GST – An Update

(As on 01st July 2018)

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 This presentation is for education purposes only and
holds no legal validity

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

May 2017 April 2017 March 2017 Sep 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 July 2017 8th July 2017 Journey Continues… • 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)

Definition of GST
Article 366(12A) “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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Pre-GST 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
13 Cesses
GST

Constitution amended to provide concurrent powers to both Centre & States to levy GST
(Centre to tax sale of goods and States to tax provision of services)
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 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

SGST/UTGS
CGST IGST
T

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
 Decision by 75% majority
 States - 2/3 weightage and Centre - 1/3 weightage
 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 1%
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 / stones
GST Council - Decisions (2/5)
 Cess over the peak rate of 28% on specified luxury & 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 till 30.09.2018
 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 till 30.09.2018
 Introduction of nation-wide E-way bill for inter-State supplies from 01.04.2018
and for intra-State supplies latest by 03.06.2018
 www.ewaybillgst.gov.in, managed by NIC would be the portal for generation of
e-way bill
GST Council - Decisions (4/5)
 Introduction of E-Wallet Scheme for exporters from 01.10.2018 & till
then relief for exporters in form of broadly existing practice
 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 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
 New system of return filing would be worked out by a Committee of
Officers
GST Council - Decisions (5/5)
 From October 2017 onwards, the amount of late fee payable by a taxpayer
 whose tax liability for that month was ‘NIL’ will be Rs. 20/- per day
instead of Rs. 200/- per day
 whose tax liability for that month was not ‘NIL’ will be Rs. 50/- per day
instead of Rs. 200/- per day
 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 even 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
 www.gst.gov.in, managed by GSTN, would be the common portal
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 & on 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. 100 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)

 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
01.10.2018)
 Concept of TCS for E-Commerce Companies (to be brought in force wef
01.10.2018)
 The e-way bill system has been introduced nation-wide for all inter-State
movement of goods with effect from 01.04.2018. As on 16.06.2018, all States
and Union Territories have introduced e-way bill system for intra-state
movement of goods
 Refund to be granted within 60 days
 Provisional release of 90% refund to exporters within 7 days
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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
already set up
 Standing Committee on Anti-Profiteering already set up
 State level Screening Committee already set up
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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
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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 (1/3)
 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 27 States (MODEL –II)
 Infosys appointed as Managed Service Provider (MSP)
 Appointed 73 GST Suvidha Providers (GSPs)
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Goods and Service Tax Network (2/3)
Harmonization of Business Processes and Autonomy of back-end systems of States
Formats and Centre

Common & Shared Centre/States

IT
IT Infrastructure Tax IT Systems
Interfaces

Non-Statutory Functions
• Core Services • Approval of Registration

Statutory Functions
– Registration • Assessment
– Returns • Refunds
– Payments • Audit and Enforcement
• Helpdesk support • Adjudication
• Information on Inter-State supply and cross- • Internal workflows to support above
credit utilization functions
• Analytics • Recovery
• IGST Settlement • Analytics and BI

Front-end Back-end
Goods and Service Tax Network (3/3)

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Role of CBIC
 Role in Policy making: Drafting of GST Law, Rules & Procedures – CGST,
UTGST & IGST Law
 CBIC 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 CBIC - GST System with GSTN
 Training of officials of both Centre & States
 Outreach programs for Trade and Industry
 Director General of Safeguards, CBIC has been mandated to conduct detailed
enquiry on anti-profiteering cases
 www.cbec.gov.in
www. cbec-gst.gov.in
CBEC Help Desk GSTN Help Desk
Toll Free : 1800 1200 232 Toll Free : 0124-4688999
Email : [email protected] Email : [email protected]
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