“GST BILL” -THE CONSTITUTION (122 ND Amendment Bill),2014 19.12.2014 BY AJAY MODI Bharuch, Gujarat [email protected] Goods & Service Tax WEF : 1 st April.

“GST BILL” -THE CONSTITUTION (122ND Amendment Bill),2014

19.12.2014

BY AJAY MODIBharuch, Gujarat

[email protected]

Goods & Service Tax

WEF : 1st April 2016

World Bank report “The Doing business 2014”, India’s Rank 134 among 189 country

World Bank report “The Doing business 2014”, India’s Rank 134 among 189 country

140 country in a world has adopted the GST140 country in a world has adopted the GST

MAKE IN INDIATAX IN INDIA

Download- http://taxguru.in

Pre condition for GST implementation

Constitution amendment Bill is required to be passed with two-thirds majority in both Houses of Parliament

Bill will have to be ratified by at least half of India's states

Centre Govt. own GST Bill and model GST Bill States will bring their own GST Bills Model GST Rules State GST Rules Place of Supply of Goods and Services Rules


Constitution amendment requirement

Lok Sabha 2/3 majority Rajya Sabha 2/3 majority out of 29 state 15 state should

ready for GST


ParliamentHouse LOK

SABHARAJYA SABHA

Total

NDA Seat 336 59 395

Total seat 543 243 786

Require Seat for majority

282 122 393Simple

majority

In India, if a bill has been rejected by any house of the parliament and more than six months have lapsed, the President may summon a joint session for passing the bill.

The bill is passed by simple majority of a joint sitting.


NDA Ruling stateSr. State Party

1 Gujarat BJP

2 Maharashtra BJP+SHIV SENA

3 Goa BJP

4 Rajasthan BJP

5 Madhya Pradesh BJP

6 Chhattisgarh BJP

7 Punjab Shiromani Akali Dal

8 Nagaland Nagaland People's Front

9 Andhra Pradesh Telugu Desam Party

10 Haryana BJP

11 Jharkhand BJP

12 Jammu & Kashmir ????


Non-NDA Ruling stateSr. State Party

1 Arunachal Pradesh

2 Assam

3 Bihar

4 Himachal Pradesh

5 Karnataka

6 Kerala

7 Manipur

8 Meghalaya

9 Mizoram

10 Orissa

11 Sikkim

12 Tamil Nadu

13 Telangana

14 Tripura

15 Uttar Pradesh

16 Uttarakhand

17 West BengalDownload- http://taxguru.in

What is GST

The term 'GST' is defined in Article 366 (12A) to mean

"any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption'.

It may be noted that the term 'supply' is not defined or elaborated or qualified (such as supply for a consideration). Thus, it needs to be seen whether even free supply will attract GST.

'manufacture', 'sale', 'provision of services‘, stock transfer, works contract, lease, loan licensee, job work, labour bill, Import, Depot, warehouse, C & F Agent etc. will lose their relevance.


Taxable Event

Tax on supply of goods or services Any person, providing or supplying goods or

services would be liable to charge GST GST is a consumption based levy, Place of

consumption rules Dual GST signifies that GST would be levied by

both, the Central Government and the State, on supply of goods or services

levy GST across the value chain

No C form, E-I, E-II, H form, I form, Road permit, form 402, 403 form

No Check post role


Types of GST & Administration

Sr. Types Admin by whom

1 CGST Central Government - CBEC

2 SGST State Government

3 IGST Central Government – CBEC(inter state transaction)

4 BCD+IGST Central Government – CBEC(Import transaction)


Taxpayer Identification Number

Each taxpayer could be allotted a PAN linked taxpayer identification number with a total of 13/15 digits.

This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance.

The exact design would be worked out in consultation with the Income-Tax Department.


Person based SGST Single entity

for the purpose of SGST ,all production units / branches of a person located anywhere within the state will be treated as a single taxable entity eligible for SGST input credit across units/ branches in that state.


PAN based CGST Single entity

The unit of taxation for the purpose of GST should be persons as defined under the Income Tax ACT.

For the purpose of CGST, all production units/ branches of a person located anywhere in the country will be treated as a single taxable entity eligible for CGST input credit across units /branches.


Assessment, Enforcement, Scrutiny and Audit

would be undertaken by the authority which is collecting the tax, with information sharing between the Centre and the States

Both the State and Centre may also adjudicate jointly to avoid conflicting decisions.

The assessee dealer would be required to pay GST into the specified account of the State/ Centre and file periodic returns separately with the State/ Central Government.


