Download Dr. (CS) Sanjiv Agarwal

RAJASTHAN STATE CONFERENCE
RAJASTHAN STATE CONFERENCE
Theme
New Era of Opportunities for Company Secretaries
Presentation on
Goods and Services Tax
By
Saturday ,
@Jaipur
(UK)
23rd
July , 2016
Dr. Sanjiv Agarwal
FCA, FCS,ACIS
© Dr. Sanjiv Agarwal
1
GOODS AND SERVICE TAX
This Presentation covers :
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•
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•
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•
2
Indian Economy – An Overview
Taxation in India- Power to Tax
Current Tax System/ Structure
GST – Need, Objectives and Basics
Models and Features of Constitution Amendment Bill
New concepts of CGST, SGST & IGST
Credit chain under GST-Input Tax credit
GST- Proposed Legal Framework
Salient features of Model GST Law
Concept of Revenue Neutral Rate (RNR)
Advantages / Disadvantages of GST
Challenges in Implementation of GST
Professional Opportunities in GST
INDIAN ECONOMY – AN OVERVIEW
•
India’s economy is the 7th largest economy in the world and fastest
growing even in today’s global recession.
•
Growth rate @ 7.6% in 2015-16; growth expected > 7.6% in 2016-17
•
May grow > 7 percent in Financial Year 2017
 7.3% as per IMF
 7.5% as per Moody’s
 7.4% as per OECD
•
Global economy had a slower growth @ 3.1% in 2015
•
Service sector growth @ 9%
•
Tax – GDP ratio at 10.7% in 2016 and pegged at 10.8% in 2017 ;
almost flat in last 5 years
3
TAX-GDP RATIO AT A GLANCE
4
GDP GROWTH RATES AT A GLANCE
5
INDIAN ECONOMY – AN OVERVIEW
•
Growth driven by domestic demand
•
Disposable incomes, food, lifestyle – growth triggers
•
Central Excise(40%), Customs(30%) and Service tax(30%) are major
contributors of Indirect Taxes
•
Tax revenue growth in 2016 @17percent, pegged at 11.7% in Financial
Year 2017
•
Agriculture, services and industry are 3 major sectors
•
Services play a major role in GDP with manufacturing sector still at 17%
despite Make in India
•
Sectors where growth is faster than the economy itself – financial
services, communication, hospitality, professional services etc.
6
SHARE OF SERVICES IN GDP
7
TAXATION IN INDIA - POWER TO TAX
•
•
Taxation governed by Schedule VII of Constitution of India
India has a three- tier federal structure to levy and collect taxes
 the Union Government,
 the State Governments including urban/rural local
bodies
 Concurrent List
•
•
•
•
8
Presently goods are liable to VAT/ Excise / Customs duty while
taxable services attract service tax.
Certain transactions subject to both - VAT and Service tax
Efforts being made to revamp the direct tax structure - (Wealth
Tax Act, 1957 scrapped, Committee working on the same)
Efforts to bring in a single indirect tax – GST proposed
TAXONOMY OF INDIAN TAXATION
TAXATION POWERS OF UNION
• Income Tax (1961)
•
•
•
•
•
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9
Excise Duty (1944)
Custom Duty (1962)
Service Tax(1994)
Central Sales Tax(1956)
Stamp Duty
Specified Cesses
–
–
–
–
–
–
-
on income, except agricultural
income
on goods manufactured
on imports
on specified services
on inter-state sale of goods
on 10 specified instruments
on specified items
TAXONOMY OF INDIAN TAXATION
TAXATION POWERS OF STATES
VAT / Sales Tax
Stamp Duty
Tax
Toll Tax
Specified Cesses
Other Taxes
10
-
on sale of goods, other than newspapers
on other than 10 specified instruments
on agricultural income
on utilities
on specified items
on
– Land and buildings
– Entry of goods in local Area (Entry Tax or
Octroi)
– Consumption or sale of electricity, Vehicles
– Luxuries including taxes on entertainment,
Betting and gambling, Alcoholic Liquor,
Narcotic Drugs and Opium
PRESENT INDIRECT TAX STRUCTURE
IN INDIA
11
Indirect Taxes : Budget Estimates
(Rs. in crores)
2015-16 (RE)
2016-17 (RE)
Excise Duty
284142
318670
Service Tax
210000
231000
Customs Duty
209500
230000
SBC
3750
10000
KKC
-
5000
Clean Energy Cess
-
26148
Infrastructure Cess
-
3000
13 Cesses yielding < Rs. 50 crore scrapped (EC, SHEC, Salt, Mica, Iron, Mangeese,
Chrome Ore, Lime Stone & dolomite, Cine workers, Textiles etc).
