A Presentation on GST

Narayan Lodha, Chartered Accountant
GOODS AND SERVICES TAX
(GST) IN INDIA
A Presentation
by
CA Narayan Lodha
Chartered Accountant
Flat No. 503, Tower Hibiscus,
Paramount Floraville, Sector 137,
Noida -201304 +91 9818156768
Email : lodhanarayan@hotmail.com

Salient Features of GST
GST Model
Payment of Tax
Benefit of GST
Subsuming of Existing Taxes
Tax Levy under GST
Input Tax Credit (ITC)

 Goods and Service Tax (GST) is applicable on “supply” of goods or services as against the
present concept of tax on the manufacture/ sale of goods or on provision of services.
 GST is based on the principle of destination based as against the present principle of
origin based taxation.
 There would be dual GST with the Centre and the States simultaneously levying it on a
common base.
 The GST levied by the Centre would be called Central GST (CGST) and
 The GST levied by the States would be called State GST(SGST). Union territories
without legislature would levy Union territory GST (UTGST).
 An Integrated GST (IGST) would be levied on inter-State supply (including stock transfers)
of goods or services. This would be collected by the Centre so that the credit chain is not
disrupted.
 Import of goods would be treated as inter-State supplies and would be subject to IGST in
addition to the applicable customs duties.
 Import of services would be treated as inter-State supplies and would be subject to IGST.
 It is Proposed to be levied at the each stage of business

 From manufacture to final consumption with credit of Taxes paid at previous stages
available as setoff. Only Value addition will be taxed
 There would be four tax rates namely 5%, 12%, 18% and 28%. Besides, some goods and
services would be under the list of exempt items. Rate for precious metals is yet to be
fixed.
 A cess over the peak rate of 28% on certain specified luxury and sin goods would be
imposed for a period of five years to compensate States for any revenue loss on account
of implementation of GST.
 The five laws namely are Passed CGST Law for Central GST , UTGST Law for Union
territory GST , IGST Law Integrated GST for inter state, SGST Law State GST and GST
Compensation Law .
 GST would apply to all goods and services except Alcohol for human consumption
 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.
 Input Tax Credit (ITC) to be broad based by making it available in respect of taxes paid on
any supply of goods or services or both used or intended to be used in the course or
furtherance of business.

Benefit of GST
 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
 Distinction between Goods &
Services no longer required
 Its Transparent Character, GST would
be easier to administer
To Trade and Commerce/
Industry
 Simpler Tax system
 Reduction in prices of goods &
services due to elimination of
cascading
 Uniform prices throughout the
country
 Transparency in taxation system
 Increase in employment
opportunities
 Harmonization of laws, procedures
and rates of tax
 GST would also make Indian
products competitive in the
domestic and international markets
To Consumers
& Government

Subsuming of Existing Taxes
 Central Excise Duty;
 Additional Duties of Excise
 Duties of Excise (Medicinal and Toilet
Preparations)
 Service Tax;
 CVD (Additional Customs Duty)
 Special Additional Duty of
Customs(SAD)
 Cesses and surcharges insofar as they
relate to supply of goods or services.
Taxes currently levied and
collected by the Centre
 State VAT;
 Central Sales Tax;
 Purchase Tax;
 Luxury Tax;
 Entry Tax (All forms);
 Entertainment Tax (except those
levied by the local bodies);
 Taxes on advertisements;
 Taxes on lotteries, betting and
gambling;
 State cesses and surcharges insofar
as they relate to supply of goods or
services
Taxes currently levied and
collected by the States & UT

GST Model
Dual GST
Intra State
Transactions
Inter State
Transactions
IGSTCGST
SGST/
UTGST

GST Model
Service
tax
Excise
Entry/O
ctroi
State
Surchar
ge
Purchas
e Tax
Entertai
nment
Tax
Luxury
tax
Lottery
tax
SGST
VAT
CST
CGST

