Goods & Services Tax

“One Nation
One Tax”
The Journey to GST

First Discussion Paper The Constitution (122nd

was released by the Amendment) Bill was introduced in
Empowered Committee the Lok Sabha
2006 2011

Announcement of GST for the first time was 2009 Constitution (115th Amendment)Bill 2014
made by the then Union Finance Minister, The Constitution (One
introduced and subsequently lapsed
during budget of 2006-07 that it would Hundred and First
introduced from 1 April 2010 Aug
Amendment) Act was
2016 enacted
May April March Sep
2017 2017 2017 2016

GST Council CGST, IGST, UTGST and GST Council Recommends 1st GST Council
recommends Compensation Cess Acts the CGST, SGST, IGST, Meeting
all the rules passed UTGST and Compensation
All States
Cess Act
except J&K
passed their 30th June 2017
SGST ACT
• Notifying and amending rules
1st July2017 8th July2017 • Dealing with IT related issues
• Revision of Rates
• Clarification and
GST Launched SGST Act passed by J&K; CGST and IGST communication with taxpayers
Ordinances promulgated to extend GST to J&K
True Economic Integration of India

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GST Law from a Constitutional Perspective (1/2)
Article 366(12A) Definition of GST
“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

Sl No Definition Article Definition

1. Goods 366(12) Includes all materials, commodities, and articles [Pre Existing Definition]
2. Service 366 (26A) Anything other than goods [Introduced vide 101st Constitutional Amendment
Act]
3. State 366(26B) With reference to articles 246A, 268, 269,269A and Article 279A includes a
Union territory with Legislature. [Introduced vide 101st Constitutional
Amendment Act]

“Goods and Services tax” law while having unique principles, has significant elements of prior Central
and State laws; and is also inspired by VAT/GST legislation of EU, Australia, Malaysia etc. along with
International VAT/GST guidelines of OECD

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GST Law from a Constitutional Perspective (2/2)
 Bill passed by Rajya Sabha on 03.08.2016 & Lok Sabha on 08.08.2016
 Notified as Constitution (101st Amendment ) Act, 2016 on 08.09.2016
 Key Features:
 Concurrent jurisdiction for levy & collection of GST by the Centre & the
States – Article 246A
 Centre to levy & collect IGST on supplies in the course of inter-State trade
or commerce including imports – Article 269A
 Compensation for loss of revenue to States for five years on
recommendation of GSTC – Clause 19
 GST on petroleum crude, high speed diesel, motor spirit (commonly known
as petrol), natural gas & aviation turbine fuel to be levied from a later date
on recommendations of GSTC
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Existing Indirect Tax Structure in India
Central Taxes State Taxes
• Central Excise duty • State VAT / Sales Tax
• Additional duties of excise • Central Sales Tax
• Excise duty levied under Medicinal • Purchase Tax
& Toilet Preparation Act • Entertainment Tax (other than those
• Additional duties of customs (CVD & levied by local bodies)
SAD) • Luxury Tax
• Service Tax • Entry Tax (All forms)
• Surcharges & Cesses • Taxes on lottery, betting & gambling
• Surcharges & Cesses

GST

Constitution amended to provide concurrent powers to both Centre & States to levy
GST
5 (Centre to tax sale of goods and States to tax provision of services)
 Central Taxes
Multiple State Taxes Single Tax-GST
Tax Multiple State Tax Single Tax
Administrations Administrations Administration

CEx/ST Act & Rules Multiple Acts & Rules Uniform law

Procedures Multiple procedures

Computerized
uniform procedures
Pre-GST Indirect tax structure in India

GST
GST

CGST
CGST
SGST
SGST/UTGST
IGST
IGST

GST Structure in India

Outside GST !

