have set up branches /warehouses
in different States. It has been observed that some of
the Companies have more than 30 branches
warehouses in the Country only to save CST cost.

However, in GST regime, an Inter-State transaction


in goods will attract Integrated Goods and Service
Tax (IGST).

Challenges Before Government


GST rollout from April 2017 will be a challenge for
Government.
IT infrastructure for GST will be ready by december end.
Monsoon sessions of the State legislative assemblies are
taking place.
50% of the states will have to pass the Amendment GST Bill
within 30 days.

PROPOSED GST RATES ?


13th finance commission recommended a rate of
12%. State says they will not settle for anything
below 15% .However government would settle
between 14%-16% . According to Government there
would be two Slabs:
one a lower rate slab for essential items and another
effective rate for most items. Some goods will be
exempted and a lower rate by 1% for precious metals
such as gold, platinum, silver.

EFFECT ON CONSUMERS

Effect on Consumers
This will help in saving time of both the consumer and the government. In some cases it
will be beneficial for the consumer and in others it would benefit the government.
Here is the list of GST IMPACT ON VARIOUS SECTORS.
1)BANKS- Current service tax 15% now after GST 18%Negative.
2)CONSUMER STAPLES- current tax rate 22% know after GST it's 18% .
Positivefor - Asian paints,Dabur,HUL, EMAMI
NEGATIVEfor ITC & UNITED BREWERIES.
3)CONSUMER DISCRETIONARYcurrent 15% after GST 18%
NEGATIVE

4)MEDIA- current Tax 15% service tax and 7% entertainment Tax by State's know After
GST it will be 18%
POSITIVE
5)TELECOM- current Tax 15% After GST 18% may see marginal dip in consumption as tax
rise from 15% to 18%
NEGATIVE
6)AUTO INDUSTRIEScurrent Tax 27% after GST it will be 18%.
POSITIVE
7)METALS- current TAX 18% after GST 18% no major impact
8)CEMENT- current Tax 27% altogether after GST it will be 18%
POSITIVE.
9)PHARMA- current Tax 15% after GST it will be 18%

Negative

10)REAL ESTATE- 15% to 16% Stamp duty, Current duty approx 7%.NEGATIVEfor
real estates.
11)TRANSPORTATION- majorly benefits to logistics sector no impact of GST
POSITIVE.
12)Eating out may get expensive:As of now we have to pay 18.5% service tax as
well as Vat, if we spend of Rs.1000 for eating out. After GST implementation tax rate may
become 18% or more.
13)Mobile Bills may increase: For instance, we pay 15% service tax and VAT for bill
of Rs.1000, so we are paying 1150 now. If GST tax kept fixed as 18%, we have to pay 1180.
So be prepared to pay higher call rates and higher internet packs
14) LEDs and Readymade garments to get cheaper: Current tax on LEDs is
24.5% which will come down to 18% as GST. Now buying clothes from your favourite
fashion brands is going to be cheaper as GST kept 12% tax on it

Reforms Needed to Resolve Disputes

Impact of the GST bill

Creation of a 'harmonized system of taxation' in the country by


subsuming all the indirect taxes into one GST

It will eliminate cascading taxes (tax on tax) hence reduce the cost of
goods

It will ensure higher compliance on account of input tax rebate system

Single tax for Goods and Services hence no need for differentiation
between the two which is not only difficult in the age of IT but also
results in double taxation

It will widen the tax base and lower the tax burden

It will help ensure the same price for a single good or service across the
country

By extension, it will help increase the saving rate and thus help the
economy grow. The government feels it can help enhance the growth by
upto 2 %. Even the Task Force under leading economist Kelkar had
pointed out that it will increase growth

It will increase the export competitiveness of the


economy
o It will enhance the 'Ease of Doing Business' in India
and help attract investment (Make in India)
o The ease of a single indirect tax will increase the
compliance levels thus increasing the tax buoyancy
o The states will be compensated for first five years
for losses incurred on account of GST implementation
for upto 5 years in staggered manner

Any Questions ?