12
INDIRECT TAX REVENUE – AT A
GLANCE
13
DRAWBACKS OF CURRENT TAXATION
SYSTEM
•
Confusion / lack of clarity / interpretational issues
•
Lack of trust between assessee and revenue – Valuation/
Classification/ Exemption
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Complexity and lack of consistency in provisions
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Hidden tax on exports, no state tax on imports
•
Cascading effect
•
Narrow assessee base
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High transaction costs
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High compliance costs
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Too much of litigation and disputes
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Lack of harmony and varying inter - state practices :
Turnover/Exemption
•
14
Corruption
RECENT IMPROVEMENTS IN TAX
STRUCTURE
•
Replacement of the single-point State sales taxes by the VAT in all
of the States and Union Territories.
•
Gradual reduction in the Central Sales Tax rate (will be scrapped
in GST regime)
•
Introduction of service tax by the Centre and
expansion of its base over the years.
•
15
Rationalization of the Cenvat credit system
•
Electronic platform
•
Self regulatory tax regime-Self Assessment
•
Dispute resolution measures (VCES,2013; IDRS,2016)
substantial
What is Goods
‘Goods’ as defined in clause (25) of the section 65B of Finance Act,
1994 means –
•
every kind of movable property other than actionable claim and
money;
•
and includes securities, growing crops, grass, and things attached to
or forming part of the land
•
which are agreed to be severed before sale or under the contract of
sale
(Defined differently for GST)
16
What is Service
Prior to 01.07.2012
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The term ‘Service’ was not defined in erstwhile law (upto 30.6.2012)
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The term ‘taxable service’ was defined under Section 65(105)
•
Each taxable service and definitions related to meaning of service
were defined [Clause (a) to (zzzzw)]
•
Around 120 definitions were in place
•
W.e.f. 1.7.2012, ‘service’ has been defined in Section 65B(44)
17
What is Service
W.e.f 01.07.2012
‘Service’ defined in clause (44) of the section 65B of Finance Act,
1994 and means –
• any activity
• For a consideration
• carried out by a person for another and
• includes a declared service (66E)
18
Concept of Taxability of Service
E: Employee
M: Money
A: Actionable claim
G: Goods
I: Immovable property
C: Court Fee
E - MAGIC TEST
1. Non Taxable
territory
(POPS)
2. Negative
list (15)
3. Exemptions
(63)
Taxable
19
10 DECLARED SERVICES
SERVICE FOR A CONSIDERATION
What is GST ?
A common tax
on
Goods
20
Services
What is GST ?
‘G’ – Goods
‘S’ – Services
‘T’ – Tax
•Goods and Service Tax (GST) is a comprehensive tax.
•GST is an indirect tax in lieu of tax on goods (excise) and tax on service
(service tax).
•GST is just like State level VAT which is levied as tax on sale of goods.
•GST will be a national level value added tax applicable on goods and
services.
• GST is a tax on goods and services with value addition at each stage
having comprehensive and continuous chain of set-of benefits from the
producer’s/ service provider’s point up to the retailer’s level where only
the final consumer should bear the tax.”
21
WHY DOES INDIA NEED GST
•
No free Inter- state trade & commerce
•
Suffers from discriminatory taxes ,
undue preferences , trade and
non - trade barriers , entry tax , octroi and check posts .
•
A complex tax structure with multiple rates of taxes - Multiple taxes
across the supply chain
•
As a developing country, India needs a transparent & unambiguous
tax policy / tax structure-to take reforms forward
•
Fewer and lower taxes would actually yield more revenue rather than
having stiff taxes coupled with tax evasion
•
GST will operate on a negative list i.e. all goods and services will be
subject to GST unless specifically exempted
22
WHY DOES INDIA NEED GST
•
Increased tax collections due to wider tax base and better compliance
•
GST encourages an unbiased tax structure that is neutral to business
processes, business models, organization structure, product substitutes
and geographical locations
•
High transaction cost in the hands of the tax payers/ businesses
•
Improvement in international cost competitiveness of indigenous goods
and services.
