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Goods & Services Tax (GST)(As On 01-01-2017)
January, 10th 2017
  GOODS &
SERVICES TAX
   (GST)


               1
           PRESENTATION PLAN
v   WHY GST : PERCEIVED BENEFITS
v   EXISTING INDIRECT TAX STRUCTURE
v   FEATURES OF CONSTITUTION AMENDMENT ACT
v   GST COUNCIL
v   FEATURES OF PROPOSED GST MODEL
v   FEATURES OF DRAFT GST LAW
v   GSTN
v   ROLE OF CBEC
v   WAY FORWARD                        2
WHY GST?

PERCEIVED
 BENEFITS
            3
WHY GST : PERCEIVED BENEFITS
v To   Trade                             v To   Consumers
  q   Reduction in multiplicity of         q   Simpler Tax system
                                           q   Reduction in prices
      taxes                                    of goods & services
  q   Mitigation of cascading/                 due to elimination of
      double taxation                          cascading
  q   More efficient neutralization        q   Uniform prices
      of taxes especially for exports          throughout the
                                               country
  q   Development of common                q   Transparency in
      national market                          taxation system
  q   Simpler tax regime                   q   Increase in
       §   Fewer rates and exemptions          employment
                                               opportunities
       §   Distinction between Goods &
           Services no loner required                            4
EXISTING INDIRECT
 TAX STRUCTURE


                    5
EXISTING INDIRECT TAX STRUCTURE


                                EntryTax&Octroi

 Customs              Excise
  Duty                 Duty     EntertainmentTax

                                 ElectricityDuty

            Central
                                  LuxuryTax
            Levies
  Central                            VAT
    Cess              Service
 SalesTax
                        Tax

                                    State
                                   Levies






                                                   6
 FEATURES OF
 CONSTITUTION
AMENDMENT ACT
    (CAA)
                7
               FEATURES OF CAA....
v   CAB passed by Rajya Sabha on 03.08.2016 & Lok Sabha on
    08.08.2016
v   Notified as Constitution (101st     Amendment ) Act, 2016 on
    08.09.2016
v   Key Features:
    q   Concurrent jurisdiction for levy & collection of GST by the
        Centre & the States ­ Article 246A
    q   Centre to levy & collect IGST on supplies in the course of
        inter-State trade or commerce including imports ­ Article 269A
        §   to be apportioned between Union & States on
            recommendations of the GST Council (GSTC)
        §   Parliament to have powers to formulate principles for
            determining when a supply takes place in course of inter-
            State trade or commerce                               8
           ....FEATURES OF CAA....
v   Key Features contd.
    q   Compensation for loss of revenue to States for five years
        on recommendation of GSTC ­ Clause 19
    q   GST defined as any tax on supply of goods or services or
        both other than on alcohol for human consumption ­
        Article 366 (12A)
    q   Goods includes all materials, commodities & articles ­
        Article 366 (12)
    q   Services means anything other than goods ­ Article 366
        (26A)
    q   GST on petroleum crude, high speed diesel, motor spirit
        (commonly known as petrol), natural gas & aviation
        turbine fuel to be levied from a later date on
        recommendations of GSTC                             9
           ....FEATURES OF CAA....
v   Key Features contd.
    q   GSTC - Article 279A
        § To be constituted by the President within 60 days from the
          coming into force of the Constitution Amendment
        § Consists of Union FM & Union MOS (Rev)

        § Consists of Ministers in charge of Finance / Taxation of
          each State
        § Chairperson ­ Union FM
        § Vice Chairperson - to be chosen amongst the Ministers of
          State Government
        § Quorum is 50% of total members
        § Decisions by majority of 75% of weighted votes of members
          present & voting
                                                                 10
                 ....FEATURES OF CAA
v   Key Features contd.
    q   GSTC - proposed Article 279A
        § Weightage of votes:
            o   Centre ­ 1/3rd of total votes cast
            o   States (all taken together) ­ 2/3rd of total votes cast
        §   Council to be guided by need for
            o   a harmonized structure of GST; and
            o   a harmonized national market for goods & services
        §   Council to make recommendations on
            o   Taxes, etc. to be subsumed in GST
            o   Exemptions & thresholds
            o   GST rates
            o   Band of GST rates
            o   Model GST Law & procedures                                11
GST COUNCIL



