GST PPT Taxguru
GST PPT Taxguru
GST PPT Taxguru
(GST) IN INDIA
A Presentation by
Concept of GST
GST is a tax on goods and services with comprehensive and continuous chain of setoff
benefits from the Producers point and Service providers point up to the retailer level.
GST is expected be levied only at the destination point, and not at various points (from
manufacturing to retail outlets). It is essentially a tax only on value addition at each
stage and a supplier at each stage is permitted to setoff through a tax credit mechanism
which would eliminate the burden of all cascading effects, including the burden of
CENVAT and service tax.
Under GST structure, all different stages of production and distribution can be
interpreted as a mere tax pass through and the tax essentially sticks on final
consumption within the taxing jurisdiction.
Currently, a manufacturer needs to pay tax when a finished product moves out from the
factory, and it is again taxed at the retail outlet when sold. The taxes are levied at the
multiple stages such as CENVAT, Central sales tax, State Sales Tax, Octroi, etc. will be
replaced by GST to be introduced at Central and State level.
Continued.
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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 .
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Tax Structure
Direct Tax
Income Tax
Indirect Tax
Wealth Tax
Central Tax
Excise
Service Tax
State Tax
Custome
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VAT
Indirect Tax =
GST (Except
customs)
Direct Tax
Income Tax
Wealth Tax
Intra- state
CGST (Central)
SGST (State)
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Inter State
IGST (Central)
Subsuming of Existing
Taxes
CGST
VAT/sales tax
Entertainment Tax
Luxury Tax
Lottery Tax
Entry Tax
Purchase Tax
Stamp Duty
Goods and passenger Tax
Tax on vehicle
Electricity, banking, Real state
IGST
SGST
Central Excise
Additional duties of Custom (CVD)
Service Tax
Surcharges and all cesses
CST
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Model of GST
SGST and CGST for intrastate transaction : In the GST system, both Central and State
taxes will be collected at the point of sale. Both components (the Central and State GST)
will be charged on the manufacturing cost. This will benefit individuals as prices are likely
to come down. Lower prices will lead to more consumption, thereby helping companies.
IGST for Interstate transaction: IGST Model will be in place for taxation of inter State
transaction of Goods and Services. The scope of IGST Model is that center would levy
IGST which would be CGST plus SGST on all inter State transactions of taxable goods and
services with appropriate provision for consignment or stock transfer of goods and services.
The GST paid on the purchase of goods and services, to be paid on the supply of goods and
services.
There should be no distinction between raw materials and capital goods in allowing input
tax credit. The tax base should comprehensively extend over all goods and services up to
final consumption point on value addition.
Stakeholder in Business
Chain
1.
1.
Manufactur
Manufactur
er
er
5.Governme
5.Governme
nt
nt and
and
Banks
Banks
4.Consumer
4.Consumer
2.
2.
Wholesaler
Wholesaler
Goods
Goods
+
+
Services
Services
3.Retailer
3.Retailer
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After
taking
set
off
of
Input
credit, pay the Output Liability on value addition
Manufacturer
Manufacturer After taking set off of Input credit, pay the Output Liability on value addition
Wholesaler
Wholesaler
Input
Input Credit
Credit of
of Goods+
Goods+ services
services from
from manufacturer
manufacturer
After
After taking
taking set
set off
off of
of Input
Input credit,
credit, pay
pay the
the Output
Output Liability
Liability on
on value
value addition
addition
Retailer
Retailer
Input
Input Credit
Credit of
of Goods+
Goods+ services
services from
from wholesaler
wholesaler
After
After taking
taking set
set off
off of
of Input
Input credit,
credit, pay
pay the
the Output
Output Liability
Liability on
on value
value addition
addition
Consumer
Consumer
Ultimate
Ultimate Output
Output Liability
Liability recovered
recovered from
from consumer
consumer
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Set-off methodology
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CGST
Input
SGST
Input
IGST
Output
IGST
Output
IGST
Output
CGST
Output
CGST
Output
CGST
Output
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Functioning of GST
The illustration shown below indicates, in terms of a hypothetical example with a
manufacturer, one wholesaler and one retailer, how GST will work.