Alcohol for human Power to tax remains with the

consumption State

Five petroleum
GST Council to decide the date
products – crude oil
from which GST will be
, diesel, petrol,
applicable
natural gas and ATF

Part of GST but power to levy

Tobacco additional excise duty with
Central Government

Entertainment tax Power to tax remains with local

levied by local bodies bodies

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GST Council – Constitution (Article 279A of the Constitution)

 Chairperson – Union FM
 Vice Chairperson - to be chosen amongst the Ministers of State
Government
 Members - MOS (Finance) and all Ministers of Finance /
Taxation of each State
 Quorum is 50% of total members
 States - 2/3 weightage and Centre - 1/3 weightage
 Decision by 75% majority
 Council to make recommendations on everything related to GST
including laws, rules and rates etc.
GST Council - Decisions (1/5)
 Threshold limit for exemption to be Rs. 20 lac (Rs. 10 lac for special category
States except J&K)
 Compounding threshold limit to be Rs. 1 Crore with -
Categories Tax Rate
Traders & 1%
Manufacturers
Restaurants 5%
 Turnover limit recommended to be raised to Rs. 1.5 Cr in 23rd GST Council
meeting - to be notified after necessary amendment in the Act
 Government may convert existing Area based exemption schemes into
reimbursement based scheme – Already notified by Centre on 05.10.2017
 Four tax rates namely 5%, 12%, 18% and 28%
 Some goods and services would be exempt
 Separate tax rate (3% or 0.5%) for precious metals
GST Council - Decisions (2/5)
 Cess over the peak rate of 28% on specified luxury and sin goods
 To ensure single interface – all administrative control over
 90% of taxpayers having turnover below Rs. 1.5 cr would vest with
State tax administration
 10% of taxpayers having turnover below of Rs. 1.5 cr. would vest with
Central tax administration
 taxpayers having turnover above Rs. 1.5 cr. would be divided
equally between Central and State tax administration
 Power under the IGST Act shall also be cross-empowered on the
same basis as under CGST and SGST Acts with few exceptions
 Power to collect GST in territorial waters delegated to the States
 Eighteen rules on composition, registration, valuation, input tax credit etc.
have been recommended and notified
GST Council - Decisions (3/5)
 Exemption from registration
 to suppliers of services making inter-State supply upto Rs. 20 lacs
 to suppliers providing services through an e-commerce
platform provided their aggregate turnover does not exceed Rs. 20
lacs
 Exemption from Section 9(4) – Reverse Charge on purchase
from unregistered persons
 No requirement on payment of tax on advance received for supply of
goods by all taxpayers
 Exemption from tax for supplies from GTA to unregistered person
 Suspension of TCS / TDS provisions/ E way bill system till 31.03.2018
 Introduction of E-Wallet Scheme for exporters from 01.04.2018 and
till then relief for exporters in form of broadly existing practice
GST Council - Decisions (4/5)
 All taxpayers to file monthly GSTR-3B & pay tax on monthly basis
 Taxpayers with turnover upto Rs. 1.5 Cr to file quarterly GSTR – 1
returns
– Monthly for other taxpayers
 Time period for filing GSTR-2 and GSTR-3 for the months of July, 2017
to March 2018 would be worked out by a Committee of Officers
 Late fee already paid but subsequently waived off to be re-credited to
their Electronic Cash Ledger under “Tax” head instead of “Fee” head
 From October 2017 onwards, the amount of late fee payable by a
taxpayer
 whose tax liability for that month was ‘NIL’ will be Rs. 10/- per
day & whose tax liability for that month was not ‘NIL’ will be Rs.25/-
per day
GST Council - Decisions (5/5)
 Facility for manual filing of refund application
 Facility for manual filing of application for advance ruling
 Supply of services to Nepal and Bhutan exempted from GST if payment
not received in foreign convertible currency – such suppliers to be
eligible for input tax credit
 Centralized UIN to be issued to every Foreign Diplomatic Mission /
UN Organization by the Central Government
Main Features of the GST Act (1/5)
 Concurrent jurisdiction for levy & collection of GST by the Centre
(CGST) and the States (SGST)
 Centre to levy and collect IGST on supplies in the course of inter-
State supplies & imports
 Compensation for loss of revenue to States for five years
 All transactions and processes only through electronic mode – Non-
intrusive administration
 PAN Based Registration
 Registration only if turnover more than Rs. 20 lac (Rs. 10 lacs for
special category States except J&K)
 Main Features of the GST Act (2/5)
 Option of Voluntary Registration
 Composition threshold shall be Rs. 150 lakh
 Composition scheme shall not be available to inter-State
suppliers, service providers (except restaurant service) and
specified category of manufacturers
 Deemed Registration in three working days
 Input Tax Credit available on taxes paid on all procurements
(except few specified items)