•
Enhancement in efficiency in manufacture and distribution due to
economies of scale
•
To be used as a weapon against corruption
contd. . .
23
WHY DOES INDIA NEED GST
•
Nature of complexities i.e. classification to valuation , taxability, place of supply
etc exist in the present structure.
Some of such burning issues are:
 Excise on MRP
 Excise, VAT and Service Tax on IT Software,
 VAT & Service tax on:
Works Contracts
Right to Use
Composite Contracts such as AMC transactions
Restaurant Services
IPR Services
• Export of Services
• Issues in Cenvat Credit
contd. . .
24
WHY DOES INDIA NEED GST
Cascading Effect
• Multiple taxes
• No inter-tax set off
• Even no set-off in some taxes
• Tax on Tax
• Increased cost of products / services
• Higher compliance costs
• In GST, many taxes will get subsumed and tax cascading will
be eliminated on credit of inward taxes across the board
25
WHY DOES INDIA NEED GST
Cascading Effect
• Central Sales Tax (CST) on inter-state sales, collected by the origin
state for which no credit is allowed by any level of government –
being phased out now
• Real estate transactions kept outside the scope of both VAT and
CENVAT
• Exempt sectors are not allowed to claim any credit for the CENVAT
or the service tax paid on their inputs
26
MOVING TOWARDS GST
27
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THE CONSTITUTIONAL AMENDMENT BILL,
2014
(Pending in Rajya Sabha)
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Enables introduction of GST
GST defined
Service defined
Integrated GST
Inter-state sale of goods to attract additional tax
Import of goods / services
Alcohol for human consumption
Petroleum products and tobacco
Role of GST Council
Compensation to States
KEY FEATURES OF CONSTITUTIONAL
AMENDMENT BILL
122nd Amendment Bill introduced in LS on 19.12.2014
– Concurrent jurisdiction for levy of GST by the Centre and the
States –proposed Article 246A
– Authority for Centre to levy & collection of IGST on supplies in
the course of inter-State trade or commerce including imports –
proposed Article 269A
– Authority for Centre to levy non-vatable Additional Tax – to be
retained by originating State
30
GST AS PROPOSED
NEW DEFINITIONS
•
•
•
•
•
31
“Goods and services tax” means any tax on supply of goods, or
services or both except taxes on the supply of the alcoholic liquor for
human consumption. [Proposed Article 366(12A)]
To be extended to crude, diesel, petrol, natural gas and ATF from a
date to be notified on recommendation of the GST Council
“Goods” includes all materials, commodities, and articles. [Existing
Article 366(12)]….inclusive definition
(Concept of ‘excisable goods’ to go )
“Services” means anything other than goods. [Proposed Article
366(26A)]…depends upon definition of goods
Supply defined in Section 3 of Model GST Law
Objectives of GST
•
Main objective of Goods & Service Tax(GST) would be to eliminate the
cascading effect of taxes on production and distribution cost of goods
and services.
•
The exclusion of cascading effect i.e. tax on tax will significantly
improve the competitiveness of original goods and services in market
which leads to beneficial impact to the GDP growth of the country.
•
It is felt that GST would serve a superior reason to achieve the
objective of streamlining indirect tax regime in India which can remove
cascading effect in supply chain till the level of final consumers.
