Overview of gst

goods and service tax GST tax taxation goods and services overview introduction history implementation journey process requirement slab rates Sahab sums taxes Central Government State Government advantages disadvantages problems

1. OCT 2020 Overview of GST ~ Keshav Garg

2. Goods and Service Tax The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. France was the first country to implement the GST in 1954; since then, an estimated 160 countries have adopted this tax system in some form or another. Some of the countries with a GST include Canada, Vietnam, Australia, Singapore, United Kingdom, Monaco, Spain, Italy, Nigeria, Brazil, South Korea, and India. The different tax slab are being made keeping in mind the nature of different types of goods and services. In order to calculate GST, one has first find these codes: 1. HSN- Harmonized System of Nomencalture 2. SAC- Services Accounting Codes Once the codes are identified, the applicability of CGST, SGST and IGST is to determined. 2

3. Journey towards GST The genesis of the introduction of GST in the country was laid down in the historic Budget Speech of 28 th  February 2006, wherein the then Finance Minister laid down 1 st  April, 2010 as the date for the introduction of GST in the country. Thereafter, there has been a constant endeavor for the introduction of the GST in the country whose culmination has been the introduction of the Constitution (122 nd  Amendment) Bill in December, 2014. President Assent for enactment of Bill Formation of GSTC Approval of Recommendations by CG and SG Drafting of Central and State GST Acts and Rules Effective Date defined by GSTC 3

4. Slab Rates India has, since launching the GST on July 1, 2017, implemented the following tax rates:  A 0% tax rate applied to certain foods, books, newspapers, homespun cotton cloth, and hotel services. A rate of 0.25% applied to cut and semi-polished stones. A 5% tax on household necessities such as sugar, spices, tea, and coffee. A 12% tax on computers and processed food. An 18% tax on hair oil, toothpaste, soap, and industrial intermediaries. The final bracket, taxing goods at 28%, applies to luxury products, including refrigerators, ceramic tiles, cigarettes, cars, and motorcycles. 4

5. Taxes Subsumed In GS T 5 GST replaced the following taxes currently levied and collected by the Centre:- a) Central Excise Duty b) Duties of Excise (Medicinal and Toilet Preparations) c) Additional Duties of Excise (Goods of Special Importance) d) Additional Duties of Excise (Textiles and Textile Products) e) Additional Duties of Customs (commonly known as CVD) f) Special Additional Duty of Customs(SAD) g) Service Tax h) Cesses and surcharge in so far as they relate to supply of goods and services. State taxes that are subsumed within the GST are:- State VAT b) Central Sates Tax c) Purchase Tax d) Luxury Tax e) Entry Tax (All forms) f) Entertainment Tax and Amusement Tax (except those levied by the local bodies) g) Taxes on advertisements h) Taxes on lotteries, betting and gambling i) State cesses and surcharges in so far as they relate to supply of goods and services.

6. Advantages of GST Simpler tax regime with fewer exemptions Final price of goods is expected to be transparent due to seamless flow of input tax credit between the manufacturer, retailer and service supplier Reduction in prices of commodities and goods in long run due to reduction in cascading impact of taxation Expansion of the tax base as they will be able to tax the entire supply chain from manufacturing to retail Relatively large segment of small retailers will be either exempted from tax or will suffer very low tax rates under a compounding scheme - purchases from such entities will cost less for the consumers 6

7. Disadvantages of GST GST is a totally IT-driven law. While the idea is novel, the flip side is that all states in India aren’t equipped with the necessary infrastructure to implement this system to its full extent. Companies who operate their businesses in multiple states, have to register in all those states. This adds an extra level of complexity that did not exist earlier. The tax officers and other related officials need extensive and exhaustive training to implement and monitor the new rules in an effective manner. There is a distinct possibility that some items will cost more after GST implementation. Items of expenditure like insurance renewal premium, healthcare, courier services, DTH services will become costlier – items that millions of us use every day. 7

8. Thank You! ~Keshav Garg