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 Main Features of the GST Act (3/5)

 Credit available to recipient only if invoice is matched (two

months time for matching)
 Set of auto-populated Monthly returns and Annual Return
 Composition taxpayers to file Quarterly returns
 Automatic generation of returns
 GST Practitioners for assisting filing of returns
 GSTN and GST Suvidha Providers (GSPs) to provide
technology based assistance

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 Main Features of the GST Act (4/5)

 Tax can be deposited by internet banking, NEFT / RTGS, Debit /

credit card and over the counter
 Concept of TDS for certain specified categories (to be brought in
force wef 01/10/18)
 Concept of TCS for E-Commerce Companies (to be brought in
force wef 01/10/18)
 Concept of e-way bill (to be brought in force in staggered manner
wef 01/01/18 & at national level wef 01/04/18)
 Refund to be granted within 60 days

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 Provisional release of 90% refund to exporters within 7 days
 Main Features of the GST Act (5/5)
 Interest payable if refund not sanctioned in time
 Refund to be directly credited to bank accounts
 Comprehensive transitional provisions for smooth transition of existing
tax payers to GST regime
 Special procedures for job work
 System of GST Compliance Rating
 Anti-Profiteering provision – National Anti-Profiteering Authority being
set up
 Standing Committee on Anti-Profiteering to be set up
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 State level Screening Committee to be set up
Benefits of GST (1/2)

1 Reduction in Cascading of Taxes

Decrease in
2 Overall Reduction in Prices Inflation

3 Common National Market

Ease of Doing
4 Benefits to Small Taxpayers Business

5 Self-Regulating Tax System

Decrease in “Black”
Non-Intrusive Electronic Tax System
Transactions
6

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Benefits of GST (2/2)

7 Simplified Tax Regime

More informed
8 Reduction in Multiplicity of Taxes consumer

9 Consumption Based Tax

Poorer States
10 Abolition of CST to Gain

11 Exports to be Zero Rated

“Make in
India”
12 Protection of Domestic Ind. - IGST

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 Goods and Service Tax Network
 Incorporated in March 2013 as Section 25 private limited company with paid
up capital of Rs. 10 crore
 Equity Holders
o Central Government - 24.5%
o EC and all States together - 24.5%
o Financial Institutions – 51%
 To function as a Common Pass-through portal for taxpayers-
o submit registration application
o file returns
o make tax payments
 To develop back end modules for 28 States (MODEL –II)
 Infosys appointed as Managed Service Provider (MSP)
 Appointed multiple GST Suvidha Providers (GSPs)
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Role of CBEC
 Role in Policy making: Drafting of GST Law, Rules & Procedures – CGST,
UTGST & IGST Law
 CBEC is responsible for administration of the CGST and IGST law.
 Assessment, Audit, Anti-evasion & enforcement under CGST, UTGST & IGST
Law
 Levy & collection of Central Excise duty on products outside GST – Petroleum
Products & Tobacco
 Levy & collection of Customs duties
 Developing linkages of CBEC - GST System with GSTN
 Training of officials of both Centre & States
 Outreach programs for Trade and Industry
 Director General of Safeguards, CBEC has been mandated to conduct detailed
enquiry on anti-profiteering cases
 THANKS!
Any questions?

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