32
THE GENESIS OF GST
Tax on
Services
Tax on
Goods
GST
Central
GST
(CGST)
33
Inter
State GST
(IGST)
State
GST
(SGST)
FEATURES OF GST
•
•
•
34
Dual GST will comprise –
 The Central GST and the State GST
 Central GST and State GST, in themselves, would comprise
both the goods tax and the services tax
 Both taxes to operate in parallel and to apply on every
transaction
 Supply of goods/services to be the taxable event (not on
manufacture/sale/provision)
 Rules for determining the place and time of supply of goods and
services to be formulated
Both Central GST and State GST leviable on intra-State supply of
goods and services
Integrated GST or IGST (an aggregate of Central GST and State
GST) leviable on inter-State supply of goods and services and
Imports
PROPOSED MODEL OF GST
35
FEATURES OF GST
•
•
Exports to be zero rated, with benefit of refund of input taxes
Integrated GST (IGST) mechanism proposed for cross border
transactions (imports)
•
Basic Customs Duty to continue in the existing form
•
Counter-veiling Duty (CVD) and the Additional Duty of Customs
(ACD) currently levied on imports as part of customs duties to be
replaced by Integrated GST
36
FORM OF PROPOSED GST
Multiple
Statutes
Intra State
Supply
Inter State
Supply
One for CGST at Centre
One in each State for SGST
 Dual GST: Centre (CGST) and the States (SGST) concurrently levying and
collecting the tax
 Integrated GST i.e. IGST (CGST+SGST) on supplies in the course of interstate trade or commerce to be levied and collected by the centre
 1% additional tax by centre (for originating state for 2 years (extendable))
 Imports deemed to be supply in the course of inter-state trade or commerce
37
ILLUSTRATION OF GST
38
INDIRECT TAXES PROPOSED TO BE
SUBSUMED IN GST
39
TAXES WHICH MAY NOT BE SUBSUMED IN
GST
Central Taxes/Levies
State Taxes/Levies
Basic Customs Duty
Taxes on Liquors
Excise Duty on Tobacco
products
Export Duty
Toll Tax/ Road Tax
Specific Central Cesses (eg, Oil
Cess)
Taxes on petroleum products
Property Tax
Stamp Duties
Environment Tax
Tax on Consumption or Sale of
Electricity - Not certain
Stamp Duty - Not certain
Purchase tax on food grains
Taxes on motor spirit & high speed
diesel
40
DESTINATION BASED CONSUMPTION TAX
- CONSEQUENCES
41
Basics of GST
Proposed Indirect Tax Structure
Intra State
Taxable
Supply
Excise and
Service Tax
will be known
as CGST
Local VAT &
other taxes
will be known
as SGST
Inter State
Taxable
Supply
CST will be
replaced by
Integrated
GST (IGST)
Approx. Sum
total of CGST
and SGST
Custom Duty
In place of
CVD and SAD,
IGST will be
charged
Import From
Outside
India
42
CENTRAL GST (CGST)
•
CGST on both , goods and services
•
To be levied , controlled and administered by Union .
•
Levied by the Centre through a separate statute on all transactions of
goods and services made for a consideration.
•
Exceptions would be exempted goods and services, goods kept out of
GST and transactions below prescribed threshold limits.
•
CGST would be levied across the value chain.
•
Rates for CGST would be prescribed appropriately reflecting revenue
considerations and acceptability.
•
Two Governments will combine their various levies into single GST.
•
Proceeds to be shared between Centre and States .
43
STATE GST (SGST)
•
Levied by the States through a statute on all intra-state
transactions of goods and services made for a consideration.
•
State GST would be paid to the accounts of the respective State.
•
Exceptions would be exempted goods and services, goods kept out
of GST and transactions below prescribed threshold limits.
•
Basic features of law such as chargeability, taxable event, measure,
valuation, classification would be uniform across these Statutes /
States as far as practicable.
44
Integrated GST ( IGST )
•
On inter-state and cross border transactions
•
Centre would levy and collect IGST in lieu of CGST and SGST.
•
To be shared between Centre / States
•
Single IGST rate
•
IGST would be levied on all inter-State transactions of taxable
goods and services with appropriate provision for consignment or
stock transfer of goods and services.
•
Inter-State dealer will pay IGST after adjusting available, input
IGST, CGST and SGST on purchases.
45
Contd….
Integrated GST ( IGST )
•
The seller in State - A will pay the IGST to the Centre.
•
While paying IGST, the seller will adjust against available credit
of IGST, CGST and SGST.
•
State Government - A will transfer the credit of SGST used by the
seller for payment of IGST to the Centre.
•
Buyer in State - B can avail credit of the IGST charged.
•
Buyer in State - B can use the IGST to discharge output tax
liability in his own State.
