webinar on gst for non finance professionals
TRANSCRIPT
Tax Structure
Direct Tax Indirect Tax
Taxes Levied by
Central Govt.
Taxes Levied by
State Govt.Income Tax
Excise Duty
Customs
Service Tax Entry Tax, Luxury Tax etc.
VAT/CST
Existing Tax Structure in India
No change in proposed tax structure under GST
Will be replaced by GST
This law applies to persons involved in production or manufacture of excisable goods. It is an indirect tax paid by the manufacturer, who passes on its incidence to the customers.
This law applies to the person providing taxable services for a consideration excluding services covered in negative list.
This Act is applicable to every dealer who carries on the business of sale and purchase of goods within the state.
This Act is applicable to every dealer who carries on the business of sale and purchase of goods from one state to another state.
Entry Tax is levied on the entry of goods brought into the state from beyond its borders for the purpose of sale as well as consumption
A luxury tax is a tax placed on products or services that are deemed to be unnecessary or non-essential.
Luxury Tax Excise Duty Service Tax VAT CST Entry Tax
Brief write up on Existing Taxes replaced under GST
Central Excise Duty
Additional Duties of Excise
Excise Duty Levied under Medicinal and Toiletries Preparation Act
Additional Duties of Customs (CVD and SAD)
Service Tax
Surcharges and Cess
State VAT/ Sales Tax
Central Sales Tax
Purchase Tax
Entertainment Tax (not levied by local bodies)
Entry Tax , Octroi
Taxes on lottery, betting & gambling
Luxury Tax
Surcharge and Cess
Central Taxes State Taxes
Existing Laws that will get impacted under GST
Workflow under Existing Tax Structure
Steel Plant (Gujarat) Car Manufacturing Plant (Gujarat)
Import procurement (Engine)
Tyres Plant (Outside Gujarat)
Custom Port
Distributor (Gujarat) to Consumer (Gujarat)
A. Manufacturer (Gujarat) to Distributor (Gujarat)
Basic Price = 160.91
(Steel 30 + Tyres 20.45 + Imported goods 110 + ET on Tyres 0.46 )
Value Addition + Profit Margin = 30
Excise Duty @ 12.5% = 23.86
VAT @ 14% = 30.07
Total Sale Price to Distributor = 244.84
B. Manufacturer (Gujarat) to Distributor (Madhya Pradesh)
Basic Price = 160.91
Value Addition + Profit Margin = 30
Excise Duty @ 12.5% = 23.86
CST @ 2% = 4.30
Total Sale Price to Distributor = 219.07
Total Cost to Distributor = 223.45 ( 219.07+ 4.38 (ET)
Basic Price = 214.77
Value Addition + Profit Margin = 20
VAT @14% = 32.87
Total Sale Price to Consumer in Gujarat = 267.64
Assumption : Excise Duty – 12.5%, VAT – 14%, CST – 2%, Entry Tax – 2%, Basic Custom Duty – 10%, CVD – 12.5%
Particulars Consumer ( Gujarat)
Consumer(MP)
Cost of Goods 200.00 200.00
Total taxes paid by Consumer
67.64 77.53
Effective Tax rate 34% 39%
Distributor (MP) to Consumer (MP)
Basic Price = 223.45
Value Addition + Profit Margin = 20
VAT @14% = 34.08
Total Sale Price to Consumer in MP = 277.53
Cost= 30.00Excise [email protected] %= 3.75VAT @ 14%= 4.73 Billing amount = 38.48
Cost = 20.00Excise [email protected]%= 2.5CST@2%= 0.45Billing amount = 22.95 Entry Tax to be paid by Car Manufacturer = 0.46
Import value = 100Basic Custom Duty = 10CVD = 13.75SAD = 4.95Total Purchase Price= 128.70
Figure in lakh
Note : Entry Tax needs to be paid directly by the Purchaser to the Government and accordingly Manufacturer in Gujarat and Distributor in MP has borne the Entry Tax.
