Beginners guide to Goods & Service Tax in India
- 1. R Venkatakrishnan & Associates Chartered Accountants Offices at Chennai Bangalore Hyderabad Salem Devanahalli www.rvkassociates.com
- 2. Goods & Service Tax (GST)
- 4. • The union cabinet approved on 17th Dec’14, the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Service Tax (GST) in the country. • The Union Finance Minister Shri Arun Jaitley introduced the said bill in the Lok Sabha on 19th Dec’14. • The proposed amendment in the Constitution will confer powers both to the Parliament and State legislatures for levying GST on the supply of goods and rendering of services in the same transaction.
- 5. • A new Article 279A is proposed for the creation of a Goods & Services Tax Council which will be a joint forum of the Centre and the States. • The Council will make recommendations to the Union and the States on important issues like tax rates, exemptions, threshold limits, dispute resolution modalities etc. • Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years. • A provision in this regard has been made in the Amendment Bill (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year). Legislative Update …. Cont’d
- 6. • GST is also a destination based consumption levy • GST is proposed to be in implemented by 1st April 2016 • GST is a tax on supply of goods or rendering of services. Accordingly, any person supplying goods or rendering services will be required to charge GST Salient Features of GST
- 8. Taxes Subsumed under CGST
- 9. Taxes Subsumed under SGST Note: Alcohol products are kept out of the purview of GST wherein the power to levy is still with State Government
- 10. For Sales made/service rendered within the state, GST will be levied by both the Central Government (CGST) and State Government (SGST) on the same transaction, making GST a dual transaction tax structure. To Illustrate: Transactions value of Goods Sold or Services Rendered within the State is Rs. 5,000 On the above transaction, CGST will be levied at 5% i.e., 250 and SGST will be levied at 5% i.e., 250 How Does GST Work?
- 11. • Under IGST, tax will be collected by Centre. • Centre will remit the share of the state to the respective state. • As it is a consumption based tax, state share of tax will go to the state were service/goods are consumed/sold and not to the state from where the service/goods is rendered/sold. To Illustrate: Transactions value of Goods Sold or Services Rendered from Bangalore to Mumbai is Rs. 5,000 On this transaction, IGST will be levied at 10% i.e., Rs. 500. This tax will be initially collected by Centre and then it will be appropriated to Maharashtra (consumption state) at an agreed ratio How does IGST Works???
- 12. • For Goods Purchased within India – Applicable taxes are CGST, SGST and IGST • For Goods Imported into India – Applicable taxes are Basic Custom Duty, CGST & SGST Taxes Applicable…
- 13. • Under GST, it is expected that Goods and Services will have same rate of tax Rate of Tax under GST
- 14. • It is proposed that credit of CGST paid will not be CENVAT Credit Provisions
- 15. Scheme for Exporters under GST As compared to the existing mechanism, there is no change in tax provision for exporters wherein the same principal of “Zero Tax on Exports” will be applicable. Note: Similar Benefits may be given to Special Economic Zones (SEZ)
- 16. • Proposed threshold Limit for getting covered under GST – Rs.25L • Each taxpayer could be allotted a PAN linked taxpayer identification number with a total of either 13 or 15 digits
- 17. • The assessee is required to account for CGST, SGST and IGST separately (for both output tax and input tax) • Common Return formats for CGST & SGST Accounting & Returns
- 18. • Administration of the Central GST would be with the Centre and for State GST with the States • Full computerisation of the compliance and administrative systems Administration
- 19. Contact pankaj.r@rvkassociates.com Bangalore +91 98440 00207 +91 80 23418753 Chennai +91 44 24618778 / 24618740 Hyderabad +91 40 66620039 / 27611565 http://www.rvkassociates.com