india gst 16 jun15

Ketan Jog | 16.Jun.15

GST in India

GST| Part 3 |16.Jun.15| slide 2


Contents

Quick Re-cap

What has changed since… December 2014

Way Forward

Implementation Matrix

GST Network


Recap : Constitutional Authority to levy Taxes

Union List State List Concurrent List• Income Tax• Custom Duty• Excise Duty• Service tax• Central Sales Tax• Stamp duty in respect of

bills of exchange, cheques, promissory notes, etc

• Taxes on lands and buildings

• Excise duty on alcoholic liquor etc

• Entry tax (Levied by State)

• Sales Tax• Road Tax• Luxury Tax• Stamp duty in respect of

documents other than those specified in the provisions of List I

• Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty

Taxes levied under Current authority of the Constitution


Re-cap : Course of Events

Existing Tax system was sought to be replaced by a Single Tax called GST as

recommended by Kelkar Committee in 2003.

But…Single GST concept was rejected in favor of a DUAL GST – One for the

Centre (CGST) and other for State (SGST).

It has now become CGST, SGST and IGST & Addl IGST!!!. IGST is Integrated

GST on Inter State Transactions. Addl IGST is @ 1% for upto 2 Years.

Finance Minister, Shri Arun Jaitley presented the Constitution Amendment Bill

(CAB) in the Loksabha on 19.Dec.14, which now provides for “Concurrent

jurisdiction for levy & collection of GST by the Centre & the States”.

CAB was passed by Lok Sabha in Budget session on 6.May.15, but Rajya Sabha

referred it to Select Committee, which is due to comment on the bill in Monsoon

Session.


Re-cap : Constitutional Setup : as per Proposed CAB

By Union By States By Both Union & States

• Income Tax• Custom Duty• Excise Duty• Service tax• Central Sales Tax• Stamp duty in respect of

bills of exchange, cheques, promissory notes, etc

• Interstate sale of Goods & Services (IGST)

• Excise on Petrol, Crude, Diesel, ATF, Tobacco products.( ? Notified Date ?)

• Taxes on lands and buildings

• Excise duty on alcoholic liquor etc

• Entry tax (Levied by State)

• Sales Tax• Road Tax• Luxury Tax• Stamp duty in respect of

documents other than those specified in the provisions of List I

• On all Goods & Services except Alcoholic Liquor (CGST and SGST)

• Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty

Taxes that will be levied under authority of the Constitution


Re-cap : Definitions Goods & Services Tax : Article 366A (Clause 12A) of the Constitution of

India :

means any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor for human consumption.

On the following, GST will be levied wef date rec Services : Article 366A Clause (26A) of Constitution says “Services”

means anything other than goods. Goods : means every kind of movable property other than actionable

claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.


Re-cap : Basic Concepts

Tax on domestic consumption.

No differentiation between Goods and Services.

Tax leviable at each point of sale or provision of service.

Input Tax Credit is available at every stage.

Treats whole country as a single jurisdiction.

Uniform Tax rates across the whole jurisdiction.

No distinction in Tax rates on Imported or Domestic Goods.

Single Tax jurisdiction allows ease of allowing Input Tax Credit.

Destination based tax for interstate transactions (IGST)- ultimate tax will be

collected by the state in which goods are finally consumed.


Re-cap : How will the Tax look on an Invoice

■ Supply within State:

■ Supply from One State to Another

■ Exports

– The Base for both CGST and SGST is same – no tax on tax

– Tax Rate is assumed 10%

– Revenue Neutral Rate as worked out earlier : 12% (2005)

Basic value charged for supply of goods or services 10,000Add: CGST @ 10% 1,000Add: SGST @ 10% 1,000Total price charged for local supply of goods or services 12,000

Basic value charged for supply of goods or services 10,000Add: IGST @ 20% 2,000Add: Additional IGST @ 1% 100

Total price charged for interstate supply of goods or services 12,100

Basic value charged for supply of goods or services 10,000Add: CGST \ SGST \ IGST NIL NilTotal price charged for export of goods or services 10,000


Re-cap : Set Off or Input Tax Credit

Nature of Input Tax Can be utilized for payment ofCGST

(Amount goes to CBEC)CGSTIGST

SGST (Amount goes to State)

SGSTIGST

IGST(Amount goes to CBEC)

CGSTSGSTIGST

Central Government to act as a Clearing House & transfer the funds across States


Re-cap : Benefits

• Reduction in the number of taxes at the Central and State level.

