A Presentation by

Gyanesh Tripathi
Yogesh Kakde
 GST is a tax on goods and services with comprehensive and continuous chain
of setoff benefits from the Producer’s point and Service provider’s point up to
the retailer level.

 GST is expected be levied only at the destination point, and not at various
points (from manufacturing to retail outlets). It is essentially a tax only on
value addition at each stage and a supplier at each stage is permitted to setoff
through a tax credit mechanism which would eliminate the burden of all
cascading effects, including the burden of CENVAT and service tax.

 Under GST structure, all different stages of production and distribution can be
interpreted as a mere tax pass through and the tax essentially sticks on final
consumption within the taxing jurisdiction.

Continued…….
 All goods and services, barring a few exceptions, will be brought
into the GST base. There will be no distinction between goods and
services.

 Under GST, the taxation burden will be divided equitably between

manufacturing and services, through a lower tax rate by increasing
the tax base and minimizing exemptions.

 The existing taxation system will be discontinued. Instead, a new

statute known as IGST will come into place on the inter-state
transfer of the Goods and Services.

 By removing the cascading effect of taxes (CST, additional customs

duty, surcharges, luxury Tax, Entertainment Tax, etc. ),CGST &
SGST will be charged on same price .
 Tax Structure

Direct Tax Indirect Tax

Income Tax Wealth Tax Central Tax State Tax

Entry Tax, luxury

Excise Service Tax Custome VAT tax, Lottery Tax,
etc.
 Tax Structure

Indirect Tax =
Direct Tax GST (Except
customs)

Income Tax Wealth Tax Intra- state Inter State

CGST (Central) SGST (State) IGST (Central)

 •Central Excise

CGST
•Additional duties of Custom (CVD)
•Service Tax
•Surcharges and all cesses

•VAT/sales tax
•Entertainment Tax
•Luxury Tax
•Lottery Tax
•Entry Tax
SGST •Purchase Tax
•Stamp Duty
•Goods and passenger Tax
•Tax on vehicle
•Electricity, banking, Real state

• CST
IGST
 SGST and CGST for intrastate transaction : In the GST system, both Central
and State taxes will be collected at the point of sale. Both components (the
Central and State GST) will be charged on the manufacturing cost. This will
benefit individuals as prices are likely to come down. Lower prices will lead to
more consumption, thereby helping companies.

 IGST for Interstate transaction: ‘IGST Model’ will be in place for taxation
of inter State transaction of Goods and Services. The scope of IGST Model is
that center would levy IGST which would be CGST plus SGST on all inter
State transactions of taxable goods and services with appropriate provision for
consignment or stock transfer of goods and services.

 The GST paid on the purchase of goods and services, to be paid on the supply
of goods and services.

 There should be no distinction between raw materials and capital goods in

allowing input tax credit. The tax base should comprehensively extend over all
goods and services up to final consumption point on value addition.

 Assessable value for all the taxes will be same.

 1.
Manufacturer

5.Government
2. Wholesaler
and Banks
Goods
+
Services

4.Consumer 3.Retailer
 •Input Credit of Goods+ services
Manufacturer •After taking set off of Input credit, pay the Output Liability on value addition

•Input Credit of Goods+ services from manufacturer

Wholesaler •After taking set off of Input credit, pay the Output Liability on value addition

•Input Credit of Goods+ services from wholesaler

Retailer •After taking set off of Input credit, pay the Output Liability on value addition

Consumer • Ultimate Output Liability recovered from consumer

 Since the Central GST and State GST are to be treated separately, in
general, taxes paid against the Central GST shall be allowed to be taken as
input tax credit (ITC) for the Central GST and could be utilized only
against the payment of Central GST. The same principle will be applicable
for the State GST.

 Cross utilization of ITC between the Central GST and the State GST
would, in general, be allowed.