•
Centre will transfer credit of IGST used for payment of SGST to
State Government - B.
Contd…
46
IGST – ILLUSTRATION
•
•
•
•
•
•
•
47
Maharashtra seller selling to Karnataka buyer for Rs.1,00,000/-.
IGST payable assuming an 8% rate is Rs.8,000/-.
Rs.8,000/- can be paid by adjusting
– Inter-State purchases (IGST) Rs.3,000/– Local purchases (CGST) Rs.1,500/– Local purchases (SGST) Rs.1,500/– Cash payment of Rs. 2000/Since dealer has used SGST of Maharashtra to the extent of
Rs.1,500/-, Centre has to transfer Rs.1,500/- to Maharashtra
Government.
IGST of Rs.8,000/- is availed as credit by Karnataka buyer.
Karnataka dealer sells the goods at Rs.2,00,000/- attracting CGST of
say Rs.16,000/- and SGST of Rs.16,000/-.
If IGST of Rs.8,000/- is used to pay the SGST then Karnataka
Government has to transfer Rs.8,000/- to the Centre.
CREDIT CHAIN UNDER GST –
INPUT TAX CREDIT (ITC)
48
CREDIT CHAIN UNDER GST –
INPUT TAX CREDIT (ITC)
49
CREDIT CHAIN UNDER GST
TO BE
OFFSET IN
SAME
ORDER
CENTRAL GST
CREDIT
STATE GST
CREDIT
INTEGRATED GST
CREDIT
1
Central GST Liability
State GST Liability
Integrated GST Liability
2
Integrated GST Liability
Integrated GST Liability
Central GST Liability
3
_
State GST Liability
Entities may need to maintain Separate IGST Credit Chain for each
State individually
Additional 1% tax is also not Cenvatable
50
CENVAT CREDIT MATRIX
51
TAX TYPE
(INPUT)
TAX TYPE
(OUTPUT)
WHETHER
POSSIBLE
RANKING
CGST
CGST
YES
1
CGST
SGST
NO
N.A
CGST
IGST
YES
2
SGST
CGST
NO
N.A
SGST
SGST
YES
1
SGST
IGST
YES
2
IGST
IGST
YES
1
IGST
CGST
YES
2
IGST
SGST
YES
3
GST Draft Law – Things you must know
•
GST applicable on ‘supply’
•
GST payable as per time of supply
•
Determining Place of Supply could be the key
•
Valuation in GST
•
Input tax credit in GST
•
Inter-State supply of goods for consideration to attract additional
tax
•
There would be 33 GST laws in India
•
Rate of GST is not yet specified in the draft GST law
52
GST DRAFT LAW-MEANING OF SUPPLY
Supply of goods or services shall include :
•
•
•
•
53
lease or disposal, and
Importation of services
Supply as per Schedule-I (supply without consideration)
In relation to 'supply' for the purpose of GST, following points may
be noted • supply shall be goods and / or services
• supply should be made or agreed to be made
• supply should be for a consideration
• supply should be made by person
• supply should be made in the course of or furtherance of business
• supply shall include importation of service, irrespective of whether
for consideration or not and whether in the course of or
furtherance of business or not.
• supply shall include supply as per Schedule-I made without a
consideration
GST DRAFT LAW-MEANING OF SUPPLY
Matters to be treated as supply without consideration (Schedule I)
•
•
•
•
•
•
Permanent transfer/disposal of business assets.
Temporary application of business assets to a private or nonbusiness use.
Services put to a private or non-business use.
Self supply of goods and/or services.
Assets retained after deregistration.
Supply of goods / services by a taxable person to another
taxable or non-taxable person in the course or furtherance of
business.
54
SALIENT FEATURES OF MODEL GST LAW
•
The Model GST law consists of:
•
162 + sections divided into 25 Chapters along with 4 schedules
•
Rules relating to Valuation under GST
•
Draft Integrated GST Act (IGST) consisting of 33 sections divided
into 11 Chapters.
•
Different dates may be appointed for different provisions of this
Act
55
SALIENT FEATURES OF MODEL GST LAW
•
All forms of 'supply' of goods and services such as sale, transfer,
barter, exchange, license, rental, lease and import of services of
goods and services made for a consideration within the state will
attract CGST (central levy) and SGST (state levy).