Taxes proposed to be excluded under GST
Basic Customs Duty
Stamp Duty
Tax levied by Local bodies
Tax on Alcoholic liquor for human consumption
Tax on Tobacco products
Tax on Petroleum products
Proposed Indirect Tax Structure in India
Indirect Tax Structure
GST
Intra State (within the
same state)
Inter state (From one state
to other)
SGST(State)
IGST(Central)
CGST(Central)
GST is proposed to be levied and collected on
Supply of Goods and Services in India
Import of Goods into India
Import of Services
Intra-State Supplies (Within the same
state)
Inter-State Supplies (From one state
to another)Basic Customs Duty
(+) IGST
CGST and SGST (levied and collected on the value of supply)
IGST
CGST stands for Central Goods and Service Tax. This is levied by Central GovernmentSGST stands for State Goods and Service Tax. This is levied by State GovernmentIGST stands for Integrated Goods and Services Tax which would roughly be equal to CGST plus SGST
IGST
Taxability under GST
Note - GST will not be levied on export of goods and services because export is a zero rated supply
GST is proposed to be levied and collected on
Supply of Goods and Services in India
Import of Goods into India Import of Services
Intra-State Supplies (Within the same
state)
Inter-State Supplies (From one state to
another)
Basic Customs Duty (+) IGST
CGST and SGST (levied and collected on
the value of supply)IGST
CGST stands for Central Goods and Service Tax. This is levied by Central GovernmentSGST stands for State Goods and Service Tax. This is levied by State GovernmentIGST stands for Integrated Goods and Services Tax which would roughly be equal to CGST plus SGST
IGST
Taxability under GST
Note - GST will not be levied on export of goods and services because export is a zero rated supply
GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the producer's point and service provider's point up to the retailer's level.
GST will have two components: one levied by the Centre (hereinafter referred to as Central GST), and the other levied by the States (hereinafter referred to as State GST). This dual GST model would be implemented through multiple statutes (one for CGST and SGST statute for every State).
The Central GST and the State GST would be levied simultaneously on all transactions of goods and services within the state except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits.
In case of Inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. Stage of Supply Chain (A)
Purchase Price (B)
Value Addition + Profit Margin (C )
Sale Price (D)
Rate ofGST (E )
GST on Purchase Price (G=B*E)
GST payable to Government (H)
Manufacturer
Whole Seller
Retailer
Consumer
100 30 130 18% 23.4 18.0 5.4 (23.4-18)
130 20 150 18% 27.0 23.4 3.6 (27.0-23.4)
150 10 160 18% 28.8 27.0 1.8 (28.8-27.0)
160 18% 28.8 28.8
Figures in Lakh
GST on Sale Price (F)
GST & Its Components
GST Rate Levied on
Manufacturer claims back GST paid on purchases of Goods/Services
Wholesaler claims back GST paid on purchases of Goods/Services
Retailer claims back GST paid on purchase of Goods/Services
Consumer will pay GST on purchase of Goods/Services
Manufacturer
Wholesaler
Retailer
Consumer
GST Mechanism
IGST IGST
IGST
IGST
CGST
CGST
CGST
SGST SGST
SGST
GST- INPUT TAX CREDIT- MANNER OF SET OFF
Particulars Current Indirect Tax System Dual GST System
Nature of Tax Origination Based Consumption based destination tax
Taxable Event Manufacture, Sale or provision of Services Supply of Goods/Services (includes stock transfers as well)
Taxes to be subsumed (Central)
Central Excise Service Tax Additional duty of Customs
Central GST
Taxes to be subsumed (State)
VAT Central Sales Tax (CST) Purchase Tax, Entertainment Tax, Luxury Tax, Lottery Tax, Entry
Tax/ Octroi
State GST
Taxes to apply on Import of Goods
Basic Custom Duty Additional duty of Customs Special Additional duty of Customs
Integrated GST Basic Customs Duty
Taxes to apply on Export of Goods
Basic Custom Duty Additional duty of Customs Special Additional duty of Customs
Zero rated supply
Intra-State Supply of Goods/Services
Excise Duty (on Manufacture of goods) State VAT on sale on goods Service Tax (on supply of services)
Central GST State GST
Inter-State Supply of Goods/Services
Excise Duty (on Manufacture of goods) CST on sale of goods Service Tax (on supply of services)
Integrated GST
Inter-State Stock Transfer of Goods
Excise Duty (on Manufacture of goods) No State VAT/ CST on Stock transfer
Integrated GST
Snapshot of Present tax structure Vs Proposed tax structure under GST
Passage of Constitutional Amendment bill from Parliament
Ratification by more than 50% states
Presidential Assent of Constitution Amendment and notification in official gazette
Cabinet Approval for Formation of GST Council
RECENT PROGRESS Recommendation of
model GST laws by GST council
Cabinet Approval for CGST and IGST laws by the Centre and SGST laws by All States
Passage of CGST and IGST laws in the Centre and SGST laws in all states