Rates of GST

Sr. Types For

1 Zero rate Export goods & service

2 Revenue-Neutral Rate (RNR)

12% Industrial item (5% CGST and 7% SGST)

3 Standard rate 20% for all other goods

4 concessional rate 10% Necessities and goods of basic importance

5 Special rate 1% Bullion & jewellery

6 Exempted/ nil rated 0% for 91 items

7 1% IGST non vatable A 1% origin based tax to offset the CST loss would be collected by the Union retained by the States. This tax would not be vattable.


GST on services

The principles of Place of Provision of Services would be adapted from the place of supply rules.

The States would be eligible for the SGST part of services consumed within the State which would be an additional revenue for the State

The States are expected to enjoy at least Rs.150,000/- Crores of revenue depending on the intra state consumption of services.


Credit

The person supplying the goods or services is allowed to take credit for taxes paid on supply of goods or services, consequent to which, GST becomes a tax on the value added at the next stage by the dealer

GST would be levied on supply of goods and services and the supplier would be allowed credit for the GST paid on purchases.

Exclusion of alcohol sector could mean that the companies manufacturing alcohol may not be in a position to avail credit of GST paid by them on their procurements.


Classification

The Classification under customs which is based on the harmonised System of Nomenclature would be adopted under GST.


Credit available

Type of purchase Local Interstate ImportedGST incidence on purchase (taxes payable)

CGSTSGST

IGSTBCDIGST

Credit entitled on (with respect to taxes paid)

CGSTSGST

IGST IGST


Credit Cross utilisation

Nature of tax paid on purchase Can be utilized for payment of

CGSTCGSTIGST

SGST

SGSTIGST

IGSTCGSTSGSTIGST

The credit would be seamless except that the credit of CGST paid would not be allowed for set-off against SGST payable and vice versa.


GST Cr./Dr. Example sales 50000000SEZ 10% 5000000GS 70%35000000OGS 20%10000000

Purchase 35000000 70%GS 80% 28000000OGS 20% 7000000

GST PAYMENT SEZ 0% 0GS CGST 12% 4200000 SGST 12% 4200000OGS IGST 24% 2400000

1080000

0

GST CREDIT GS CGST 12% 3360000 SGST 12% 3360000 OGS IGST 24% 1680000 IGST 1% 70000 8470000

PARTICULARSCREDIT DEBIT BALANCE

CGST SGST IGST CGST SGST IGST CGST SGST IGSTGS Purchase 3360000 3360000 33600003360000 OGS Purchase 1680000 1680000 GS sales 4200000 4200000

OGS sales 2400000 -840000 -840000 -720000


Valuation

It is expected that GST would be levied on the transaction value i.e. price actually paid or payable for supply of goods and services.


GST Benefit

Common market for the entire country2% increase in GDP (Gross Domestic Product)Online procedure, simplification in tax complianceReduction in tax evasion, litigationGST rates will be uniform across the countryOne tax rate in one nation theory, 12-16% taxNo distinction between raw materials and capital goods all the credit of taxes paid on purchase of inputs, input services and capital goodsAdvanced version of VATGST would be drawn form the best practices internationallyEnd of "inspector raj" as well as "tax on taxIt will be single most tax reform after 1947


Dis-advantages of GST

Loss to Manufacturing state Profit to consumer state Market loss to un-organised sector 12-16% tax States not willing to give Veto to Union Adoption of huge capacity IT to improve efficiency

and credit states for input credit utilised as taxes collected would be on account of destination state.


CGST - 12%

Present Duty or Tax Percentage

Central Excise Duty 12%

Education Cess 2% of ED

SHE cess 1% of ED

Service Tax 12%

Education Cess 2% of ST

SHE cess 1% of ST

Additional Customs Duty (CVD) (on Import)

12%

Special Additional Duty of Customs (SAD) (on Import)

4%

State Excise Duty 14%

Central Surcharges and Cesses Download- http://taxguru.in

SGST - 12%Present Duty or Tax Percentage (Gujarat)

VAT 5% On Industrial Item15% on other item

CST 2% against C form5 or 15% without C form

Entry Tax 12% Motor Vehicles, Marble or Granite8% Cement, Light Diesel Oil6% Kota Stones16% Naphtha21.6% High Speed Diesel Oil

Purchase Tax 4% for BT, Fuel use

Octroi, LBT 1 or 2%

Luxury Tax

Entertainment Tax (other than the tax levied by the local bodies)

Stamp Duty 3.5 %

Electricity duty

Taxes on lottery, betting and gambling, State cesses and surcharges


IGST – Integrated GST

CGST + SGST = IGST 12 + 12 = 24% 1% extra for 2 year IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services.

Inter-State seller would pay the IGST on value addition after adjusting credit of IGST, CGST and SGST on purchases.

The supplier state would transfer to the Centre the credit of SGST used on payment of IGST.

The success of a good GST would depend heavily on the success of the IGST model.


