Goods & Services Tax

GST may miss next rollout

deadline too
ET: 21:09:2010

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 Goods & Services Tax
• Reasons to rollout
• Most of the BJP-ruled states are opposing the
bill …UP and Tamil Nadu want that their
autonomy should not be affected0
Ajay Singh Yadav(FM, Har.)
• However 13th finance commission has
proposed a Rs. 50,000 crore compensation
package for states for possible loss of
revenue after putting in place the regime.
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 Flow of Presentation

• What is Goods & Services Tax?

• GST –Global Scenario
• Background in India
• Why GST?
• Likely Features Of GST
• Basic Structure of GST
• Dual structure of GST
• Administrative machinery
• Way Forward

• GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this
tax and so, in many respects, GST is like a last-point retail tax.

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 What is Goods & Services Tax?

• GST is a broad based and a single comprehensive tax

levied on goods and services consumed in an economy.

• GST paid on the procurement of goods and services can

be set off against that payable on the supply of goods or
services. But being the last person in the supply chain,
the end consumer has to bear this tax and so, in many
respects, GST is like a last-point retail tax.

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 Taxes proposed to be subsumed
by GST
• Value Added Tax
• Service Tax
• Central Excise
• Entertainment Tax
• Luxury Tax
• Octroi
• Lottery Tax

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 GST –Global Scenario
• More than 140 countries have already introduced GST/National
VAT.

• France was the first country to introduce GST system in 1954.

• Most countries have a single GST rate.

• Typically it is a single rate system but two/three rate systems are

also prevalent depending upon the requirement of the implementing
nation.

• Standard GST rate in most countries ranges between 15-20%

• All sectors are taxed with very few exceptions/ exemptions

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 Background in India
• The effort to introduce the new tax regime was reflected, for the first time, in
2006-2007 Union Budget Speech.

• The then Finance Minister Mr. P. Chidambaram remarked that there is a

large consensus that the country must move towards a national level GST
that must be shared between the centre and the states.

• He proposed 1 April, 2010 as the date for introducing GST. After successful
introduction of Value Added Tax (VAT) in almost all the states and
continuous increase in number of services under the service tax net.

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 Why GST ?
• A simple tax structure with only one or two rates of taxes.

• Uniform single tax across the supply chain.

• Reduced transaction cost in the hands of the tax payers.

• Increased tax collections due to wider tax base and better compliance.

• Improvement in international cost competitiveness of indigenous goods and

services.

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 Likely Features of GST
• Manufacturers, traders and service providers having turnover more than the
threshold limit to register under Central and State GST.

• A single Tax Identification Number (TIN) would be allotted for both Central
and State GST.

• Both Central as well as State GST would be levied at every point of sale.

• State GST paid in one State would be creditable against State GST liability
of another State.

• Certain specified goods may be subject to a lower State GST rate or be

exempted.

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 Basic Structure of GST
• ‘Central GST’ and ‘State GST’ to operate in a parallel
fashion.
• Both Central and State GST to be further bifurcated into
‘Goods Tax’ and ‘Services Tax’.
• The proposed rate of GST in India is 16%.

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 How will the dual structure work?
• Central GST and State GST would be levied on different services.

• State GST would be levied on services of ‘local nature’.

• Single periodical return would be filed under the dual structure.

• Export of goods and services would be zero rated, meaning exporters of goods and services need not pay GST on their exports.GST paid by them on the procurement of goods and services will be refunded.

• All services to be taxed with few exceptions.

• their exports. GST paid by them on the procurement of goods and services will be refunded.

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 Ensuring uniform implementation
• Uniform Implementation of GST should be ensured
across all states(unlike staggered implementation of
VAT).

Many issues might crop up in case of transactions

between states who comply with GST & states who are
not complying with GST.

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Let’s hope GST is

Great & Simplified Tax !!!

Thank you.

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