Goods & Services

Tax – An Overview

— Siddharth Shankar Paikray; ERO0240651;

ITT Batch 606; PPT-02 GST – An Overview
Key areas covered
 Erstwhile indirect tax regime
 Issues with the erstwhile indirect tax regime
 Concept and Structure of GST
 Further features of GST
 Procedure to avail ITC 
 Key Impact on businesses
 Compliance Requirements
 Goods and Services Tax Network – IT Framework
 Conclusion
 Erstwhile Indirect Tax Regime

 Plethora of indirect taxes namely excise duty, service tax, CST, State
VAT, entry tax, luxury tax, countervailing duty, entertainment tax etc.

 VAT concept was introduced in India for the first time in 2005.

 Various events were there that triggered the diverse type of indirect
taxes.
Issues with the erstwhile indirect tax regime
 First things first, it was complex as there were too many to deal with.
Compliance was arduous.
 Input tax credit was allowed only on VAT and no credit was allowed on
other indirect taxes.
 It resulted in cascading of taxes.
 No mechanism to validate whether a supplier has deposited VAT collected
by him, which led to tax evasion.
 Tax laws were rendered obsolete as new forms of business like e-
commerce etc emerged.
 Concept and Structure of GST
GST is a value added tax.

Taxable event is supply of goods and or services.

A supply can be either intra state supply or inter state supply.

Intra state supply attracts two taxes namely CGST – Central Goods and Services Tax and
SGST – State Goods and Services Tax.

Inter state supply attracts only IGST – Integrated Goods and Services Tax.
 Further features of GST
 GST is leviable on the supply of almost all the goods and services except on alcohol for
human consumption and certain other goods on which it shall be leviable from a further
date.

 Input Tax Credit benefit shall be seamlessly available ensuring a smooth mathematical
system in taxation.
         Procedure to avail ITC 

 CGST Payable can be set off with input tax credit from CGST and IGST paid on
inward supply on goods and or services.

 SGST Payable can be set off with input tax credit from SGST and IGST paid on
inward supplies.

 IGST payable ca be set off with input tax credit from SGST, IGST and CGST paid on
inward supplies.
         Key Impact on businesses

 Streamlining the supply chain and ensuring seamless flow of value.

 Distortion on the arrangements of distribution of finished goods as the taxable event
has been defined in a different way.
 Changes in both procurement and distribution arrangements.
 Requirement to make revised tax planning.
 Changes in the IT environment of the businesses shall be required.
 Training to employees shall be required to ramp them up to the new norm.
Compliance Requirements
 Earlier, a taxpayer if he had operations in multiple states, needed to only take a centralized service
tax registration, but under GST, for every state in which an entity has business, shall have to take
registration separately on meeting the registration thresholds.

 Compliance burden may therefore increase, however, it may be compensated if the e-mechanism and
procedures are kept smooth and minimal.
Goods and Services Tax Network – IT Framework

GST GST Suvidha

applications Provider

Official GST
User Core GST System
Portal

Third Party GST Suvidha

Portals Provider
 Conclusion

The long-term objectives of introducing GST is that it will reduce the extent of hidden taxes in the system and thereby
create opportunities for investment in order to capitalize on the new tax regime.

The change to GST was expected to increase GDP and reduce inflation.

International experience shows that GDP growth falls after introduction of GST but it recovers after two—three
quarters and, conversely, inflation rises in the initial quarters before it declines (The Treasury, Australian Government
2003).

It has been over three years since the introduction of GST in India and it has done pretty good so far.
Thanks and Regards