Demystified - IHC | India Habitat Centre - Home Part of GST but power to levy additional excise duty...

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Demystified

Transcript of Demystified - IHC | India Habitat Centre - Home Part of GST but power to levy additional excise duty...

Page 1: Demystified - IHC | India Habitat Centre - Home Part of GST but power to levy additional excise duty with Central Government Entertainment tax levied by local bodies Power to tax remains

Demystified

Page 2: Demystified - IHC | India Habitat Centre - Home Part of GST but power to levy additional excise duty with Central Government Entertainment tax levied by local bodies Power to tax remains

Why GST ?

✓ Leading to multiple indirect taxes and multiple authorities

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• Central Excise duty

• Additional duties of excise

• Excise duty levied under Medicinal& Toilet Preparation Act

• Additional duties of customs (CVD& SAD)

• Service Tax

• Surcharges & Cesses

• State VAT / Sales Tax

• Central Sales Tax

• Purchase Tax

• Entertainment Tax (other than that levied by local bodies)

• Luxury Tax

• Entry Tax (All forms)

• Taxes on lottery, betting & gambling

• Surcharges & Cesses

Central Taxes State Taxes

GST

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Why GST ?

▪ Cascading of taxes not completely eliminated

▪ Multiple markets within India bringing in economic distortions

▪ Adverse impact on Ease of doing business and foreign investment

▪ Rampant Tax evasion and leakages

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Why Constitutional amendment ?

▪ Clear demarcation in the constitution between fiscal powers of the centre and states

▪ Constitutional amendment to empower the centre and states to concurrently levy and collect GST

▪ First mooted in the budget for 2006-07 and Proposed to be introduced from 1st April, 2010

▪ Political consensus eluded for a long time▪ Finally Constitution Amendment Bill passed by

Rajya Sabha on 03.08.2016 & Lok Sabha on 08.08.2016

▪ Notified as Constitution (101st Amendment ) Act, 2016 on 08.09.2016

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The Journey so far: Effort and Work Done

10 Years…In Making

14 EC Meetings in 10 years and 14 GSTC Meetings in 7 months

30 +Sub-Groups & Committees

180 + Officers’ Meetings

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19500 +Man Hours of discussion by GST Council

Constitution Amendment, 5 Laws and many Rules approved by collaborative effort

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Features of Constitution Amendment Act

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Alcohol for human consumption

Power to tax remains with the State

Five petroleum products – crude oil , diesel, petrol, natural

gas and ATF

GST Council to decide the date from which GST will be applicable

TobaccoPart of GST but power to levy additional excise duty with Central Government

Entertainment tax levied by local bodies

Power to tax remains with the State

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GST Council - Constitution

▪ Chairperson – Union FM

▪ Vice Chairperson - to be chosen amongst the

Ministers of State Government

▪ Members - MOS (Finance) and all Ministers of

Finance / Taxation of each State

▪ Quorum is 50% of total members

▪ States - 2/3 weightage and Centre - 1/3 weightage

▪ Decision by 75% majority

▪ Council to make recommendations on everything

related to GST including laws, rules and rates etc.

▪ 14 meetings held so far7

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Understanding CGST, SGST, UTGST & IGST

Foreign Territory

State 1

Union territory without legislature

State 2

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Main Features of the GST Act (1/4)

All transactions and processes only through

electronic mode – Non-intrusive administration

PAN Based Registration

Registration only if turnover more than Rs. 20 lac

Option of Voluntary Registration

Deemed Registration in three working days

Input Tax Credit available on taxes paid on all

procurements (except few specified items)

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INPUT MANUFACTURER

DEALERCAR MANUFACTURER

CONSUMER

SSGST =10

TAX INVOICE AVALUE = 100CGST = 10SGST = 10INVOICE VALUE = 120

ECGST = 10

TAX INVOICE BCOST = 100VALUE = 110CGST = 11 SGST = 11INVOICE VALUE = 132

SGST = 11ITC = (10)Cash= 1

STATE TAX TOTAL = RS.12.10

(10+1+1.10)

