Goods and service tax ca nk singh

Goods and Service Tax

1. A Presentation on SALIENT FEATURES OF GOODS & SERVICE TAX (GST) By CA. Niraj Kumar Singh ACA, B.COM (A&F) Mob - [phone] E-mail – [email protected]

2. SALIENT FEATURES OF GOODS & SERVICE TAX (GST) This Presentation Covers : GST - Introduction GST - Journey so far GST – Advantage and Disadvantage GST- Worldwide Rate GST – What goes?? GST- How it works ?

3. GST - INTRODUCTION It has been long pending issue to streamline all the different types of indirect taxes and implement a “single taxation” system. This system is called as GST  ( GST is the abbreviated form of Goods & Services Tax) . The main expectation from this system is to abolish all indirect taxes and only GST would be levied. As the name suggests, the GST will be levied both on Goods and Services. It is destination based tax. GS is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set­off benefits at all the previous stages. GST is a tax that we need to pay on supply of goods & services. Any person, who is providing or supplying goods and services is liable to charge GST.

4. GST - Journey so far

5. GST - Journey so far

6. Goods and Services Tax – Advantages and Disadvantages GST is a transparent Tax and also reduce numbers of indirect taxes. With GST implemented a business premises can show the tax applied in the sales invoice. Customer will know exactly how much tax they are paying on the product they bought or services they consumed . GST will not be a cost to registered retailers therefore there will be no hidden taxes and the cost of doing business will be lower. This in turn will help Export being more competitive . GST can also help to diversification of income sources for Government other than income tax and petroleum tax . Under Goods and Services Tax, the tax burden will be divided equally between Manufacturing and services. This can be done through lower tax rate by increase Tax base and reducing exemptions . In GST System both Central GST and State GST will be charged on manufacturing cost and will be collected on point of sale. This will benefit people as prices will come down which in turn will help companies as consumption will increase . Biggest benefit will be that multiple taxes like  octroi , central sales tax, state sales tax, entry tax, license fees, turnover tax etc. will no longer be present and all that will be brought under the GST. Doing Business now will be easier and more comfortable as various hidden taxation will not be present . In the amended Bill a cap Of 18% GST will be applicable on Goods and Services through the country . Because of this Prices of those Goods and services on which we used to pay taxes beyond 18% will be restricted to 18% only. For example taxes will be reduced on Mini SUV for which we are paying 30-40% Tax right now. After GST it will be reduced to 18%. Similarly Consumer goods like AC, Refrigerator and Transportation cost will also go down.

7. Goods and Services Tax – Advantages and Disadvantages A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent . GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business . The subsuming of major Central and State taxes in GST, complete and comprehensive set­off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost . GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.

8. GST Rate WORLDWIDE Country Rate of GST Denmark 25% Sweden 25% France 19.60% Germany 19% India 18% Pakistan 18% New Zealand 15% Australia 10% Singapore 7% Malaysia 6% Japan 5% Canada 5%

9. GST – What GOES Central taxes that The GST will replace - Central Excise Duty - Duties of Excise (medicinal and toilet preparations) - Additional Duties of Excise ( goods of special importance) - Additional Duties of Excise (textiles and textile products) - Additional Duties of Customs (commonly known as CVD) - Special Additional Duty of Customs (SAD) - Service Tax - Cesses and surcharges in so far as they relate to supply of goods or services State taxes That The GST will Subsume - State VAT - Central Sales Tax - Purchase Tax - Luxury Tax - Entry Tax (all forms) - Entertainment Tax (not levied by local bodies) - Taxes on advertisements - Taxes on lotteries, betting and gambling - State cesses and surcharges

10. GST – How IT WORKS The illustration shown in table indicates , in terms of a hypothetical example with a manufacturer, one wholesaler and one retailer, how GST will work. Let us suppose that GST rate is 18%, with the manufacturer making value addition of Rs.30 on his purchases worth Rs.100 of input of goods and services used in the manufacturing process. The manufacturer will then pay net GST of Rs . 5.40 after setting-off Rs . 18 as GST paid on his inputs (i.e. Input Tax Credit) from gross GST of Rs . 23.40. The manufacturer sells the goods to the wholesaler. When the wholesaler sells the same goods after making value addition of (say), Rs . 20, he pays net GST of only Rs . 3.6, after setting-off of Input Tax Credit of Rs . 23.40 from the gross GST of Rs . 27 to the manufacturer. Similarly, when a retailer sells the same goods after a value addition of (say) Rs . 10, he pays net GST of only Re.1.80, after setting-off Rs.27 from his gross GST of Rs . 28.80 paid to wholesaler. Thus, the manufacturer, wholesaler and retailer have to pay only Rs . 10.80 (= Rs . 5.4+Rs . 3.6+Re . 1.8) as GST on the value addition along the entire value chain from the producer to the retailer, after setting-off GST paid at the earlier stages. The overall burden of GST on the goods is thus much less. This is shown in the table below. The same illustration will hold in the case of final service provider as well.

11. GST – How IT WORKS Stage of supply chain Purchase value of Input Value addition Value at which supply of goods and services made to next stage Rate of GST GST on output Input Tax credit Net GST= GST on output - Input tax credit Manufacturer 100 30 130 18% 23.4 18 23.40 - 18 = 5.40 Wholesaler 130 20 150 18% 27 23.4 27 - 23.40 = 3.60 Retailer 150 10 160 18% 28.8 27 28.80 - 27 = 1.80

12. Thank you!! By CA. Niraj Kumar Singh ACA, B.COM (A&F) Mob - [phone] E-mail – [email protected]