Notification of GST Rules
Preparation of IT infrastructure
WAY FORWARD
GST implementation
potentially by April, 2017
Recent Progress on GST and Way Forward
ParticularsPRESENT TAX REGIME GST REGIME
Basic Price (includes Excise Duty, CST, Entry Tax)
Value Addition + Profit Margin
Excise Duty (ED) Total VAT/CST/
Entry Tax Total Billing Basic Price Value Addition + Profit Margin GST Total Billing
Manufacturer (Gujarat) to Wholeseller (Gujarat) 30.00 30.00 7.50 67.50 9.45 76.95 30.00 30.00 10.80 70.80
Wholeseller (Gujarat) to Retailer (Madhya Pradesh)
67.50 (includes 7.50 Excise Duty ) 20.00 - 87.50 1.75 89.25 60.00 20.00 14.40 94.40
Retailer (Madhya Pradesh) to Customer (Madhya Pradesh)
91.04 (includes 1.75 CST, 1.79 Entry Tax) 2.00 - 93.04 13.02 106.06 80.00 2.00 14.76 96.76
Total Price paid by Consumer 106.06 96.76Cost of Goods 82.00 82.00
Total taxes paid by Consumer 24.06 14.76
Effective Tax rate (in %) 29% 18%
Particulars Type of transaction Present Regime GST regime
Excise duty paid by Whole seller to Manufacturer
Within the same state 7.50 -
CST paid by Retailer to Wholeseller From one state to another 1.75 -
Entry Tax paid by Retailer directly to Govt. From one state to another 1.79 -
VAT paid by Consumer Within the same state 13.02 -
GST paid by Consumer Irrespective of same state or from one state to another 14.76TOTAL 24.06 14.76
Assumptions for rate of tax:Excise Duty – 12.50%VAT – 14%CST – 2%Entry Tax – 2%GST – 18%
Note - GST includes both Central GST and State GST. IGST (Inter State GST) will be levied in case of sale of goods from Gujarat to Madhya Pradesh for which input GST (CGST & SGST) paid on purchase of goods can be taken.
Impact on Consumer of Goods (Present tax regime Vs GST)
Detailed break up of Taxes paid by Consumer
Figure in Lakh
For Existing Taxpayers
Do all Assessees/dealers who are already registered under existing central excise/service tax/VAT laws will have to obtain fresh registration?
No, every person registered under any of the
earlier laws shall be issued a certificate of registration on a provisional basis in such
form and manner as may be prescribed.
The certificate of registration shall be valid for
a period of six months from the date of its issue: provided that the said validity period may be extended for such further period as the Central/State Government may, on the recommendation of the Council, notify.
Every person to whom a certificate of registration has been issued shall furnish
such information as may be prescribed with the specified period
The service tax assessee having centralized registration will have to apply afresh in the respective states wherever they have their businesses.
Particulars Provision
Turnover based Registration Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds Rs.9 lakh. (Rs.4 lakh for North Eastern states including Sikkim)
Mandatory Registration irrespective of the Turnover
The categories of persons who will be required to be registered under this Act mandatorily irrespective of the Turnover includes:o Persons making any inter-state taxable supplyo Casual taxable personso Persons who are required to pay tax under Reverse Chargeo Non-resident taxable personso Input service distributor
Time limit for Registration Within 30 days from the date on which he became liable for registration
Registration Process Single application to be filed online for registration under Goods & Services Tax (GST)
The registration number will be PAN based and will serve the purpose for Centre and State
Each dealer to be given unique id GSTIN Registration to be granted within 3 days
For New Taxpayers
Registration under GST
Every registered dealer is required to file return for the prescribed tax period
Fling of Returns through Online mode only
Common e-return for SGST, CGST and IGST
There would be no revision of Returns. Changes to be done in subsequent Returns only
Eight different types of Returns are prescribed viz. GSTR 1 to GSTR 8;
Requirement for Filing Return
Features of GST Return
Types of GST ReturnsType of GST Return For To be filed by
GSTR-1 Outward supplies made by taxpayer (other than compounding taxpayer and ISD) 10th of the next month
GSTR-2 Inward supplies received by a taxpayer (other than a compounding taxpayer and ISD)
15th of the next month
GSTR-3 Monthly return (other than compounding taxpayer and ISD) 20th of the next month
GSTR-4 Quarterly return for Compounding Taxpayer 18th of the month next to quarterGSTR-5 Periodic return by Non-Resident Foreign Taxpayer 20th of the next month & within 7 days
after expiry of registrationGSTR-6 Return for Input Service Distributor (ISD) 15th of the next monthGSTR-7 Return for Tax Deducted at Source 10th of the next monthGSTR-8 Annual Return By 31st December of next Financial Year
Returns under GST
A separate reconciliation statement, duly certified by a Chartered Accountant, will have to be filed by those taxpayers required to get their accounts audited under section 44AB of Income Tax Act 1961.