 The CGST and SGST will be levied on intra-state
 The Central GST and the State GST would be levied simultaneously on the same price /
value on intra state supply of good and services.
 CGST, SGST would be chargeable only when the supplier and the recipient are both
located within state.
 IGST will be charged for Inter-state supply of good and services and Imports.
 The definition of supply includes all form of Supply of goods and services , such as sale,
transfer, barter, exchange, license, rental, etc.
 Schedule I specify the activity made or agreed to be made without consideration shall be
treated as supply
 Schedule II specify the activities to be treated as supply of goods or supply of services i.e.
What is, or is to be treated as a supply of goods or a supply of services.
 Following activities shall be treated neither as a supply of goods nor a supply of services.
• activities or transactions specified in scheduled III or
• such activities or transactions undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities,
as may be notified by the Government
Tax Levy under GST

 ITC is available in respect of taxes paid on any supply of goods or services used or
intended to be used in the course or furtherance of business (i.e. for business purposes)
 Negative list approach for non-allowance of ITC
 ITC of tax paid on goods or services used for making taxable supplies by a taxable person
allowed subject to four conditions:
⁻ Possession of invoice;
⁻ Receipt of goods or services;
⁻ Tax actually paid by supplier to government;
⁻ Furnishing of return
 Credit of CGST paid on inputs may be used only for paying CGST on the output
 Credit of SGST/UTGST paid on inputs may be used only for paying SGST/UTGST on the
output
 Credit of CGST, SGST/UTGST paid on inputs may be used only for paying IGST and Vice
versa
 Full ITC allowed on capital goods in one go
 Proportionate credits allowed in case inputs, inputs services and capital goods are partly
used for business and partly for non-business purposes
 Proportionate credits allowed in case inputs, inputs services and capital goods are used
for taxable including zero rated and exempt (including non-taxable) supplies

Manner of utilization of Credit
IGST
CGST
SGST
UTGST
1) IGST
2) CGST
3) SGST
1) CGST
2) IGST
1) SGST
2) IGST
1) UTGST
2) IGST

1. GST Applicable on Supply
2. GST payable as per time of supply
3. Determining Place of Supply Could be the Key:-
 CGST, SGST would be chargeable only when the supplier and the recipient are both
located within state.
 IGST will be charged for Inter-state supply of good and services and Imports.
4. Valuation in GST i
5. Input Tax Credit (ITC) in GST
6. Matching of supplier’s and recipient’s invoice details
 ITC to be confirmed only after matching of such information
 ITC to be reversed in case of mis-match
 Input Service Distributor mechanism for distribution of ITC of input services
7. The five laws namely CGST Law, UTGST Law, IGST Law, SGST Law and GST Compensation
Law. There would be 33 GST State laws in India
8. Rate of GST is not yet specified in the draft GST law
9. Time limit for show cause notices (SCN)
10. Some old Provisions re-introduced
Ten Important things About GST

PAN based Registration
 required to be obtained for each State from where taxable supplies are being made
A person having multiple business verticals in a State may obtain separate registration for
each business vertical. This would benefit them in intra state
Liability to be registered:
 Every person who is registered or who holds a license under an earlier law;
 Every person whose turnover in a year exceeds the threshold
A person, though not liable to be registered, may take voluntary registration
 Certain suppliers liable for registration without threshold
 Registration to be given by both Central and State Tax Authorities on a common e-
application
Registration

Goods
Means every kind of movable property other than money and securities but includes
actionable claims, growing crops, grass and things attached to or forming part of the land
which are agreed to be severed before supply or under a Contract of supply.
Service
Services means anything other than goods, securities but includes activities / Services
relating to use of money or its exchange /conversion
Goods and/or Services

Activity treated as supply without Consideration
 Permanent transfer/disposal of business assets where ITC has been availed on such
assets.
 Supply of goods and services between related persons, or between distinct persons as
specified in section, when made in the course of business.
 Supply of Goods- By a principal to his agent or by an agent to his principal.
 Import of services by a taxable person from a related person or from any of his other
establishment outside India, in the Course or furtherance of business.
Schedule – I