              12
            GSTCOUNCIL....
vGST Council constituted w.e.f. 12.09.2016
vSeven Meetings held so far: Decisions
  q Threshold limit for exemption to be Rs. 20 Lakhs
    (Rs. 10 lakhs for special category States)
  q Compounding threshold limit to be Rs. 50 Lakhs ­
    not available to service providers & manufacturers
    (except of notified goods)
  q Government may convert existing Area based
    exemption schemes into refund based scheme
  q Formula for calculating compensation finalized

                                                    13
              ....GSTCOUNCIL
vSeven Meetings held so far: Decisions
  q CGST & SGST Model Law broadly approved
  q Tax rates
     §   Four tax rates namely 5%, 12%, 18% and 28%
     §   Some goods and services would be exempt
     §   Separate tax rate for precious metals
     §   Cess over the peak rate of 28% on specified luxury and sin
         goods




                                                                 14
 FEATURES OF
PROPOSED GST
    MODEL

               15
              GST ­ FEATURES....
v   Destination-based Consumption Taxation
v   Applies to all supplies of goods / services (as against
    manufacture, sale or provision of service) made for a
    consideration except ­
    q   Exempted goods / services ­ common list for CGST & SGST
    q   Goods / services outside the purview of GST
    q   Transactions below threshold limits
v   Dual GST having two concurrent components
    q   Central GST (CGST) levied & collected by Centre
    q   State GST (SGST) levied & collected by States
v   CGST & SGST on intra-State supplies of goods / services
    in India
                                                            16
             ....GST ­ FEATURES....
v   IGST levied & collected by the Centre applicable to
    q   Inter-State supplies of goods / services in India
    q   Inter-State stock transfers of goods
    q   Import of goods / services
    q   Export of goods / services (if made on payment of GST under
        claim of rebate)
v   Export of goods / services ­ Zero rated
v   All goods or services likely to be covered under GST except:
    q   Alcohol for human consumption - State Excise + VAT
    q   Electricity - Electricity Duty
    q   Sale / purchase of Real Estate - Stamp Duty + Property Taxes
v   Five specified petroleum Products ­ to be brought under GST
    from a later date on recommendation of GSTC
v   Tobacco Products ­ under GST + Central Excise           17
            ....GST ­ FEATURES....
                                                           State
             Central                                       VAT /
             Excise                                        Sales
              duty                                          Tax     Entertainment
                                            Surcharges
                                                                   Tax (not levied
                                             & Cesses
                                                                   by local bodies)
                          Additional
Surcharge
                          duties of
& Cesses
                           excise


            Central                     Purchase         State                Central
                                                                              Sales
            Taxes
                                          Tax
                                                         Taxes                 Tax
                          Excise duty
                         levied under
 Service                  Medicinal &
                                                                      Taxes on
  Tax                      Toiletries
                                               Entry                   lottery,
                          Preparation
                                                Tax                   betting &
            Additional        Act
                                                                      gambling
            duties of                                    Luxury
             customs                                      Tax
             (CVD &
              SAD)

 Central&StateTaxestobesubsumedinGST                                         18
          ....GST ­ FEATURES....
v   Floor rate with a small band of rates for standard
    rated goods / services for CGST & SGST
v   Optional Threshold exemption in both components
    of GST
v   Optional Compounding scheme for taxpayers
    having taxable turnover up to a certain threshold
    above the exemption




                                                   19
       ....GST ­ FEATURES....

                        ITC



   CGST                 SGST            IGST




CGST      IGST   SGST     IGST   IGST   CGST   SGST


  UElizaEonofInputTaxCredit(ITC)
                                                20
 FEATURES OF
DRAFT GST LAW
    (MGL)
                21
              FEATURES OF MGL....
v   Tax on supply of goods or services rather than manufacture / production of goods,
    provision of services or sale of goods
v   Powers to declare certain supplies as supply of goods or of services ­ Schedule II
v   Powers to declare certain activities/transactions as neither supply of goods nor of services -
    Schedule III
v   On Intra-State supplies of goods and/ or services - CGST & SGST shall be levied by the
    Central and State Government respectively, at the rate to be prescribed
    q    Maximum rate ring fenced in law
v   On Inter -State supplies of goods and/ or services - IGST shall be levied by the Central
    Government, at the rate to be prescribed
    q     Maximum rate ring fenced in law
v   Elaborate Rules provided for determining the place of supply
    q   Intra-State supply of goods and/or services - where the location of the supplier and the place
        of supply are in the same State
    q   Inter-State supply of goods and/or services - where the location of the supplier and the place
        of supply are in different States



