All about GST in India

PARVESH AGHI

What is GST?
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Existing Framework

Indirect Taxes in India

SAD* = Special Additional Duty

levied to counter balance the sales
tax /Vat ,local tax

**CVD is equivalent to the amount of excise

*** tax
collected on
various
articles
brought into
a district for
consumption

Article 246 of the Indian Constitution gives power to parliament to make

4

Present Indirect Tax Structure of India

Under GST tax will be levied on Supply as defined by the Model GST Act

Inefficiency in the existing system

India and China are among the most complex tax regimes in the Asia Pacific region .
In India, investors greater focus would be on spending more time on tax
management

Setting off taxes

No credit is available in respect of purchases from other states

7

GST Framework

Need for GST

Why GST ?

10

PRODUCT COVERAGE : Exceptions

Tobacco = 28+35=63
11

Product coverage - Contd

12

IT Infrastructure

13

IT Infrastructure - Contd

14

Desirable features of GSTN

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Desirable features of GSTN

Simplicity for taxpayers: The process of
filing of tax returns and payment of tax
should be simple and uniform and should
be independent of taxpayers location and
size of business.
In addition, the compliance process should
not place any undue burden on the
taxpayer and should be an integral part of
his business process.
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Desirable features of GSTN

Respect autonomy of states: The design of the
IT system should respect the constitutional
autonomy of the states. Several business
processes will be re-engineered as a new IT
system for GST is put into place.
There should be no dilution of the autonomy of
states as a result of the IT system, or the reengineering. On the contrary, it should strengthen
the autonomy of states. This is a key factor in the
design of the IT system presented in the rest of
this document.
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Desirable features of GSTN

Uniformity of policy administration: The business
processes surrounding GST need to be standardized.
Uniformity of policy administration across states and
centre will lead to a better taxpayer experience, and cut
down costs of compliance as well as tax administration.
Enable digitization and automation of the whole
chain: All the business processes surrounding GST
should be automated to the extent possible, and all
documents processed electronically. This will lead to
faster processing and reconciliation of tax information
and enable

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Desirable features of GSTN

risk based scrutiny by tax authorities. For small
taxpayers, facilitation centres can be set up to
ease the migration.
Reduce leakages: A fully electronic GST can
dramatically increase tax collections by reducing
leakages. Tools such as matching the input tax
credit, data mining and pattern detection will
deter tax evasion and thus increase collections.

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HOW TO FILE GST RETURN

20

Features of Proposed GST

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21

Features of Proposed GST

Read more at:
http://currentaffairs.gktoday.in/rajyasabha-passes-constitution-122ndamendment-gst-bill-201408201634897.html

Harmonised System of Nomenclature

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GST
% RATE STRUCTURE
ZERO RATED

0%

LOWER RATE

5%

Items of common consumption,

STANDARD RATE 1

12%

STANDARD RATE 2

18%

Two standard rates of 12 per cent and 18 per

cent, which would fall on the bulk of the goods
and services. This includes fast-moving
consumer goods

HIGHER RATE

28%

On nearly 50% of the consumer inflation

basket, including food grains, the GST will be
at 0 per cent

White goods, like washing machines, air

conditioners, refrigerators, shampoo, shaving
stuff and soap. The current levy varies
between nil tax to 30-31 percent.
Demerit goods or sin goods such as luxury
cars, pan masala, aerated drinks, and tobacco
and tobacco products, will invite a tax of 28
percent plus the cess.
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Will the rate structure increase inflation?

24

Dual GST

25

Utilization of credit

27

28

CENVAT Credit under GST

IGST

IGST
credit

CGST
credit

CGS
T

SGST
credit

SGST

CGST

SGST

29

Taxes to be subsumed

30

PURCHASE TAX ?
Purchase tax: Some of the States felt that they are
getting substantial revenue from Purchase Tax and,
therefore, it should not be subsumed under GST while
majority of the States were of the view that no such
exemptions should be given. The difficulties of the
foodgrain producing States was appreciated as
substantial revenue is being earned by them from
Purchase Tax and it was, therefore, felt that in case
Purchase Tax has to be subsumed then adequate and
continuing compensation has to be provided to such
States. This issue is being discussed in consultation with
the Government of India.

