Gst
- 2. ‘G’ – GOODS ‘S’ – SERVICES ‘T’ – TAX • Goods and Service Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and service at a national level. • GST is a tax on goods and services with value addition at each stage. • GST will include many state and central level indirect taxes • It overcomes drawback present tax system
- 3. TAX STRUCTURE & TAXATION SYSTEM IN INDIA • India offers a well-structured tax system for its population. Taxes are the largest source of income for the government. This money is deployed for various purposes and projects for the development of the nation. • Taxes are determined by the Central and State Governments along with local authorities like municipal corporations. The government cannot impose any tax unless it is passed as a law.
- 4. ROLE OF THE CENTRAL AND STATE GOVERNMENT • The entire system is clearly demarcated with specific roles for the central and state government. The Central Government of India levies taxes such as customs duty, income tax, service tax, and central excise duty. • The taxation system in India empowers the state governments to levy income tax on agricultural income, professional tax, value added tax (VAT), state excise duty, land revenue and stamp duty. The local bodies are allowed to collect octroy, property tax, and other taxes on various services like drainage and water supply.
- 5. Type of taxes Direct taxes Indirect taxes Goods and Service Taxes
- 6. DIRECT TAXES Direct taxes are levied on individuals and corporate entities and cannot be transferred to others. e.g.: Income Tax, Corporate Tax, Wealth Tax Indirect taxes Indirect taxes are not directly paid by the assesse to the government authorities. These are levied on goods and services and collected by intermediaries (those who sell goods or offer services). Here are the most common indirect taxes in India. e.g.: Excise duty, custom duty, Service Tax, Octroy Tax, VAT, CENVAT.
- 7. GOODS AND SERVICE TAX (GST) • As a significant step towards the reform of indirect taxation in India, the Central Government has introduced the Goods and Service Tax (GST). GST is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India and will subsume many indirect taxes levied by the Central and State Governments. GST will be implemented through Central GST (CGST), Integrated GST (IGST) and State GST (SGST). • Four laws (IGST, CGST, UTGST & GST (Compensation to the States), Act) have received President assent. All the States & UT expected to pass State GST Act, by end of May 2017. GST law is expected to take effect from July 1, 2017.
- 8. METHOD OF TAXATION Progressive Tax : Increasing rate of tax for Increasing Value or Volume. Regressive Tax : Decreasing rate tax for Increasing Value or Volume Proportional Tax : • Fixed rate of tax for every level of income or production
- 9. REFORM IN TAX SYSTEM VAT (Value Added Tax) • Implemented in April-1/2005 • It is replacement to complex Sales Tax • It overcomes a Cascading Effect of Tax • It applied on “ Value Added Portion “ in sales price
- 11. WHAT IS GST ? • GST is a comprehensive value added tax on goods and services • It is collected on value added at each stage of sale or purchase in the supply chain • No differentiation between Goods and Services as GST is levied at each stage in the supply chain • At all stages of production and distribution, taxes are a pass through and tax is borne by the final consumer • All sectors are taxed with very few exceptions / exemptions
- 12. HISTORY • Feb, 2006 : First time introduced concept of GST and announced the date of its implementation in 2010 • Jan. 2007: First GST study by ASSOCHAM released by Dr. Shome • Feb. 2007: F.M. Announced introduction of GST from 1 April 2010 in Budget • The Government came out with a First Discussion Paper on GST in November, 200 • Introduced the 115th Constitution Amendment (GST) Bill in the year 2011.
- 13. GST IMPACT ON ECONOMY • 1.Shaking up corporate operations “While the impact on companies varies following existence of production units in the excise exempted zones, implementation of GST should result in cost savings in the supply chain network and expedite a shift from unorganized to organized trade,” foreign brokerage firm Jefferies said in a note. • 2.Passing on the benefit of lower tax “We believe that while corporates would pass on the direct benefits of GST (like a lower tax rate), they would aim to retain partly (if not fully) the indirect benefits from the saving in logistics costs, streamlining of business processes and the seamless flow of input credits,” Nomura said in a report.
- 14. • 3.Inflation may remain low “Services sector component in CPI is around 20%, whereas they account for almost 50% of the total consumption basket in the economy,” says Soumya Kanti Ghosh, chief economic adviser at State Bank of India • 4.RBI may not cut rates in June “RBI will watch out for the monsoon progress as also how the GST pans out,” said Sinha of India Ratings. • 5.Economic growth may not jump immediately “The GST implementation will be disruptive as there will be a major change in the supply chain,” India Ratings’ Sinha said but added the tax reform will be beneficial to the economy in the medium to long term
- 15. -NIMISHA MISHRA