•
On inter-state supply of goods, IGST shall be applicable.
•
GST would be applicable on 'supply' of goods and services.
56
SALIENT FEATURES OF MODEL GST LAW
Key Features of the Model GST
•
Eligibility to Register
If the aggregate turnover of a dealer is over Rs. 9 lakh/annum, it is his/her
duty to get registered under this law. The cap for dealers in the North-east is
Rs. 4 lakh.
•
Taxable Person
The person registered under this law is only liable to pay tax if his aggregate
turnover in a financial year is over Rs. 10 lakh. Such a cap for the North-east
is Rs. 5 lakh.
•
Place of registration
The place of registration should be place from where the goods or services
are supplied. This helps with virtual marketplaces, mainly e-commerce.
•
Migration of existing taxpayers from GST
Every person already registered under the extant law will be issued a
provisional certificate of registration. This certificate shall be valid for a
period of six months, giving time to make the changes in their model and
furnish the required information, before the final certificate is provided.
57
SALIENT FEATURES OF MODEL GST LAW
Key Features of the Model GST
•
GST compliance rating score
Every taxable person shall be assigned a GST compliance rating score. The GST
compliance rating score shall be updated periodically and intimated to the taxable
person. This will be a part of public domain.
•
Taxable Event
Supply activities such as sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made for consideration are all taxable events.
•
TDS
When the total value of a contractual supply exceeds Rs. 10 lakh, the individual
Departments may be required to deduct the taxes at source.
•
TCS on online sales of goods & service
All e-commerce establishments should collect tax at the time of credit/payment.
The amount should be deposited to the respective state government, within ten
days of the end of the month in which the product/service was supplied.
58
SALIENT FEATURES OF MODEL GST LAW
Key Features of the Model GST
•
Valuation Rules
Valuation Rules shall apply to the supply of goods and/or services under the
IGST/CGST/SGST Bill
•
Returns
Dealers shall be required to furnish monthly / annually / final returns as the case
may be. These returns are for different periods / or frequencies / at intervals.
•
Refund
A person can claim refund of any tax and interest by making an application in
that regard to the prescribed officer of IGST/CGST/SGST within two years.
•
Payment
Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using
credit/debit cards or NEFT or RTGS. This amount shall be credited to the
electronic cash ledger of dealer.
•
Transitional provisions
These will ensure smooth migration to GST.
59
IT PLATFORM FOR GST
Objectives of GSTN
•
•
•
•
•
60
Integration of the common GST Portal with the existing tax
administration systems of the Central/State governments and other
stakeholders.
Provide common PAN based registration, enable returns filing and
payment processing for all states on a shared platform.
Facilitation, implementation and set standards for providing services to
the taxpayer through common GST portal State Governments and other
stake holders;
Build efficient and convenient interfaces between with tax payers to
increase tax compliance;
Carry out research, study best practices and provide training to the
stakeholders.
REVENUE NEUTRAL RATES (RNR)
Recommendation of GST Rates Committee
•
Revenue Neutral Rate (RNR) refers to that single rate, which
preserves revenue at desired (current) levels.
•
No revenue loss to exchequer
•
It is a given single rate that gets converted into a whole rate
structure.
•
Committee has chosen to recommend a range for the RNR rather
than a specific rate.
61
Contd…
REVENUE NEUTRAL RATES (RNR)
Recommendation of GST Rates Committee
62
•
Recommended the Revenue Neutral Rate (RNR) in the range of 15
percent to 15.5 percent (combined rates for centre and states)
•
Rate which will give at-least the same level of revenue, which the
Centre and States are presently earning from Indirect taxes.
•
Committee recommends a two-rate structure –
 Lower rates - around 12 per cent (Centre plus states)
 Standard rates - between 17 and 18 per cent
•
States want higher RNR but it may not be desirable
LIKELY RATE OF GST
63
18%
16%
27%
13th Finance Commission
Revenue Neutral Rate (RNR)
Talked about (Suggested by NIPFP)
16%
18%
??
