Goods and services tax in nutshell ,possibility and problems

It is a destination based tax on consumption of goods and services
It is levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff.
only value addition will be taxed and burden of tax is to be borne by the final consumer

1. “Goods and Services Tax in
nutshell ,Possibility and
Problems”
Presented by
Mr. Prashant Arsul

2. Earlier Tax structure in India

3. Structure of Indirect tax in India prior to GST

4. What is Goods and Services Tax?
•It is a destination based tax on consumption of goods
and services
• It is levied at all stages right from manufacture up to
final consumption with credit of taxes paid at previous
stages available as setoff.
•only value addition will be taxed and burden of tax is to
be borne by the final consumer

5. Taxes subsumed

6. Taxes subsumed

7. Shortcomings in the earlier Structure and
Need of GST
•Tax Cascading
•Different taxable event for different taxes
•Complexity in determining the nature of transaction – Sale vs.
Service
•Inability of States to levy tax on services
•Lack of Uniformity in Provisions and Rates
•Restricted scope of Cenvat provisions.
•Complexities in Administration

8. Structure of GST

10. Features of GST
•GST is applicable on “supply” of goods or services
as against the earlier concept of tax on the
manufacture of goods or on sale of goods or on
provision of services.
•GST would be based on the principle of destination
based consumption taxation as against the earlier
principle of origin based taxation.

11. •GST would apply to all goods and services except
Alcohol for human consumption.
•A common threshold exemption would apply to both
CGST and SGST. Taxpayers with an annual turnover
of Rs. 20 Lakhs (Rs. 10 Lakhs for special category
States) would be exempt from GST.

12. Advantages to Assessee
1] Reduction in multiplicity of taxes.
2] Reduction of cascading/ double taxation.
3] More efficient neutralization of taxes especially
for exports.
4] Development of common national market.
5] Simpler tax regime –
a) Fewer rates and exemptions.
b) Conceptual clarity (Goods vs. Services).

13. Advantages to Govt.
1] Simpler Tax system.
2] Broadening of Tax base.
3] Improved compliance & revenue collections (tax booster).
4] Efficient use of resources.
5] Increase in Revenue.

14. Exclusions
a)Alcohol for human consumption,
b)Electricity,
c)Real Estate,
d)Petroleum Products.

15. Valuation
•Tax is payable on transaction value
• Transaction value, is the price actually paid or payable for
the said supply of goods or services or both where the
supplier and the recipient of the supply are not related and
the price is the sole consideration for the supply.
•If transaction Value is not available then valuation shall be
done on the basis of Valuation Rules.

16. Time of Supply of Goods or Services
–Date of Invoice Or
–Date of Payment
Whichever is earlier.

17. Impact of GST on Indian Economy
Positive impacts of GST:
1)Easy to Run Business in various states: GST is one tax system for all
states of India and will get rid of various taxes and duties on your
businesses.
India has secured 100
th
rank all over world in terms of ease of doing
business in year 2018 as compared to 130
th
in year 2017 & 2016.
(Source: https://en.wikipedia.org/wiki/Ease_of_doing_business_index)
Jurisdiction2018 2017 2016
India 100 130 130

18. 2) Faster & Cheaper Transportation of Goods: After the
implementation of GST system in India, the transportation
services has been improved and is been faster.

19. 3) Increase in GDP: GST is likely to bring many of the
entrepreneurs, who are not paying taxes today, under the tax
net and increase the government's revenue. Further, the
transactions happening in the parallel economy will be
captured in official statistics, resulting in higher GDP.

20. 4) Reduction in budget deficit: GST will increase tax
collections and reduce the budget deficit, and the
government will be able to spend more on economic
development.
5) Reduction in prices: Only 50 products are under 28% tax
bracket and all other products are covered under 0%, 12% or
18% category.

21. 6) Reduction in corruption: There has been substantial
reduction in the corruption.

22. Particulars Without GST With GST
Manufacturer to Wholesaler
Cost of Production 5000 5000
Add: Profit Margin 2000 2000
Manufacturer Price 7000 7000
Add: Excise Duty (12.5%)875 -
Total Value 7875 7000
Add: VAT 13.5% 1063 -
Add: CGST 9% - 630
Add: SGST 9% - 630
Total Invoice Value 8938 8260

23. Wholesaler to RetailerWithout GST With GST
COG to Wholesaler 8938 8260
Add: profit Margin(10%) 894 826
Total value 9832 9086
Add: VAT 13.5% 1327 -
Add: CGST 9% - 818
Add: SGST 9% - 818
Invoice Value(COG to
Retailer)
11159 10722
Retailer to Consumer
Add: Profit Margin(10%) 1116 1072
Total Value 12275 11794
Add: VAT 13.5% 1657 -
Add: CGST/SGST(9%) - 2123
Total Price to final
Consumer
13932 13917
Cost saving to Consumer - 15

24. Problems of GST
•All Small scale industries trading in interstate need to get
register
•No. of GST return increase
•Cost on the appointment of skilled employee for
maintaining GST record is increased
•High RNR (Revenue Neutral Rate)
•All Businessman have to change their old software(Indirect
Tax) into new software (GST).

25. Conclusion
Providing adequate and relevant fundamental
information is necessary to make them better understand the
general principle of GST. No doubt that GST will give India a
world class tax system by grabbing different treatment to
manufacturing and service sector. But all this will be subject
to its rational design and timely implementation. There are
various challenges in way of GST implementation as
discussed above in paper. They need more analytical research
to resolve the battling interest of various stake holders and
accomplish the commitment for a cardinal reform of tax
structure in India.
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