Gst one nation one tax - a myth or a reality

GST is a tax on goods and services under which every person is liable to pay tax and entitled to input tax credit on its inputs.

1. Maheshwari Yuva Sangathan

2. BASIC CONCEPTS TAXATION 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

3. Taxes can be classified into various types on the basis of form, nature, aim and method of taxation. the most common and traditional classification is to classify into direct and indirect taxes . Direct Tax Indirect tax 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

4. Multiple Events and Taxes in India 19 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan Service Tax VAT Octroi Entertainment Tax Swaccha Bharat Cess Excise Luxury Tax CVD / SAD Entry Tax KKC

5. Sector Wise Tax Rates 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan 5

6. SSI Exemption VAT – Rs . 5 Lacs Service Tax – Rs . 10 Lacs Excise – Rs . 150 Lacs Composition of Taxes – Guj VAT – Rs . 50 Lacs 19 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan 6

7. Existing Indirect Tax System RBI/ Banks (Payments) CBDT (PAN Verification) CAG (Audit & Accounting) CGA/SAG ( Accounting ) Facilitation Centre E-Services Centre States Tax Administration Tax Payer Interface The present systems at Centre and States do not share data. Limited sharing amongst States through TINXSYS Department Offices CUSTOMS CEN. EXCISE SERVICE TAX VAT OTHER TAXES 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

8. Non Harmonization of Tax Law, Rules and rates Lack of automation Different Exemptions Poor Quality of tax Returns / Multiple Formats Delayed Assessments Lack of Cross Verifications with other tax administrations CA Sandesh Mundra for Maheshwari Yuva Sangathan Lesson from Present System 18 February 2017

9. GST- why did it took so much time 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

10. Taxable Event under GST is Supply Even Branch Transfers / No declaration forms 19 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

11. What is GST ? Tax on Goods and Services Destination based consumption tax Leviable on each stage on value addition Cross credits across the country 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

12. GST Common Portal RBI / Banks (Payments) CBDT (PAN Verification) CAG ( Audit & Accounting ) CGA/SAG ( Accounting ) Facilitation Centre E-Services Centre State A GST PORTAL Tax Administration Tax Payer Interface Customs CGST IGST SGST Proposed common GST Portal – To act as common interface, will provide core services of Registration, Returns & Payments, Accounting of taxes State B SGST 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

13. One Nation One Tax CA Sandesh Mundra for Maheshwari Yuva Sangathan 18 February 2017

14. Taxes to be subsumed in GST C GST T a x es on l ot t ery E n t ry T ax & Oct r o i E n t erta inm en t T ax ( e x cept b y l ocal b o di es ) P u rcha s e T ax & L u x u ry T ax C e n t r al S a les T ax V A T T a x es on b e tti n g a n d g a m bl i n g SGST 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

15. Concept of IGST 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

16. Tax to be charged – Place of supply SGST + CGST IGST Customs + IGST No GST 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

17. These would continue (apart from IT) Customs Duty Stamp Duty Property Tax Professional Tax Old Taxes on Alcohol / Petroleum / Electricity Old Taxes + GST on Tobacco CA Sandesh Mundra for Maheshwari Yuva Sangathan 18 February 2017

18. How many acts will be passed in GST CGST Act IGST Act SGST Act for each state 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

19. SGST + CGST % Supply of Goods & Services 0% Social Goods + Social services + Exports 5 % Gold & Silver ornaments, precious & semi-precious stones Around12% Goods/Services of basic necessities, all industrial & agricultural inputs & passenger transport services Around 18% Normal Rate on all goods & services other than mentioned else where 28% + Cess Cigarettes, other tobacco products, lottery tickets, luxury services, entertainment, betting & gambling Expected Rates under GST 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

20. Input Credit CGST SGST IGST Matching Issues Cross Credit Supplier Rating Impact on Working Capital 19 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

21. Illustration to Showcase Tax Benefit under GST CA Sandesh Mundra for Maheshwari Yuva Sangathan 18 February 2017

22. Present Scenario (Intra-State Trade of Goods) CA Sandesh Mundra for Maheshwari Yuva Sangathan 22 State Tax = 13.31 ( 11 + 1.10 + 1.21) VAT = 11 VAT = 12.10 ITC = ( 11) 1.10 VAT = 13.31 ITC = ( 12.10) 1.21 Excise = 10 Excise = 11 ITC = (10) 1 Tax Invoice (A) Value = 100 Excise = 10 VAT = 11 121 Tax Invoice (B) Cost = 100 Value = 110 Excise = 11 VAT = 12.10 133.10 Tax Invoice (C) Cost = 121 Value = 133.10 VAT = 13.31 146.41 Central Tax = 11 ( 10 + 1) 18 February 2017

23. GST Scenario (Intra-State Trade of Goods) CA Sandesh Mundra for Maheshwari Yuva Sangathan 23 State Tax = 12.10 ( 10 + 1 + 1.10) SGST = 10 SGST = 11 ITC = ( 10) 1 SGST = 12.10 ITC = ( 11) 1.10 CGST = 10 CGST = 11 ITC = (10) 1 Tax Invoice (A) Value = 100 CGST = 10 SGST = 10 120 Tax Invoice (B) Cost = 100 Value = 110 CGST = 11 SGST = 11 132 Tax Invoice (C) Cost = 110 Value = 121 CGST = 12.10 SGST = 12.10 145.20 Central Tax = 12.10 ( 10 + 1 + 1.10) CGST = 12.10 ITC = (11) 1.10 18 February 2017

24. Comparison (Trade of Goods) CA Sandesh Mundra for Maheshwari Yuva Sangathan 24 Sr. No. Particular Intra-State Inter-State Present GST Present GST 1. Initial Value 121.00 120.00 121.00 120.00 2. Centre’s Tax 11.00 12.10 11.00 12.22 3. State (X)’s Tax 13.31 12.10 11.00 1.10 4. State (Y)’s Tax - - 16.91 12.22 5. State’s Total 13.31 12.10 27.91 13.32 6. Total Tax paid to Govt. 24.31 24.20 38.91 –Refund Claim 25.54 7. Non - Vatable Tax borne by Business 11.00 0.00 25.00 1.10 8. Final value paid by Consumer 146.41 145.20 152.97 146.65 18 February 2017

25. Time of Supply of Goods / services Currently Under GST 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan

26. Issue – Place of supply of service 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan Software downloads Hotel stay Events Event Services Transport E-commerce Telecom

27. GST PLANNING CA Sandesh Mundra for Maheshwari Yuva Sangathan 27 18 February 2017

28. 19 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan 28

29. Do’s and Don’ts – To be reviewed after final Act and Rules are released Reviewing the procurement policy Renegotiate contracts with assumptions Review all sources of procurement excluding tax costs Stock clearances if required Avoid major procurements just before implementation Avoid large cenvat and other credit balances Avoid entering into new contracts

30. Supply Chain The following are the benefits enjoyed by companies after the implementation of GST:  Interstate sourcing of raw materials  Price negotiation  Improvement in quality  Better forecasting  Improved inventory management  Better trade-off between cost and customer service  Capacity expansion  Greater flexibility in manufacturing 18 February 2017 CA Sandesh Mundra for Maheshwari Yuva Sangathan 33

31. Thank You CA Sandesh Mundra Email: [email protected] www.gstbuilder.com Mobile: [phone] CA Sandesh Mundra for Maheshwari Yuva Sangathan 31 18 February 2017