Activity treated as supply of goods or supply of services
Goods:-
₋ Transfer of title in goods,
₋ Transfer at a future date,
₋ Banks selling assets / sale other than Slum sale
Services:-
₋ Transfer of right in goods without transfer of title,
₋ Lease of Immovable Property/Land,
₋ Use of business assets for private purpose,
₋ Declared Services,
₋ Treatment/Process which applied to another persons goods.
Composite Supply:-
₋ The Works Contract
₋ Supply / services relating to goods for human consumption other than liquor
Schedule – II

Activity to be treated neither as a supply of goods nor services
 Services by an employee to the employer in the course of or in relation to his
employment.
 Services by any court or tribunal established under any law for the time being in force.
 The Functions performed by MP, MLA, Members of Panchayat /Muncipalities /Local
Authorities etc.
 The duties performed by any person as a Chairperson/ Member /Director in a Body
established by the CG or SG or Local Authority
 Services of Funeral, Burial, Crematorium or mortuary including transportation of the
deceased.
 Sale of land with certain exception as provided in schedule II.
 Actionable claims, other than lottery, betting and gambling.
Schedule – III

The Liability to pay GST arises at the earliest
A) Goods :- Removal / delivery of goods or receipt of payment or
issuance of Invoice or Date on which buyer shows
receipt of goods
B) Services :- Issuance of invoice or receipt of payment or date on
which recipient shows receipt of services
GST Payable as per time of Supply
Tax payable on reverse charge
Means the liability to pay tax is on the recipient of Supply of goods or services
instead of on supplier / provider of good or services.

 At present Inter State supply of goods attract CST Now its provides
that an inter state supply of goods and / or services will attract
IGST.
 In case of goods the place of supply would be location where the
goods are delivered.
 And In case of Services the place of supply would be Location of
Service Recipient.
Determining Place of Supply could be the Key

GST would be payable on the ‘Transaction value’ is the price actually
paid or payable for the said supply of goods and/or services between
un-related parties.
Includes packing, commission, subsidies and discounts/incentives if it
is allowed after supply
Excludes Discounts/Incentives given before or at the time of supply
will be permissible as a deduction from transaction value.
Where the value of the supply of goods or services can not be
determined under sub-section (1) the same shall be determined in
such manner as may be prescribed.
Valuation in GST

GST on export would be zero rated.
Similar benefits may be given to Special Economic Zones (in
processing zones only).
No benefit to the sales from an SEZ to Domestic Tariff Area (DTA).
GST paid by Exporter on the procurement of goods and
services will be refunded.
GST on Export of Goods and Services

System of electronic cash ledger and electronic ITC (Credit) ledger
Payment of Tax
• Amount deposited in Cash credited
• May be used for making payment
towards tax, interest, penalty, fees or any
amount
• Balance after payment may be refunded
Electronic
Cash Ledger
• Input tax credit shall be credited here
• May be used for making payment
towards tax payable
• Balance may be refunded only in case of
exports / rate of output is less than input
Electronic
Credit
Ledger

Thank you

This presentation has been produced Narayan Lodha (the “Author”/ “Narayan”).
This presentation is confidential and must not be copied, reproduced, distributed, published, disclosed or passed (in whole or in part) to any
other person at any time without the prior written consent of the Company.
This presentation has been prepared for internal use. The contents of this document are solely for informational purpose. It does not constitute
professional advice or a formal recommendation. The presentation is made with utmost professional caution but in no manner guarantees the
content for use by any person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the
matter given. The presentation is meant for general guidance and no responsibility for loss arising to any person acting or refraining from acting
as a result of any material contained in this presentation will be accepted by us. Professional advice recommended to be sought before any
action or refrainment.
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