Download Understanding the Goods and Services Tax (GST) Reform in India and more Slides Law in PDF only on Docsity! GST - GOODS AND SERVICE TAX Docsity.com GST - GOODS AND SERVICE TAX 1/23/2013 Prof. Navin Shrivastava 2 GST will replace present set of Union, state and local level levies with one single rate for both goods as well as services. This rate will be inclusive of the share of the Union as well as state and local governments. Docsity.com WHAT IS GST 1/23/2013 Prof. Navin Shrivastava 5 The goods and services tax (GST) is a comprehensive value- added tax (VAT) on goods and services. France was the first country to introduce this system in 1954. Through a tax credit mechanism, GST is collected on value- added goods and services at each stage of sale or purchase in the supply chain. GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respects, GST is like a last-point retail tax. Docsity.com WHAT IS GST contd… 1/23/2013 Prof. Navin Shrivastava 6 Many countries have a unified GST system. However, countries like Brazil and Canada follow a dual system wherein GST is levied by both federal and state or provincial governments. In India, a dual GST is being proposed wherein a central goods and services tax (CGST) and a state goods and services tax (SGST) will be levied on the taxable value of a transaction. The central and state governments are discussing the GST system proposed to be implemented in India from April 1, 2010.Representing the states in the discussions is the empowered committee of state finance ministers Docsity.com GST: KEY FEATURES 1/23/2013 Prof. Navin Shrivastava 7 Dual GST: Central GST & State GST Destination based State GST Common Base, Classification & Forms No cascading of Central and State taxes Cross credit not allowed Tax levied from production to consumption Export and SEZ (processing zone) zero rated (excluding supply to DTA) Docsity.com DUAL GST MODEL 1/23/2013 Prof. Navin Shrivastava 10 In Duel GST model following tax will be applicable: Federal GST on Goods State GST on Goods Federal GST on Services State GST on Services Docsity.com PROPOSED GST RATES 1/23/2013 Prof. Navin Shrivastava 11 2 Rate structure: Lower and Standard Rate Precious metals and stones very low rate GST Exemption for some items (less than 100) Some Goods at lower rate (excludes Ind. inputs) 3 Petroleum products, liquor and narcotics excluded from GST regime Single tax rate for services Docsity.com INDICATIVE GST RATES 1/23/2013 Prof. Navin Shrivastava 12 Exempted products: Food Grains, Bread, Salt, Milk, Vegetables, Meat, Fish, Goods at lower rate: Tea, Milk powder, Coffee beans, Toy, Beedi, Bicycles Docsity.com FAVOURABLE IMPACT ON INDUSTRY 1/23/2013 Prof. Navin Shrivastava 15 Seamless credit to trade and industry throughout supply chain will improve competitiveness Common Tax Base will eliminate tax cascading CST phase-out will reduce supply chain cost Economy in production scale & efficiency in distribution Simplified structure to reduce transaction cost Docsity.com COST INCREASE IN CERTAIN SECTORS 1/23/2013 Prof. Navin Shrivastava 16 Increased tax incidence on distributive trade and services (duel GST) Increased tax incidence on infrastructure due to non availability of tax credit Continuing electricity duty, entertainment tax & Cess will adversely affect some sectors due to double taxation Impact on certain products due to rate increase Docsity.com THANKS 1/23/2013 Prof. Navin Shrivastava 17 Docsity.com