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Illustration to Showcase Tax

Benefit under GST

Present Scenario (Intra-State Trade of Goods)

VAT = 11

Excise = 10

Tax Invoice (A)

Value
=
100
Excise
=
10
VAT =
11
121

VAT = 12.10
ITC = ( 11)
1.10

VAT = 13.31
ITC =
( 12.10)
1.21

Excise = 11
ITC = (10)
1

Tax Invoice (B)

Cost
=
100
Value
=
110
Excise
=
11
VAT
=
12.10
133.10

State Tax = 13.31

( 11 + 1.10 +
1.21)

Central Tax = 11
( 10 + 1)
Tax Invoice (C)
Cost
=
121
Value
= 133.10
VAT
= 13.31
146.41

GST Scenario (Intra-State Trade of Goods)

SGST = 10

SGST = 11
ITC = ( 10)
1

CGST = 10

CGST = 11
ITC = (10)
1

Tax Invoice (A)

Value
= 100
CGST
=
10
SGST
=
10
= 120

Tax Invoice (B)

Cost
=
100
Value
=
110
CGST
=
11
SGST
=
11
132

SGST = 12.10
ITC = ( 11)
1.10

CGST = 12.10
ITC = (11)
1.10

Tax Invoice (C)

Cost
= 110
Value
= 121
CGST
= 12.10
SGST =
12.10
145.20

State Tax = 12.10

( 10 + 1 + 1.10)

Central Tax = 12.10

( 10 + 1 + 1.10)

146.41-145.2
= 1.21

IGST Model
State A

State B

Inter- state purchase- Rs 50

IGST@ 20% = Rs 10
Input
Credit

D1

Inter- state / Stock transfer Rs 110

D2

IGST ( CGST + SGST) Rs 22

local sale -140

CGST= 14
SGST =

14

Customer

local purchase Rs 50
SGST @ 10% = Rs 5
CGST @ 10% =Rs 5
Output
IGST

22

CGST SGST

Less

14

Input IGST

10

Less Input IGST

Input CGST

05

Input IGST

Input SGST

05

Net IGST Payable by D1

02

Net SGST payable by D2

14

14
08
06
35

Multi fold impact , not limited to tax issues

IT systems

Cash flow
Fiscal Impact

Supply chain

Accounting
Business
processes

Product pricing

Marketing

36

Way Forward

Increase in tax incidence will either erode margin , or will have

an inflationary impact on economy

37

MODEL GST LAW

38

GST LAW

39

GST LAW ..Contd

*The area of seabed around a large land mass where the sea
is relatively shallow compared with the open ocean.

40

MODEL TAX COVERS

41

SUPPLY G&S INCLUDES

All forms of supply of goods and/or services
made for a consideration by a person in the
course or furtherance of business

42

SUPPLY ALSO INCLUDES

43

Definition of Goods and Services

44

Time of supply of goods

Time of supply
of goods is the
earliest of

Liability to pay CGST / SGST on goods shall arise at the time of supply.
45

Time of supply of services

Time of supply
of services
is the earliest
of

Liability to pay CGST / SGST on services shall arise at the time of supply
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Valuation of Taxable Supply

where the price is the sole consideration

of supply and the supplier and recipient
of supply are not related , the value of
supply of goods and /or services shall be
the transaction value , that is the price
actually paid or payable for said supply
of goods and /or services

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Transaction Value Includes

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COMPLIANCES UNDER GST

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Threshold limit for registration/ tax payment

50

Persons required to register irrespective of turnover

It is envisaged that in each State, one registration would be obtained,

unless the taxpayer chooses to obtain separate registrations for its
different business verticals in the State.
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Tax Deducted at Source