Manufacturer : Let us suppose that CGST rate is 10% and SGST rate is 5% ,
with the manufacturer making value addition of Rs.30 on his purchases worth
Rs.100 of input of goods CGST paid @10%) and services used in the
manufacturing process. The manufacturer will then pay net CGST of Rs. 3 after
setting-off Rs. 10 as CGST paid on his inputs (i.e. Input Tax Credit) from gross CGST
of Rs. 13 and Rs, 6.5 as SGST.
Gross Value:130 on that CGST 13/- and SGST 6.5/Input Credit:
CGST 10-/ and SGST NIL/Net Liability:
Rs. 3 + 6.5 = 9.5/
Wholesaler: The manufacturer sells the goods to the wholesaler. When the
wholesaler sells the same goods after making value addition of (say), Rs. 20, he
pays net CGST of only Rs. 2, after setting-off of Input Tax Credit of Rs. 13, from the
gross CGST of Rs. 15 and net SGST of only Rs. 1, after setting-off of Input Tax
Credit of Rs. 6.5, from the gross SGST of Rs. 7.5 to the manufacturer.
Gross Value:150 on that CGST 15/- and SGST 7.5/Input Credit:
CGST 13-/ and SGST 6.5/Net Liability:
Rs. 2 + 1 = 3/Continued.
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Functioning of GST
Retailer: Similarly, when a retailer sells the same goods after a
value addition of (say) Rs. 10, he pays net CGST of only Re.1, after
setting-off Rs.15 from his gross GST of Rs. 16 and net SGST of only
Rs. 0.5, after setting-off of Input Tax Credit of Rs. 7.5, from the
gross SGST of Rs. 8/- paid to wholesaler.
Gross Value:160 on that CGST 16/- and SGST 8/Input Credit:
CGST 15-/ and SGST 7.5/Net Liability:
Rs. 1 + 0.5 = 1.5/
Stag
e of
Supp
ly
Chai
n
Value
at
Purc
Which
hase
Valu Supply Rate
Valu
e Goods of
e
Addi and
SGS
Of
tion Service T
Inpu
s Made
t
to Next
Stage
Man
ufact 100 30
urer
Whol
e
130 20
Selle
r
Retai
150 10
ler
130
150
160
Net
Inpu
Net
SGST
t
CGST= =SGS
Rat
CGS
Input
CGST
Tax
CGST T on
e of
T on
Tax
on
Cre
on
outpu
SGS
Outp
Credi
Outpu
dit
output- tT
ut
t on
t
on
Input Input
SGST
CGS
Tax
Tax
T
Credit Credit
10% 5% 13
10% 5% 15
10% 5% 16
6.5
7.5
10
13
15
1310
=3
6.50=
6.5
6.5
1513
=2
7.56.5=
1
7.5
1615
=1
87.5=
0.5
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Taxable Person
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This would bring the GST PAN-linked system in line with the
prevailing PAN-based system for Income tax facilitating data
exchange and taxpayer compliance.
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Taxable Event
Existing Practice
GST
Excise Duty-Manufacturing,
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GST Invoice
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Rate of Tax
Composition scheme
A Composition/Compounding Scheme will be an important
feature of GST, to protect the interests of small traders and
small scale industries. The Composition/Compounding scheme
for the purpose of GST should have an upper ceiling on gross
annual turnover and a floor tax rate with respect to gross annual
turnover.
In particular there will be a compounding cut-off at Rs. 50 lakhs
of the gross annual turnover and the floor rate of 0.5% across
the States. The scheme would allow option for GST registration
for dealers with turnover below the compounding cut-off.
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File Returns
Upload Challan
Details
CBEC
(Central
Portal)
State 1Portal
State 2 Portal
SGST and
IGST
Return
CBDT
MCA
NSDL
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State N Portal
CGST and
IGST Returns
Common
GST Portal
(Reconciliati
on system)
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