Ideal rate as per Industry
Rate suggested by Council
Actual Rate to be decided by GST Council
(Select Committee has recommended a
band )
REVENUE NEUTRAL RATES (RNR)
Summary of Recommended Rate Options (in percent)
RNR
Rate on
"Low" rate (goods)
"Standard"
"High/Demer
precious
rate
it" rate or
metals
(goods and
Non-GST
services)
excise
(goods)
Preferred
Alternative
64
15
15.5
6
12
16.9
4
17.3
2
17.7
6
12
18.0
4
18.4
2
18.9
40
40
ADVANTAGES OF IMPLEMENTATION OF
GST IN INDIA
•
•
•
•
•
•
•
GST is expected to drive consumption led growth with less tax burden
on consumers.
GST is expected to contribute to 'make in India' and 'ease of doing
business in India' initiatives of the Government.
GST addresses the issue of multiplicity of taxes.
All the rates under to GST will be uniform and the place of supply rules
will guide the GST India portal to apportion the tax.
It will boost up economic unification of India; it will assist in better
conformity and revenue resilience; it will evade the cascading effect in
Indirect tax regime.
Elimination of cascading effect.
It will reduce the tax burden for consumers. In 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.
Contd…..
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ADVANTAGES OF IMPLEMENTATION OF
GST IN INDIA
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•
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•
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It will result in a simple, transparent and easy tax structure.
It will result in a good administration of tax structure;
It may broaden the tax base;
It will increase tax collections due to wide coverage of goods and
services.
It will result in cost competitiveness of goods and services in Global
market.
It will reduce transaction costs for taxpayers through simplified tax
compliance.
It will result in increased tax collections due to wider tax base and
better conformity.
BENEFITS TO ASSESSEES
• Reduction in multiplicity of taxes
• Mitigation of cascading / double taxation
• More efficient neutralization of taxes especially for exports
• Development of common national market simpler tax
regime
• Fewer rates and exemptions
• Conceptual clarity (Goods Vs. Services)
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BENEFITS TO EXCHEQUER/GOVT
• Simpler Tax System
• Broadening of tax base
• Improved compliance & revenue collections (tax booster)
• Efficient use of resources
• Curb on revenue leakage
• Because of tax credit , cash transactions will be less
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How proposed GST will be better than
existing Taxes?
•
Dual model GST under federal structure i.e. CGST & SGST
•
Elimination of cascading effects of the taxes
•
CGST & SGST will be charged on same price
•
Set-off relief fully captured
•
Destination based tax structure
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Free movement of goods & service through out the country
•
Applicable to all transactions of Goods & Services with some
exceptions
Contd…..
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How proposed GST will be better than
existing Taxes?
•
Input tax credit (ITC) for the CGST/SGST could be utilized for
payment of CGST/SGST, but cross utilization not allowed, except
IGST
•
Inter State GST (IGST) –New model for Inter-state transactions
•
Refund for unutilized ITC will be discouraged
•
Threshold limits may be on higher side
•
Common Returns formats for CGST & SGST
•
States will be empowered to Tax Services
•
It will also improve the International cost competitiveness of native
Goods and Services.
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LIKELY DISADVANTAGES OF GST
•
Total GST rate may be higher
•
Vote weightage of States will be linked to population rather than any
economic criteria. Census is done once in 10 years.
•
Discrimination (1 percent additional tax)
•
May not be efficient for sectors like banking, tourism, advertisement,
business promotion etc.
•
Education, tourism etc will also not benefit but contribute more to
taxes
•
Dispute resolution going to be tough with poor governance. Disputes
in GSTC to be resolved by GSTC only
•
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Small states may remain aggrieved.
GST - CHALLENGES
•
GST : Game changer or name changer
•
Everyone agrees that GST is necessary but cannot agree on scope form
and content of GST
•
No one tries to understand enormity of GST – from financial accounting
to tax impact to supply chain to business models IT infra (ERP) etc.
•
Should subsume all taxes, surcharges, cesses, levies and royalties
•
Confusion on what taxes would continue alongside GST
•
GST ought to apply to all goods and services with nil or very few
exemption / exceptions
•
Legislative challenges
•
Political matrix
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GST - CHALLENGES
•
What happen to all check posts / entry barriers / staff ? Will these be
dismantled / relocated ?