52

Returns

53

Monthly Return

54

Composition Levy

55

TDS return

56

Input Service Distributor

57

Annual Return

58

Levy of late fee

59

REFUNDS

60

REFUNDS ..Contd

61

Appeals

62

Job work transactions

63

Job work transactions.Contd

64

Test your Knowledge

65

Q1 Which of the following is/are true

1) GST will be payable on transaction value i.e.
the price which does not include expense such
as packing, commission, etc.
2) There are two types of GST proposed (Centre
and State) instead of a single one.
a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2

66

Answer 1
ANSWER: Only 2 is true
Explanation:
All forms of "supply" of goods and services such as sale, transfer, barter,
exchange, license, rental, lease and import of services of goods and services
made for a consideration will attract CGST (central levy) and SGST (state levy).
States will draft their own State GST based on the draft model law with minor
variations.
As GST will apply on "supply", the erstwhile taxable heads such as "manufacture",
"sale" and "provision of services", among others, will lose relevance.
With GST to be applicable according to whether a transaction is "intra-state" or
"inter-state", separate provisions are there to help an assessee determine the
place of supply for goods and services.
GST WOULD BE PAYABLE ON "TRANSACTION VALUE", BEING THE PRICE
ACTUALLY PAID OR PAYABLE, AND SAID TO INCLUDE ALL EXPENSES IN
RELATION TO SALE, SUCH AS PACKING AND COMMISSION.

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Question 2
What shall constitute quorum of the GS
Council meeting?
a. One half of the total number of its members
b. Two-thirds of the total number of its members
c. One Fourth of the total number of its members
d. One Third of the total number of its members

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Answer 2
ANSWER: (a ) : One half of the total number of its members

Explanation:
One half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum
at its meetings.
Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less
than three-fourths of the weighted votes of the Members present and voting, in accordance with the
following principles, namely : (a) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and
(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total
votes cast in that meeting.

69

Question 3
Which article spells formation of GST
Council?
a. 270
b. 246A (2)
c. 269A (1)
d. 279A

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Answer 3
ANSWER: (d) 279A

Explanation:
279A (1) The president shall formulate GST Council within 60
days from the date of commencement of the Constitution
Amendment Act.
279A (2) Members of council.
279A (3) - The Members of the Goods and Services Tax Council
shall, as soon as may be, choose one amongst themselves to be
the Vice-Chairperson of the Council for such period as they may
decide.
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Question 4
4) What is Revenue Neutral Rate?
a. Tax rate to get more amount of money on
changing tax laws
b. Tax rate to get same amount of money despite
changing tax laws
c. Tax rate to get more amount of money without
changing tax laws
d. To get more money by keeping the tax rates
same
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Answer 4
ANSWER: ( b ) Tax rate to get same amount of money despite
changing tax laws
Explanation:
It is the tax rate that allows the government to receive the same amount of
money despite of changes in tax laws.
In the GST regime the revenue of the government would not be same in
comparison with the present tax structure due to tax credit mechanism,
removal of cascading effect, or otherwise.
Therefore an adjusted in tax rate is required to avoid reduction in revenue of
the government.
This adjusted Rate is termed as Revenue Neutral Rate (RNR). It is the rate at
which tax revenue will remain same, despite allowing input tax credit and
other factor.

73

Question 5
What is Integrated Goods and Services Tax?

a. Tax imposed on imported goods and services

b. Tax imposed on value additions to exports
c. Tax imposed on interstate trade
d. Tax on international trade

74

Answer 5

( c) Tax imposed on interstate trade

Explanation: In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services
Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution.

The IGST would roughly be equal to CGST plus SGST.

The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another.

The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of
IGST, CGST and SGST on his purchases (in that order). 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
(both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in
payment of SGST.

Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State.

75

Question 6
Who of the following will be the members of
the GST Council?

1) Union Finance Minister

2) Union Minister of State in charge of Revenue
or Finance
3) Chief Ministers of States
a. 1, 3
b. 1, 2
c. 2, 3
d. All of the above
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Answer 6
ANSWER:

(b) 1, 2

Explanation:
The composition of the GST Council includes:
The Union Finance Minister (as Chairman),
The Union Minister of State in charge of Revenue or Finance, and
The Minister in charge of Finance or Taxation or any other Minister,
nominated by each state government.

