CONCEPTS OF DEMONETIZATION

AND GST
 DEMONETIZATION
 Demonetization is an act of removing a currency unit of its
status as legal tender
 On 8th November , 2016 , the Government of India decided
to demonetize value currency notes of denomination 500
and 1000 with immediate effect.
 As per scheme, people had to deposit the invalid currency
in the banks and restrictions were made on cash
withdrawals.
 The aim of demonetization was to curb corruption and
counterfeiting the use of high denomination notes for
illegal activities.
 FEATURES OF
DEMONETIZATION
 Demonetization is viewed as a ‘Tax Administration
Measure’.
 Demonetization is also interpreted as a shit on the part of
government indicating the tax evasion will o longer be
accepted or tolerated.
 Demonetization has also led to channelizing savings into
the formal financial system.
 Demonetization also aims to create al less-cash or cash-lite
economy.
 IMPACT OF
DEMONETIZATION
 GOODS AND SERVICES
TAX(GST)
 GST is a comprehensive indirect tax which has replaced
many indirect taxes in India.
 The Goods and Services Tax Act was passed in the
Parliament on 29th March,2017 and came into effect on 1st
July,2017.
 GST carries the slogan of one tax, one nation.
 BENEFITS OF GST
 GST improves the ease of doing business in tax compliance.
 GST has replaced 17 indirect taxes and 23 cesses of the
Center and the States.
 GST is charged at each stage of value addition .
 GST focuses on supply of goods rather than their
production.
 TYPES OF TAXES UNDER
GST
 Central Goods and Services Tax(CGST)
 State Goods and Services Tax(SGST)
 Integrated Goods and Services Tax(IGST)
 SOME FACTS ABOUT GST
 Single tax structure
 Effect on price
 Consumption based tax
 Invoice matching
 Anti-Profiteering measure
 Registration under GST
 INPUT TAX CREDIT UNDER
GST
 Input tax credit means reducing the ax paid on inputs from
taxes to be paid on output.
 When any supply of services or goods are supplied to a
taxable person , the GST charged is known as Input Tax.
 The supplier at each stage is permitted to avail a credit of
GST paid on purchase of goods or services and can set off
this credit against the GST payable on supply of goods and
services to be made by him.
 Thus, the final consumer bears the GST charged by the last
supplier in the supply chain which avoids double taxation.
 For example, if tax payable by a manufacturer on the
output , i.e. final product is 450 and he has already paid a
tax of 300 on output,i.e purchases , then he can claim ‘Input
Credit’ of 300 and he needs to deposit only 150 in taxes.

GST to be paid by manufacturer = GST on Output – GST on Inputs

 KEY FEATURES OF GST

 Applicability of GST.
 Applicable on supply of goods and services.
 Consumption based tax
 GST on imports.
 GST rates.
 Payment of GST.
 GST COUNCIL
 QUORUM: 50% of the total number of members of the
Goods and Services Tax Council should constitute the
quorum at its meeting.
 CONSTITUTION: As per 279A of the amended
constitution, GST council must consist of following
members.
1.Chairperson: Finance Minister
2.Vice Chairperson: Chosen amongst the ministers of State
Government.
3.Members: MoS(Finance) and all Ministers of
Finance/Taxation of each state.
 MAJORITY REQUIRED TO TAKE DECISION: Every
decision of the GST Council shall be taken at a meeting, by
a majority of not less than 45% of the weighted votes of the
members present and voting ,in accordance with the
following principles:
1.Vote of the Central Government shall have a weightage
of one-third of total votes cast
2.Votes of all the State Government taken together shall
have a weightage of two-third of the total votes cast in the
meeting.