How GST works


Transaction within state

Basic value charged for supply of goods or services

10,000

Add: CGST @ 10%* 1,000

Add: SGST @ 10%* 1,000Total price charged for local supply of goods or services

12,000

Note: In the above illustration, the rate of CGST and SGST is assumed to be 10% each

The GST for local supplies would be split into SGST and CGST.


Supply from One State to Another


10,000

Add: IGST @ 20%* 2,000Total price charged for interstate supply of goods or services

12,000

Note: In the above example, the rate of IGST is assumed to be 20%

IGST revenue would get distributed to the States


Export


10,000

Add: GST NilTotal price charged for export of goods or services

10,000

In case the supply of goods or services are exported out of India i.e. the place of consumption rules provide that regard the transaction as ‘exported’, then the transaction would be zero rate

The supplier would be allowed to export the goods or services without charging any tax


Import


10,000

Add: BCD @ 10% 1000

Add: IGST @ 24% 2400Total price charged for import of goods or services

13,400

In case the supply of goods or services are exported out of India i.e. the place of consumption rules provide that regard the transaction as ‘exported’, then the transaction would be zero rate

The supplier would be allowed to export the goods or services without charging any tax


Out from GST

(a) petroleum crude; (b) high speed diesel; (c) motor spirit (commonly known as petrol); (d) natural gas; (e) aviation turbine fuel; and (f) tobacco and tobacco products.";

Alcoholic liquor for human consumption

Petroleum goods will be part of the GST but they will be levied at zero rate, implying that the states will continue to levy VAT while Centre will levy excise duty in the initial few years.


Exemption Limit

Uniform State GST threshold of INR 25 Lakhs for both goods and services


Composition scheme

Both the Centre and States are of the same view that there should be a Compounding Scheme for the purpose of GST with an upper ceiling on gross annual turnover and a floor rate with respect to gross annual turnover.

50 lakh of gross annual turnover floor rate of 0.5% across the states.


Definition of “Services”

“Services” defined by proposed new clause (26A) to be inserted into Article 366 “Services” means anything other than goodsThe definition of services being other than goods raises the concern of whether it would also cover Immovable property transactions.


GST Council

All decisions in the Council will require 75 per cent votes.

joint forum of the Centre and the States Chairmanship of the Union Finance Minister Ministers in charge of Finance/Taxation or Minister

nominated by each of the States & UTs with Legislatures, as members

Council will make recommendations to the Union and the States on important issues like tax rates, exemptions, threshold limits, dispute resolution modalities etc.


Compensation to States

some States who are consumer like Kerala would immensely benefit by GST

GST most well to do manufacturing States like Gujarat, Maharashtra, Haryana, Tamil Nadu & Karnataka

others would get a share of the services consumed in the State which is a much bigger proposition (service sector = 59% of GDP)

They would also get a share of the Rs125,000/- of Additional Customs Duty as well as the Special Additional Duty] on imports.


Compensation agreement

Year % of loss

1 100

2 100

3 100

4 75

5 50


Comparison Local sales : Industrial Item

Particulars Present GST

Basic value 1000 1000

Excise duty @12.36% 123.6 0

1123.6 1000

VAT @ 5% / GST 12% 56.18 120

Total Bill 1179.78 1120


Comparison Inter State Sales : Industrial Item



Excise duty @12.36% 123.6 0

1123.6 1000

CST 2% / GST 12% 22.5 120

Total Bill 1146.1 1120

Credit 123.6 120

Net cost 1022.5 1000


Comparison Local sales : Non Industrial Item



Excise duty @12.36% 123.6 0

1123.6 1000

VAT @ 15% / GST 24% 168.54 240

Total Bill 1292.14 1240


Comparison : Import



BCD @ 10% 100 100

1100 0

CVD @ 12% 132 0

1232 0

Ecess+SHE Cess 6.96 0

1238.96 0

SAD 4% 49.56 0

Total Bill 1288.52 0

VAT / CST 0 % , IGST 24% 0.00 240

Total Bill 1288.52 1340.00

Credit of Tax 181.56 240

Net cost 1106.96 1100.00


Comparison : Works contract



Labour 30% 30000

Material 70% 70000

ST on labour @ 12.36% 3708

VAT on material @15% 10500

GST @ 24% 14208 24000

Total Bill 114208 124000


Comparison : Import service / inter state service



ST on labour @ 12.36% 12360

IGST @ 24% 24000

Total Bill 112360 124000


Comparison : Service within state



ST on labour @ 12.36% 12360

CGST @ 12% 12000

SGST @ 12% 12000

Total Bill 112360 124000



“GST BILL” -THE CONSTITUTION (122 ND Amendment Bill),2014 19.12.2014 BY AJAY MODI Bharuch, Gujarat [email protected] Goods & Service Tax WEF : 1 st April.

Documents

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types of gst administration