                                                                                                 22
          ....FEATURES OF MGL....
v   Liability to pay tax arises only when the taxable person
    crosses the exemption threshold
v   Taxable person is a person who is registered or required to
    be registered under Schedule - V
v   Provision for levy of tax on fixed rate on aggregate turnover
    upto a prescribed limit in a financial year (Composition
    scheme) without participation in ITC chain
v   Elaborate principles devised for determining the time of
    supply of goods and services with following being crucial
    determinants with certain exceptions:
    q   Date on which supplier issues invoice
    q   Date on which supplier receives the payment, whichever is
        earlier
                                                               23
         ....FEATURES OF MGL....
v   Tax is to be paid on Transaction value (TV) of supply generally i.e.
    the price actually paid or payable for the supply of goods and/or
    services
v   ITC is available in respect of taxes paid on any supply of goods
    and / or services used or intended to be used in the course or
    furtherance of business (i.e. for business purposes)
v   Negative list approach for non-allowance of ITC
v   ITC of tax paid on goods and / or services used for making taxable
    supplies by a taxable person allowed subject to four conditions:
    q   possession of invoice;
    q   receipt of goods or services;
    q   tax actually paid by supplier to government;
    q   furnishing of return
v   Full ITC allowed on capital goods in one go except in respect of
    pipelines and telecommunication tower where ITC would be
    allowed in three equal annual instalments
                                                                      24
          ....FEATURES OF MGL....
v   Input Service Distributor mechanism for distribution of ITC of
    input services
v   Proportionate credits allowed in case inputs, inputs services
    and capital goods are partly used for business and partly for
    non-business purposes
v   Proportionate credits allowed in case inputs, inputs services
    and capital goods are used for taxable including zero rated
    and exempt (including non-taxable) supplies
v   ITC cannot be availed after filing of return for the month of
    September of next Financial Year or filing of Annual Return
v   ITC available only on provisional basis for a period of two
    months until payment of tax and filing of valid return by the
    supplier
v   Matching of supplier's and recipient's invoice details
    q   ITC to be confirmed only after matching of such information
    q   ITC to be reversed in case of mis-match