For Business and Industry
Easy Compliance, Uniformity of tax rates and structure,
Removal of cascading effect, Improved competitiveness due to reduction in transaction cost
For Central and State Governments
Simple and easy to administer, Better controls on
leakage, Higher revenue efficiency
For the Consumer
Single and transparent tax proportionate to the value
of goods and services, Relief in overall tax
burden
Overall for the whole economy
Transparent and better compliance, Reduce
corruption, Unorganized sector will come under tax
regime, GST will boost “Make in India” program.
Advantages of GST to Various Stakeholders
Major Challenges under GST
Calculation of Revenue Base of Centre and States, along
with compensation requirements of Centre
GST Rates structure List of Exemptions
Forming of consensus on Model GST Bill Threshold limits Implementation
of GST Network
Extensive training to tax administration
staff
Key Term DefinitionAggregate Turnover
“aggregate turnover” means the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be. However, it does not include the value of supplies on which tax is levied on reverse charge basis and the value of inward supplies
Casual taxable person
“casual taxable person” means a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business
Input Service Distributor
"Input Service Distributor" means an office of the supplier of goods and / or services which receives tax invoices towards receipt of input services and issues tax invoice or such other document as prescribed for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above
Non-resident taxable person
“non-resident taxable person” means a taxable person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India.
Revenue Neutral Rate
It is the tax rate that allows the government to receive the same amount of money despite of changes in tax laws. In the GST regime the revenue of the government would not be same in comparison with the present tax structure due to tax credit mechanism, removal of cascading effect, or otherwise. Therefore an adjusted rate is required to avoid reduction in revenue of government. This adjusted rate is termed as Revenue Neutral Rate. It is the rate at which tax revenue will remain same despite allowing input tax credit and other factor.
Supplier “supplier” in relation to any goods and/or services shall mean the person supplying the said goods and/or services and shall include an agent acting as such on behalf of such supplier in relation to the goods and/or services supplied
Key Terms and Definitions under GST
Key Term DefinitionZero-rated supply
“zero-rated supply” means a supply of any goods and/or services on which no tax is payable but credit of the input tax related to that supply is admissible
Supply Supply includes(a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business,(b) importation of service, whether or not for a consideration and whether or not in the course or furtherance of business, and(c) a supply specified in Schedule I, made or agreed to be made without a consideration.(2) Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services.(2A) Where a person acting as an agent who, for an agreed commission or brokerage, either supplies or receives any goods and/or services on behalf of any principal, the transaction between such principal and agent shall be deemed to be a supply.(3) Subject to sub-section (2), the Central or a State Government may, upon recommendation of the Council, specify, by notification, the transactions that are to be treated as—(i) a supply of goods and not as a supply of services; or(ii) a supply of services and not as a supply of goods; or(iii) neither a supply of goods nor a supply of services.(4) Notwithstanding anything contained in sub-section (1), the supply of any branded service by an aggregator, as defined in section 43B, under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said aggregator
Reverse charge “reverse charge’’, means the liability to pay tax by the person receiving goods and / or services instead of the person supplying the goods and / or services in respect of such categories of supplies as the Central or a State Government may, on the recommendation of the Council, by notification, specify
Key Terms and Definitions under GST
RESULT : B stops purchasing from A and look for more compliant vendor
Particulars Percentage
Complied within Due Date
66%
Not Complied within Due Date
20%
Compliances Not Yet Due 14%
A B Sold goods for Rs.100 , Charged GST @18% i.e. Rs.18
A does not file his returnwithin due date
B files return and claims credit Rs18.
B is not allowed credit of Rs18..Loss to B
Don’t Lose Business …Get Complified! Get Komplify Now!!
Get Certified by our Compliance Management Software ..