 ADC paid on Import of goods and service would fall under the IGST and
this duty would be allowed for setoff of SGST and CGST.
 Value Net
at Inpu Net SGST
Purc
Stage Which t CGST= =SGS
hase Rate CGS Input
of Valu Supply CGST Tax CGST T on
Valu Rate of T on Tax
Suppl e Goods on Cre on outpu
e of SGS Outp Credi
y Addi and Outpu dit output- t-
Of SGST T ut t on
Chai tion Service t on Input Input
Inpu SGST
n s Made CGS Tax Tax
t
to Next T Credit Credit
Stage
Man 6.5-
13–10
ufact 100 30 130 10% 5% 13 6.5 10 0 0=
=3
urer 6.5
Whol
7.5-
e 15–13
130 20 150 10% 5% 15 7.5 13 6.5 6.5=
Selle =2
1
r
8-
Retai 16–15
150 10 160 10% 5% 16 8 15 7.5 7.5=
ler =1
0.5
 With Constitutional Amendments, both CGST and SGST will be levied on
import of goods and services into the country.
 The incidence of tax will follow the destination principle(Place of supply
rules).
 Tax revenue in case of SGST will accrue to the State where the imported
goods and services are consumed.
 Full and complete set-off will be available on the GST paid on import on
goods and services.
 Thus, import of goods will attract BCD and IGST. It may be noted that
import of services, as against service tax at present, in GST regime, will
attract IGST.
 Basic Custom Duty will continue to there under GST system. However, the
additional custom duty in lieu of CVD /Excise and the Special Additional
Duty (SAD) in lieu of sales tax/VAT will be subsumed in the import GST.
 The import of services will be subject to Central GST and State GST on a
reverse charge mechanism. In other words, the GST will be payable by the
Importer on a self declaration basis.
 It will cover all types of person carrying on business
activities, i.e. manufacturer, job-worker, trader, importer,
exporter, all types of service providers, etc.
 If a company is having four branches in four different states,
all the four branches will be considered as TP (Taxable
person) under each jurisdiction of SGs.
 A dealer must get registered under CGST as it will make
him entitle to claim ITC of CGST thereby attracting buyers
under B2B (Business to Business) transactions.
 Importers have to register under both CGST and SGST as
well.
 GST on export would be zero rated.
 Similar benefits may be given to Special Economic Zones (in
processing zones only).
 No benefit to the sales from an SEZ to Domestic Tariff Area (DTA).
 GST paid by Exporter on the procurement of goods and
services will be refunded.
Pre GST Practice GST

Taxable event is “Supply “ of Goods &

Excise Duty-Manufacturing, service
The location of the supplier and the
recipient within the country is immaterial
Sales Tax/VAT- Sale of Goods for the purpose of CGST.

SGST would be chargeable only when the

Service Tax- Realization of Service supplier and the recipient are both
located within the State.

Inter state Supply of goods and services

will attract IGST.
 The Task Force on GST said the computation of CGST and
SGST liability should be based on the Invoice credit
method. i.e., allow credit for tax paid on all intermediate
goods and services on the basis of invoices issued by the
supplier.
 Invoice level detail is necessary for the reconciliation of tax
deposits, and the end-to-end reconciliation of ITC. An
effective IGST implementation may also require invoice-
level details.
 A number of states are capturing invoice details even in the
existing VAT systems. It is proposed to follow a two-
pronged approach with Dealer level granularity of returns in
the first phase followed by invoice level in the next phase.
 Send Challan
Taxpayer Banks and RBI

File Returns Upload Challan

Details

CBEC
State 1Portal
(Central
Portal)
Common GST State 2 Portal
CGST and Portal
SGST and
IGST Returns (Reconciliation
IGST Return State N Portal
system)

MCA CBDT
NSDL
 The Exporting State will transfer to the Centre the
credit of SGST used in payment of IGST.
 The Importing dealer will claim credit of IGST while
discharging his output tax liability in his own State,
 The Centre will transfer to the importing State the
credit of IGST used in payment of SGST,
 The relevant information will also be submitted to the
Central Agency which will act as a clearing house
mechanism.
 1.Traceability of tax paid
 2. Smooth flow of goods and services across the
borders of the state due to abolition of octroi.
 Saving of fuel wasted during waiting at borders of the
state and faster movement of transport.
 Check on corruption on all the fronts in business.
 Essentially it has facilitated tracking on expenditure as
well as earning of all the stake holders.
 It has brought transparency in business and promoted
ease of doing business in any state or across the
country.

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 Under the CGST model proposed, with threshold of
annual turnover of Rs.10 lakhs, the present Assessee
base of Excise and Service Tax of about 10 lakhs will
increase to about 50 lakhs as every manufacturer and
Trader above the specified threshold will be liable to
CGST.
 Thank you

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