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FINANCE ACADEMY
(in collaboration with IT Academy)
presents
GST Basics
Learning Outcomes
The following short presentation on GST basics aims to enable participants to impart an understanding of
the
– General principles of GST
– The IT Architecture of GST
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GST Basics
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GST Basics
Type of taxes
Currently, the Indian tax structure is divided into two
▪ Direct Taxes - levies where liability cannot be passed ▪ Indirect Taxes - the liability of the tax can be passed
to someone else. on to someone else.
– An example - Income Tax where you earn the – An example - a shopkeeper must pay GST on his
income and you alone are liable to pay the tax on supply and can pass on the burden to the ultimate
it. customer.
In effect, You as the customer would pay the price of the item as well as the GST on it, so the shopkeeper can
deposit the GST to the government.
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Finance Academy – Excellence for Function; Acumen for All
GST Basics
What is GST?
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GST Basics
Let us understand GST from the above perspective: ( INTRA STATE TRANSACTION)
From point of `manufacture-dispatch-sales’ to `Consumption’
▪ GST Is a comprehensive, multi-stage, destination-based tax
– Multi-stage : from Manufacture or production to the final sale
▪ Stage 1: Buying Raw-Material (The Vendor will levy GST on Manufacturer)
▪ Stage 2: Production or manufacture and Tailoring (Manufacturer will charge GST to Distributor)
▪ Stage 3: Warehousing of materials with Distributor ( Distributor will charge GST to Retailer)
▪ Stage 4: Sale of the Product to retailer (Retailer will charge GST to Customer)
▪ Stage 5: Retailer Sells to end customer – YOU
– This completes the product life cycle
GST will be levied on each of these stages, for the value created, which makes it a multi-stage tax
Under GST, the rate of tax would be as applicable to the product classification, at each of the stages 1 to 5.
Generally, the GST paid at each stage of purchases will be available as INPUT TAX CREDIT ( set off)
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Transitions:
From point of `manufacture-dispatch-sales’ to `Consumption’
▪ Is a comprehensive, multi-stage, destination-based Consumption Tax
▪ Is levied on every value addition
▪ Destination based Tax connotes – it is the state where the ultimate customer is located, will get revenue of the
GST.
▪ Goods and services tax (GST) taxes has replaced the central excise duty, services tax, additional customs
duty, surcharges, state-level value added tax and Octroi
▪ Other levies which are currently applicable on inter-state transportation of goods are also done away with, in GST
regime
GST is a consumption based tax, therefore, taxes are paid to the state where the goods or services are ultimately
consumed not the state in which they were produced.
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Final Sale
to Sale to Retailer
Consumer
VAT
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SGST
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▪ Goods and Services Tax addresses this issue through a system of Input Tax Credit which allows seller to
claim the tax already paid and the final burden on the end consumer is therefore decreased
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Compensation Cess ranging from 1% to 15% would be applicable on Luxury Goods falling under the Tax Category of
28%
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From July 1, flat and apartment owners who pay or spend more than Rs 5,000 towards maintenance of their houses
will have to shell out more as the Goods and Services Tax will slap on them an additional 2.5 per cent tax. Earlier rate
was 15.5% and now the GST rates are increased to 18%.
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GST Basics
▪ Businesses includes trade, commerce, manufacture, profession, vocation or any other similar activity
▪ irrespective of its volume or frequency.
▪ includes supply of goods/ services for starting or closure of a business
▪ Agriculture includes floriculture, horticulture, sericulture, raising of crops, grass or garden produce. But
does not include dairy farming, poultry farming, stock breeding, gathering of fruit or rearing of seedlings
or plants.
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GST Basics
TURNOVER BASIS
▪ You must collect and pay GST when your turnover in a financial year:
– exceeds Rs. 20 lakhs.
– limit is Rs 10 lakhs for some special category (North Eastern states].
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The Act now provides that when a registered buyer buys from an unregistered dealer, then reverse charge is
applicable, i.e. the buyer (recipient of goods/services) is liable to pay GST. This is similar to the current purchase tax on
purchase of goods from an unregistered dealer applicable in many states.
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▪ Composition Scheme
– Small Businessmen or Traders dealing with goods can opt for composition scheme
– Having Turnover limit of Rs. 75 lakhs
– Applicable tax would be 2% for manufacturer, 5% for caterers 1% for other traders
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▪ Agents or any other person who makes supply on behalf of other registered taxable persons
▪ Distributors or input service distributors
– This person has the same PAN as the office of the supplier.
– This person is an officer of the supplier, he receives supplies and issues tax invoice to distribute credit of
CGST/SGST/IGST
▪ E-Commerce Operator
– Persons who supplies (except branded services) via an e-commerce operator
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▪ The taxpayer can choose to get separate registrations for its different business verticals in the State
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GST Basics
▪ A return is a document that a taxpayer is required to file as per the law with the tax administrative authorities
▪ Under the GST law, a normal taxpayer will be required to furnish three returns monthly and one annual return
▪ Similarly, there are separate returns for a taxpayer registered under
– The composition scheme
– taxpayer registered as an Input Service Distributor,
– a person liable to deduct or collect the tax (TDS/TCS)
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▪ Supply of goods or services between related persons made during the course of business is treated as
‘supply’ even when there is no consideration. Employer and Employee were covered in the definition of
related person
▪ Gifts above (and equal to) Rs. 50,000 will attract GST
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▪ In Schedule III - sale of land and/or building will neither be treated as a supply of goods nor a supply of services
and GST will NOT apply on sale of land/building (Stamp duty will continue to apply)
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Determining time of supply for services shall be earlier of the following dates:
(a) If the invoice is issued within time prescribed:
– Invoice issue date,OR
– Date of receipt of payment
– whichever is earlier
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▪ As and when, payment is made after 180 days then the ITC, will be re-allowed.
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▪ http://www.cbec.gov.in/htdocs-cbec/gst
▪ http://www.cbec.gov.in/htdocs-cbec/gst/draft-rules-format
▪ http://www.gstn.org/
▪ https://www.egov-nsdl.co.in/gst.html
▪ http://meity.gov.in/GST
▪ https://aces.gov.in/
▪ http://www.mahavat.gov.in/Mahavat/index.jsp
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GSTN Portal
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GSTN Portal
GSP Provider • 10th Seller has to upload his sales data - GSTR 1
• 15th to 20th ASP will reconcile GSTN credits with Purchases booked
ASP Provider
• 20th Final Reconciled Purchases - GSTR 2
• Mico
• Lucas TVs • 20th Payment to Banks
• MRF Tyres
• 20th Final Monthly Return GSTR 3
Buyers/ Sellers
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GST Basics
GSTN
Portal
GSP GSP
ASP ASP
ASP Reports
Sales Data
GSTN
Portal
GSP GSP
ASP
ASP Compliant
ASP Data
GSTR 1
ASP Reports
• GSTR2A – Provisional Purchase Register
• GSTR 2 – reconciled GSTN credits with Invoice Book
• GSTR1A - Purchase not in GSTN but Invoiced by
vendor
• GSTR3 - Monthly Return (Sales – Purchase GSTN
base)
GST Box • GSTR 6 - Input Service distributor (HO)
• GSTR 7 - Return for TDS
Sales Data
Milestones Achieved:
• Co Creation with SAP Labs for changes in R3
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Application
Infrastructure
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You have the Power, It all depends how well you glue it together
To deliver a Beautiful Transformation
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