How Komplify helps you increase Business
Fully-automated compliance
solution
SimpleQuick
Inexpensive
Comprehensive Compliance Checklist
CentralState
Municipal
For Small & Medium
Businesses
EfficiencyPenaltyAvoid
Surprises
Critical Compliances
across modules
HR Tax
CorporateEnvironment
Industry-specific
Hassle-free Updates &
Task Management
Email Reminders
Calendar ViewGenerate Reports
About Komplify
1 2 3 4 5
• Know the applicable critical compliances online
• Move up or drill down the applicable compliances by various variables
• Real-time compliance status of your organization
• Generate customized compliance reports
• Slice and dice reports basis your requirements
• Get online compliance certificates
• No complicated workflows
• Easy to allocate compliances through quick links, bulk allocation, etc.
• Get email alerts well before compliance date
• Get compliance alerts from your calendar
• Stay updated about regulatory amendments
Identify laws online
Management by exception
Easily manage compliances
How Komplify can help MSMEs ?
Ahead-of-time alerts
1. Depth of Laws Covered
2. Type of Laws and Compliances Covered
Central Laws State Laws Municipality Laws
Corporate Secretarial Compliances
Environment, Health & Safety
Fiscal Compliances(Registrations and Filings only)
Labour & EmploymentIndustry Specific Compliances
Building, Infrastructure & Establishment
About Komrisk
Comprehensive and Customized compliance Repository
Ahead of time alerts and reminders
Single source of truth for all Compliance Proofs
Manage Incidents and Internal Policies
Near real-time Compliance updates
Lexplosion’s Compliance Management tool – Komrisk, combines the benefits of a Comprehensive Compliance Content and a web-based software
(This is the preferred option for organizations)
Why Komrisk?
Management by Exception through Real-time status dashboards
1
2
3
4
5
6
Identification of Regulations
• Receive information on client's operations
• Discuss with client regarding applicability of laws
• Client reviews and signs-off the list of laws
Deployment of Komrisk• Basis applicable laws, identify the
applicable compliances• Create and configure client
workspace in Komrisk• Publish applicable compliances
onto the workspace • Configure client details on Komrisk• Impart Komrisk training for client’s
users
Periodic Regulatory Updates
• Track applicable laws on an ongoing basis
• Update client-specific workspace with any regulatory amendments
Komrisk Deployment Process
Software Support
• SLA based software support
• Periodic software updates, as and when applicable
55+ Entities Using Komrisk 1800+ Komrisk Users 22000+ Compliance Tasks~5 Years Since in
Existence
Founded by 4 experienced lawyers – worked with GE; Genpact, Amarchand & Mangaldas
Focused on Legal & Statutory Compliance Management
Introduced India’s first cloud-based compliance
solution – Komrisk in 2012
Partnered with CII for providing Compliance Training &
Updates to its Members
Deloitte’s “Technology Fast 500 Asia Pacific Companies
”NASSCOM’s “Outstanding IT/ITES Company” at Emerge January 2012.
NASSCOM’s Emerge 50 for 2012 and 2013 Deloitte’s “Technology Fast 50 India 2012”
Leading Fortune 100 Companies
Top Fortune 500 Companies FTSE/ NYSE/
NASDAQ / BSE/ NSE Listed Entities
Reputed ecommerce companies
Started in 2007
Highly decorated / acknowledged
by Industry/ Consultants
Delivered 150+ Compliance
Management Engagements
About Lexplosion
Contact Us
Lexplosion is also a Member Firm of Leading Indian Industry Associations
HeadquarterLexplosion Solutions Private LimitedInfinity Benchmark, Floor 6, Office# 1, Plot# G1, Block - EP & GP, Sector V, Salt Lake, Kolkata- 700 091, IndiaT. +91.33.40 61 80 83/84/85, F. +91.33.40 61 80 86
Mumbai OfficeLexplosion Solutions Private LimitedRegus Trade Centre G/F & 1st Floor, Bandra East, Mumbai, Maharashtra 400051
www.lexplosion.in / www.kompify.com
NCT (Delhi) & Registered OfficeLexplosion Solutions Private LimitedD-20 Hauz Khas, Ground Floor, New Delhi – 110016, India
Bangalore OfficeLexplosion Solutions Private LimitedRegus, CBD Bangalore, Level 9 Raheja Towers, 26-27 Mahatma Gandhi Road, Bangalore - 560 001, India
THANK YOU