• Decrease in effective tax rate for many goods.

• Removal of the current cascading effect of taxes

• Reduction of transaction costs of the taxpayers through simplified tax compliance

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

Govt Expects Tax Collections to increase by 90K Crores


What has changed since… December 2014 Lok Sabha has passed the GST CAB Finance Minister has stated in LS the Tax Rate will be much lower than 25%. Rajya Sabha has referred it to “Select Committee”. Select Committee is expected to decide on

Addl IGST – If it is really necessary Place of Supply Rules Revenue Neutral Rate (RNR) – effective GST Rate


Way Forward

• Monsoon Session of Parliament to commence in July, in which Rajya

Sabha is expected to Approve the CAB.

• After CAB passage in Rajya Sabha, atleast 15 States have to ratify it

in their respective State Legislative Assemblies.

• Then, President shall give his assent for enactment.

• GST Council to be formed within 60 Days of Enactment of CAB.

• GST Law & Rules to be announced by Centre & States and to be

opened for Public Opinion.

• GST Network (IT Infrastructure) for handling GST to be introduced.


Implementation StructureActivity ResponsibilityRegistration,File Returns,Tax Payments

Tax Payer

Registration Acceptance,Acceptance & Return ConsolidationChallan ReconciliationsMatching of Input Tax CreditPreparing MIS for Govt & PublicHelpdesk and Facilitation Centres

GSTN(IT Infrastructure for facilitating GST)

Assessment, Audits and Law EnforcementRefundsDispute Resolution

Tax Authorities

Tax Payments & Reconciliations Banks & RBI

Tax Payer and Tax Authorities are expected to Interact only THRU GSTN


GSTN : Objectives

■ Clear IT Migration Strategy to GST

■ Simplicity for Tax Payers

■ Respect Autonomy of the States

■ Uniformity of Policy Administration across the whole Country

■ Enable digitization of the whole chain

■ Reduce tax Leakages

■ Leverage current IT Investments made by States

■ Common File Formats

NSDL is the Implementing Agency selected by the Government to roll out GSTN


GSTN : Workflow Registration : Single PAN based registration number to be issued to all Tax

Payers. A registration number can be extended to “States” on request.

Returns Filing : Accept Tax Returns and proceed with Preliminary Processing

Returns filed will be forwarded to CBEC; If States desire (in cases they do not have

required Infrastructure), Returns will be forwarded to States as well.

Harmonized System of Nomenclature to be implemented for Goods, in line with GATT.

“Business Rules Engines” to refer to Tax Rates, Revenue Sharing Rules etc in Returns.

Challan Matching with Tax Returns & Input Tax Credit Reports

Tax paid under IGST by the selling dealer in the Exporting State will be available

as ITC to the Purchasing Dealer in the Importing State.

Info uploaded by Tax Payer will flow to CBEC, States and later CBDT, MCA.


GSTN Data Capturing Structure

Whole Entity

Branch / Location

Invoice / Document

HSN Nomenclature


GSTN “Tax Boosters”

Type of Fraud In System Checks Fraudulent Invoice Matching with Data uploaded

Improper Input Tax Credit Matching with Data uploaded

Fraudulent Use of “Exempt” Rules Business Rules Engine Validation

False Payment Proof Matching with E-Payments

Unrecorded Sales Data Mining

Misuse of Composition Data Mining

Wrongful Application of Lower Tax Rate Data Mining

Under-Invoicing declaration Data Mining

Non-Existent Dealers Data Mining

GSTN to have “Intelligent Deterrents” to check Frauds

Results of these Tax Boosters to be forwarded in due course for Audits, Appeals, Refund Processing


QUESTIONS & COMMENTS?

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THANK YOU!!