•
IT Infrastructure - Is IT backbone fully ready and in place
•
Treatment of accumulated fiscal benefits
•
Additional
tax
of
upto
1
percent
for
inter
state
trade
for
manufacturing states will create distortions
•
Dispute resolution mechanism still fragile – Council to decide
•
GST may create inflationary pressure in first few quarters as costs to
be passed on to customers
•
Rapid increase in assessee
•
Place of supply to hold the key to success of GST
•
Effective credit mechanism
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INDUSTRY’S PERSPECTIVES & CONCERNS
•
All declaration forms (Form F, C) should be abolished
•
Monitoring through system based controls
•
Full set-off of Input tax credit to the assessee / entity, based on principle of
business cost and expenditure
•
Immediate credit of stock transfers, without one-to-one co-relation.
•
Refunds, if any, should be automatic through system based controls. Full
set-off : a question mark
•
Any change post implementation should be uniform by all states not
piecemeal.
•
Bar on increase in rates, imposition of new taxes by states
•
Uniform legislation, forms, rules, rates, compliance requirements.
•
Set-off should be on entity / concern basis.
•
Building of IT backbone
•
Multiple state jurisdictions.
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TRADER’S PERSPECTIVES & CONCERNS
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Dialogue with Trade & Industry and all other stake holders
•
Industrial inputs, Capital goods to be at lower rate
•
List of exempted goods – specific/common across states
•
Stock transfers should be exempted
•
Monitoring through system based controls
•
Lesser paper work/compliances
When GST will Come ???
•
The GST will come into force once the 122nd Constitutional
Amendment Bill is passed by Parliament
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•
Enacted into an Act when 50 percent of the states ratify it.
•
GST Act to be legislated by Union
•
GST Act to be legislated by States
•
IGST Act to be legislated by Union
•
Rules to be framed
•
GST to be implemented from a common notified date ??
Professional Opportunities in GST
Professional Practice
Areas(planning,
compliances)
Advance Ruling
Representation
Employment with
Corporates- dealing
with Indirect taxes
Advisory Services
Professional
Opportunities in
GST
Representation in
Tribunals / Courts
Client
Retainerships for
Compliances
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GST awareness
Knowledge
Management &
Training
Role of Professionals
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•
•
•
•
•
•
For Tax planning
Audit of books of Accounts/Compliance Audit
Tracking GST development
Review of draft legislation and impact analysis
Industry Consultation for improvement in business process
Interpretation of legal provisions and procedures
•
•
Implementation assistance and Post implementation support
Developing systems and procedures/MIS
•
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Advisory and consulting services
Certification Works
Procedural Compliances
Record Keeping
Return verification/filing of returns
Negotiations with Suppliers
Representations before Authorities
Appellate Work
Providing opinions / clarifications
Due diligence on revenue leakages/ cenvat
Role of Professionals
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GST KNOWLEDGE – IN THE OFFING
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GST KNOWLEDGE – IN THE OFFING
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GST-Background, Concepts and overview
GST Models Across the world and GST model for India
Brief Comments on First discussion Paper on GST and report of
Thirteenth Finance Commission on GST
Principles of GST law
Procedural Aspect under GST Registration, Payment, Returns,
Assessment, Revision etc.
Transition to GST-Likely challenges and way forward
Information Technology Infrastructure and GST
GST Audit
Impact of GST
Decoding of 122nd Constitutional Amendment Bill, 2014
Issues of compensation to States for Central Sales Tax (CST) phasing
out
ICSI INITIATIVES IN THE PAST
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Background material / literature on GST
Specialized course on Indirect Tax
Series of webinars held in May / June 2016
Core group constituted on GST
GST corner feature started in chartered secretary journal
August issue of journal deducted to GST
GST being emphasised in all major programmes
Next series of webinars in the offing.
“Absorb what is useful ,
discard what is not ,
add what is uniquely your own .”
-Bruce Lee
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THANK YOU
FOR
YOUR
PRECIOUS TIME
AND
ATTENTION
Dr. Sanjiv Agarwal
FCA, FCS, Jaipur
[email protected]
[email protected]
www.gstcounsellor.com
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