77

Question 7
Which of the following is/are true regarding
recent GST Bill?
1) Recent Goods and Services Tax (GST) Bill is a
money bill.
2) Being a money bill, Rajya Sabha cannot move
amendments to the recently passed GST Bill.
a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2

78

Answer 7
ANSWER: (d) Neither 1 nor 2

Explanation:
GST Bill is a constitutional Amendment Bill. Rajya Sabha can make amendments to the bill.
It is not a money bill as it makes changes to the constitution for altering the way taxes are levied, collected
and divided among the centre and the state.
The Bill amends the Constitution to give concurrent powers to Parliament and state legislatures to levy a
Goods and Services tax (GST).
This implies that the centre will levy a central GST (CGST), while states will be permitted to levy a state GST
(SGST).
For goods and services that pass through several states, or imports, the centre will levy another tax, the
Integrated GST (IGST).

79

Question 8
Which of the following state taxes are
included in GST?

1) Electricity duty
2) Central Excise Duty
3) Countervailing Duty ( CVD)
a. 1, 2
b. 2, 3
c. All of the above
d. None of the above
80

Answer 8
ANSWER: (b) Central excise and CVD

81

Question 9
Which of the following is/are true regarding
draft of the GST bill proposed?

1) Online purchases will not attract GST.

2) The liability to pay GST will arise at the time
of supply.
a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2
82

ANSWER 9
ANSWER: Only 2
Explanation:
All online purchasing will attract GST.
The liability to pay GST will arise at the time of
supply.

83

Question 10
13) GST contract is won by
a. TCS
b. Wipro
c. Microsoft
d. Infosys

84

Answer 10
ANSWER: (d) Infosys
Explanation:
The GST IT system will provide a standard interface for the taxpayer
including registration, filing of returns and payment of tax and a
common and shared IT infrastructure between the Center, the states
and other bodies such as the Reserve Bank of India.
Goods and Services Tax Network (GSTN) is a non-Government,
private limited company. It was incorporated on March 28, 2013.The
Company has been set up primarily to provide IT infrastructure and
services to the Central and State Governments, tax payers and other
stakeholders for implementation of the Goods and Services Tax
(GST).

85

Question 11
State whether the statement is true or false
with respect to GST Bill?
The Central GST Act extends to the whole of
India and includes Jammu & Kashmir (J&K

86

Question 11
State whether the statement is true or false
with respect to GST Bill?
The Central GST Act extends to the whole of
India and includes Jammu & Kashmir (J&K

(a)True
(b)False

87

Answer 11
Answer : (a)

88

Question 12
Which of the following is/are correct with
respect to GST Bill?
A registered taxable person, whose aggregate
turnover in a financial year does not exceed INR
150 lakhs, may opt to pay an amount calculated at
specified composition rate, which will not be less
than 1% of turnover during the year.
(a)True
(b)False

89

Answer 12
Answer : (b) false

90

Question 13
Which of the following is/are correct with respect
to GST Bill?
Every electronic commerce operator engaged in
facilitating supply of any goods / services is required to
collect tax at source (out of the total amount payable to
the supplier) at the time of credit of such amount or at
the time of payment, whichever is earlier.
(a)True
(b)False

91

Answer 13
Answer : (a) True

92

Question 14
Which of the following is/are correct with
respect to GST Bill?
IGST Can be utilized only towards payment of
IGST and not towards payment of CGST and SGST.
(a) True
(b) False

93

Answer 14
Answer : False (b)

94

Question 15
Which of the following is/are correct with respect to
GST Bill?
Every registered taxable person (dealer) shall have to
electronically file a monthly return for inward and outward
supplies of goods and / or services, input tax credit
availed, tax payable, tax paid and other particulars as may
be prescribed within 20 days after the end of such month.
(a) True
(b) False

95

Answer 15
Answer : True : (a)

96

Question 16
What is Taxable Event under new GST model
tax
a)Manufacture
b)Supply
c)None of above

97

Answer
What is Taxable Event under new GST model
tax
a)Manufacture
b)Supply
c)None of above