                                                                      25
        ....FEATURES OF MGL....
v   PAN based Registration
    q   required to be obtained for each State from where taxable
        supplies are being made
v   A person having multiple business verticals in a State may
    obtain separate registration for each business vertical
v   Liability to be registered:
    q   Every person who is registered or who holds a license under
        an earlier law;
    q   Every person whose turnover in a year exceeds the
        threshold
v   A person, though not liable to be registered, may take
    voluntary registration
v   Certain suppliers liable for registration without threshold
                                                                 26
        ....FEATURES OF MGL....
v   Registration to be given by both Central and State Tax
    Authorities on a common e-application
v   Deemed registration after three common working days from
    date of application unless objected to
v   Self ­serviced Amendments except for certain core fields
v   Provision for surrender of registration and also for suo-moto
    cancellation by the tax authorities
v   Normal taxpayers, compositions taxpayers, Casual
    taxpayers, non-resident taxpayers, TDS Deductors, Input
    service Distributors (ISDs) to file separate electronic returns
    with different cut-off dates
q   Annual return to be filed by 31st December of the following
    Financial Year along with a reconciliation statement
q   Short-filed returns not to be treated as a valid return for
    matching & allowing ITC and fund transfer between Centre
    and States
q   Tax Return Preparers scheme to assist taxpayers mainly in
                                                                  27
    filing of returns
        ....FEATURES OF MGL....
v   System of electronic cash ledger and electronic ITC ledger
v   Tax can be deposited by internet banking, NEFT / RTGS,
    debit/credit card and Over The Counter
v   Date of credit to the Govt. account in the authorized bank is
    the date of payment for credit in electronic cash ledger
v   Payment of Tax is made by way of the debit in the electronic
    cash or credit ledger
v   Cross-utilization of ITC between CGST & IGST, between
    SGST & IGST allowed
v   Hierarchy for discharging payments of various tax liabilities
v   Provision for TDS on certain entities
v   E-Commerce Operators, facilitating supplies by other
    suppliers, to collect Tax at source (TCS), at the time of
    supply, out of payments to be made to such suppliers
                                                               28
        ....FEATURES OF MGL....
v   Time limit for refund of tax or interest is two years
v   Refund of accumulated ITC allowed in case of exports or
    where the credit accumulation is on account of inverted duty
    structure
v   Refund to be granted within 60 days from the date of receipt
    of complete application
v   Interest is payable if refund is not sanctioned within 60 days
v   Refund claim along with documentary evidence is to be filed
    online without any physical interface with tax authorities
v   Immediate provisional sanction of 90% of refund claim on
    account of exports
v   Principle of "Unjust enrichment" to be satisfied
v   Tax refund will be directly credited to the bank account of
    applicant
v   Refund can be withheld in specified circumstances even
    without any stay from any higher appellate fora                29
        ....FEATURES OF MGL....
q   Self ­assessment of tax
q   Provisions for assessment of non-filers, unregistered persons
    & summary assessments in certain cases
q   Provision made for provisional assessment on request of
    taxable person ­ to be finalized in six months
q   Audit can be conducted at the place of business of the
    taxable person or at the office of the tax authorities, after
    prior intimation to taxable person
q   Audit to be completed within 3 months, extendable by a
    further period of 6 months
q   On conclusion of audit, the taxable person to be informed
    about findings, his rights and obligations and reasons for the
    findings                                                     30
            ....FEATURES OF MGL
v   Adjudication order to be issued within 3/5 years of filing of annual
    return in normal cases & fraud / suppression cases respectively
v   SCNs to be issued at least 3 months and 6 months prior to last date of
    passing adjudication order in normal cases and in fraud etc.
    respectively
v   Taxable person can settle at any stage, right from audit/investigation to
    the stage of passing of adjudication order and even thereafter
v   Officers to have power of search & seizure with inbuilt safeguards
v   Restricted power to arrest and for prosecution provided for
v   Elaborate provisions made for appeals up to Supreme Court
v   Alternate dispute resolution mechanism of advance ruling provided for
v   Comprehensive transitional provisions for smooth transition to GST
v   Provision for Job work provided
v   System of GST Compliance rating provided
v   Anti-profiteering provision made to dis-incentivize non-passing of price
    reduction benefits to consumers



                                                                           31
GST NETWORK
   (GSTN)


              32
                              GSTN
v    Incorporated on 28.03.2013 as Section 25 private limited
     company with authorized equity of Rs. 10 crore
v    Strategic control to remain with Government
v    Equity Holders
     q CentralGovernment - 24.5%
     q EC and all States together - 24.5%
     q Financial Institutions ­ 51%
v   To function as a Common Pass-through portal for taxpayers-
     q submit   registration application
     q file returns
     q make tax payments
v   Appointed Infosys as Managed Service Provider (MSP)


                                                             33
ROLE OF CBEC



               34
                   ROLE OF CBEC
v   Prominent role as custodian of Centre's fiscal destiny in relation
    to indirect taxes
v   Role in Policy making: Drafting of GST Law, Rules                &
    Procedures ­ CGST & IGST Law
v   Assessment, Audit, Anti-evasion & enforcement under CGST &
    IGST Law
v   Levy & collection of Central Excise duty on products outside
    GST ­ Petroleum Products & Tobacco
v   Levy & collection of Customs duties
v   Evolving a joint Dispute resolution mechanism
v   Developing linkages of CBEC - GST System with GSTN
v   Training of officials of both Centre & States

                                                                  35
WAY FORWARD



              36
                WAY FORWARD....

v   Recommendation of Model GST laws by GST Council
v   Cabinet Approval for the CGST and IGST laws by Centre and for
    SGST laws by all states
v   Passage of CGST and IGST laws by Parliament and passage of
    SGST laws by all State legislatures
v   Recommendation of Model GST Rules by GST Council
v   Notification of GST Rules
v   Recommendation of GST Tax rates by GST Council
v   Establishment and upgradation of IT framework


                                                              37
                 ....WAY FORWARD
v   Meeting implementation challenges
v   Effective coordination between Centre & State tax
    administrations
v   Reorganization of field formations
v   Training of Officials and Trade & Industry
v   Augmentation of human resources
v   Spreading Accounting Literacy
v   Developing IT skills
v   Reorganisation of Audit procedures
v   Harmonization of processes & procedures between CGST /
    IGST & SGST Law
                                                       38
39

 
 
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