A

CENTRAL TAX TOTAL = RS.12.10

(10+1+1.10)

CGST = 11ITC = (10)Cash = 1

TAX INVOICE CCOST = 110VALUE = 121CGST = 12.10SGST = 12.10INVOICE VALUE = 145.20

B C

SGST = 12.10ITC = (11)

Cash = 1.10

CGST = 12.10ITC = (11)

Cash = 1.10

CGST = 10% SGST = 10%VALUE ADDITION = 10%ITC = INPUT TAX CREDIT

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Main Features of the GST Act (2/4)

Credit available to recipient only if invoice is

matched – Helps fight huge evasion of taxes

Set of auto-populated Monthly returns and Annual

Return

Composition taxpayers to file Quarterly returns

Automatic generation of returns

GST Practitioners for assisting filing of returns

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Main Features of the GST Act (3/4)

Tax can be deposited by internet banking, NEFT / RTGS,

Debit/ credit card and over the counter

Concept of TDS for certain specified categories

Concept of TCS for E-Commerce Companies

Refund to be granted within 60 days

Provisional release of 90% refund to exporters within 7

days

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Main Features of the GST Act (4/4)

Interest payable if refund not sanctioned in time

Refund to be directly credited to bank accounts

Comprehensive transitional provisions for smooth

transition of existing tax payers to GST regime

Special procedures for job work

System of GST Compliance Rating

Anti-Profiteering provision

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GST Network (GSTN)

A section 25 non profit company with Strategic Control of

the Government

To function as a Common Pass-through portal for

taxpayers-

▪ submit registration application

▪ file returns

▪ make tax payments

To develop back end modules for 27 States/UTs (MODEL –II)

Infosys appointed as Managed Service Provider (MSP)

34 GST Suvidha Providers (GSPs) appointed

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Taxpayer

GSTN

Supplier

Invoice Details upload from 1st of

July to 10th of August

Supplier

File GSTR-I by 10th of August

Auto-Populationof invoice details

in GSTR-2 of recipient

Recipient

Amend or modify and file GSTR-2 by 15th of August

Supplier and Recipient

To reconcile details by 17th of

August

Supplier

File GSTR-3 by 20th of August &

pay tax

Return Process (Example : Return for July 2017)

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GST Council - Decisions (1/2)

Threshold limit for exemption to be Rs. 20 lac (Rs. 10 lac forspecial category States)

Compounding threshold limit to be Rs. 50 lac with -

Government may convert existing Area based exemptionschemes into reimbursement based scheme

Majority of goods and services have been fitted into Four taxrates namely 5%, 12%, 18% and 28% and exempt category

Cess over peak rate of 28% on specified luxury and demeritgoods

Separate tax rate for precious metals8

Categories Tax Rate

Traders 1%

Manufacturers 2%

Restaurants 5%

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To ensure single interface – all administrativecontrol over▪ 90% of taxpayers having turnover below Rs. 1.5 cr

would vest with State tax administration▪ 10% of taxpayers having turnover below Rs. 1.5

cr. would vest with Central tax administration▪ taxpayers having turnover above Rs. 1.5 cr. would

be divided equally between Central and State taxadministration

CGST, SGST, UTGST, IGST, Compensation Laws and manyRules recommended

GST Council - Decisions (2/2)

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Compensation Mechanism for States

Revenue of all taxes subsumed in GST by the

State for 2015-16 as the base

Assumption of 14% Annual Growth Rate

Compensation to be provided through Cess

Cess only on few specified luxury and demerit

goods

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Way Forward

SGST law to be passed by the remaining State

Legislatures

GST Council to fit tax rates of few remaining categories

of Goods

Notification of Rules by the Central and the State

Governments

Sector Wise guidance notes to be prepared

Migration and handholding of existing tax payers

Outreach program for trade and industry

Change Management23

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Thank [email protected]

Twitter: @ArunGoyal59

mailto:[email protected]

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