98

Question 17
Rajya Sabha on 3 August 2016 passed The
Constitution (122nd Amendment) (GST) Bill,
2014. The Bill exempts which of the following
Goods and Services from its purview?
[A] Tobacco Products
[B] Alcohol
[C] Steel
[D] Furniture
99

Answer 17
Rajya Sabha on 3 August 2016 passed The
Constitution (122nd Amendment) (GST) Bill,
2014. The Bill exempts which of the following
Goods and Services from its purview?
[A] Tobacco Products
[B] Alcohol
[C] Steel
[D] Furniture
100

Question 18
Which state became the first to ratify The
Constitution (122nd Amendment) (GST) Bill,
2014?
[A] Karnataka
[B] Assam
[C] Maharashtra
[D] Nagaland

101

Answer 18
Which state became the first to ratify The
Constitution (122nd Amendment) (GST) Bill,
2014?
[A] Karnataka
[B] Assam
[C] Maharashtra
[D] Nagaland

102

Question 19
Indirect taxes can be either origin based or destination
based. Origin based tax (also known as production tax) is
levied where goods or services are produced. Destination
based tax (consumption tax) are levied where goods and
services are consumed. In India we are going to follow
GST which is going to be
a)Destination based
b)Origin based
c)Production base
d)None of the above

103

Answer19
Indirect taxes can be either origin based or destination
based. Origin based tax (also known as production tax) is
levied where goods or services are produced. Destination
based tax (consumption tax) are levied where goods and
services are consumed. In India we are going to follow
GST which is going to be
a)Destination based
b)Origin based
c)Production base
d)None of the above

104

Question 20
The move from origin based to destination based indirect
tax regime would lead to drop in revenues of some states.
This was the reason that some states such as Bihar have
opposed GST, which is a destination based tax. The
central government has promised to compensate such
states for a period of five years.
a)True
b)False

105

Answer
The move from origin based to destination based indirect
tax regime would lead to drop in revenues of some states.
This was the reason that some states such as Gujarat
have opposed GST, which is a destination based tax. The
central government has promised to compensate such
states for a period of five years.
a)True
b)False

106

Thank You

107

Existing Framework -- Handicraft

108

GST Framework- HANDICRAFT

109

HANDICRAFT

110

Area of Concern- Handicraft Industry

Handicrafts sector to be exempt from the purview of GST
Blocking of Working capital to be addressed, in case handicrafts
sector not exempted, will result in high cost of capital
Merchant exporter to be allowed procure goods without paying
taxes
Job workers procedure to be clarified
Refund procedure to be simplified
Utilization of duty credit not to be restricted only to payment of
customs duty
Duty Drawback rate to factor increased tax cost on
procurements of input material

111

 Today under VAT/CST merchant exporters can

purchase goods without payment of tax on
furnishing of a declaration form. Will this system
be there in GST?
the H Form under CST is issued when the inter-state buyer is an exporter and
buys the goods for the purpose of exports. If the exporter buyer (who belong
to other state) issues H form, the selling dealer is not required to charge or
pay any CST on the transaction. The selling dealer should obtain Form H from
the exporter buyer in due course along with Bill of Lading for onward
submission to the VAT Deptt. or else eventually the selling dealer has to pay
CST at full rate as may be applicable. Selling dealer should always obtain
security to the extent of amount of applicable CST / VAT which is not charged
due to anticipated issuance of Form H and the same may be released after
receipt of duly filled up Form H along with copy of the Bill of Lading in due
course.
112

Continuous supply of goods

113

Continuous supply of services

In case of continuous supply of services, the time of
supply shall be (a) where the due date of payment is ascertainable from the
contract, the date on which the payment is liable to be
made by the recipient of service, whether or not any
invoice has been issued or any payment has been received
by the supplier of service;
(b) where the due date of payment is not ascertainable
from the contract, each such time when the supplier of
service receives the payment, or issues an invoice,
whichever is earlier;
c) where the payment is linked to the completion of an
event, the time of completion of
114

Place of registration

115