CHRIST UNIVERSITY Department of Commerce I

Subject: Other Taxes Topic: Goods and Services Tax

Continuous Internal assessment III
By, Karthik Ravi – 08D0027 Kushal S S – 08D0062 Mayank Baid – 08D0041 Ramesh Kumar – 08D0044

Submitted to, Dr. Alice Mani

........... 7 GST rates ................................. 8 Method: ................................. 9 Conclusion ...................................................... 7 Payment of tax ................... 5 The GST model in India ................................................................................... 4 Benefits of GST ........................................................................................................................................................................................................... 7 Applicability of CGST and SGST .................................... 7 Constitution amendment for levying service tax by the states ..... 8 Exract ...................................... 6 Dual GST ...... 5 Indirect taxes subsumed under GST ........................................................................................ 7 Input tax credit setoff ............................ 3 Why Goods and service tax? ....................................Goods and Services Tax Table of Contents What is GST ? ....................................................................................................................................... 6 Tax payer identification number ................................................................................................................................................................ 10 2|Continuous internal Assessment ......................................................... 3 Roadmap to GST ..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 6 Taxable event ........................................................................................ 8 Periodical return ....................................... 7 Collection of GST .................................

That is the foundation of a GST. telecom license fees. and eliminate the cascading effects of multiple layers of taxation. entry tax. As we have parallel systems of indirect taxation at the central and state levels. turnover tax. Integration of goods and services taxation would give India a world class tax system and improve tax collections. The introduction of goods and services tax will lead to the abolition of taxes such as octroi. Each of the systems needs to be reformed to eventually harmonize them. each of the systems needs to be reformed to eventually harmonise them. there are parallel systems of indirect taxation at the central and state levels. State level sales tax. The first step towards introducing GST is to progressively converge the service tax rate and the CENVAT rate. In the Union Budget for the year 2006-2007. sale and consumption of goods as well as services at a national level. Central sales tax. At the central level. The goods and service tax (GST) is proposed to be a comprehensive indirect tax levy on manufacture. taxes on transportation of goods and services. He proposed to set April 1. tax on consumption or sale of electricity. World over. Presently. It would end the long standing distortions of differential treatments of manufacturing and service sector. GST will facilitate seamless credit across the entire supply chain and across all states under a common tax base. Finance Minister proposed that India should move towards national level Goods and Services Tax that should be shared between the Centre and the States. 2010 as the date for introducing GST.Goods and Services Tax Goods and Services Tax (GST) is a part of the proposed tax reforms that center round evolving an efficient and harmonized consumption tax system in the country. stamp duty. before the two are integrated. goods and services attract the same rate of tax. beginning has been made by converging widely 3|Continuous internal Assessment . The central excise duty should be converted into a full fledged manufacturing Stage VAT on goods and services and the states sales tax systems should be transformed into a retail stage destination based VAT.

State VAT on CST. Here there is no set off benefits available. Entry tax on VAT etc. The reformed indirect tax system GST-Goods and service tax is proposed to implement on 1st April 2010 in India. are yet to be included in the VAT. The manufacturer pays CENVAT on goods produced. For example manufacturing of a product attract CENVAT. entertainment tax. Now Government has decided to abolish tax on tax effect by implementing GST. Several countries implemented this tax mechanism followed by France. 4|Continuous internal Assessment . The GST Implementation is not yet declared by government and the drafting of GST law is still under process and a clear picture will be available only after announcement of Implementation. Likewise there are many situations in the nature of cascading effect for instance. So the CENVAT element is loaded on the product. As the name denotes the goods and service tax is integrated in GST for setoff benefit of Input tax credit. These taxes are still existing and payable. According VAT rules. the first country introduced GST. Goods and service tax is a new version of VAT which gives a comprehensive setoff for input tax credit and subsuming many indirect taxes from state and national level. Indirect taxes like luxury tax. the sales tax is payable on the aggregate selling price which include CENVAT.Goods and Services Tax varying tax rates and extending input tax credit to convert excise duties into a CENVAT. One of the main reasons of the introduction of GST is to avoid cascading effect of taxes in India.

2. betting and gambling. 1.Goods and Services Tax Several taxes like additional customs duty. 7. Luxury tax 4. Many indirect taxes in state and central level subsumed by GST. 7. GST provide comprehensive and wider coverage of input credit setoff. 3. 4. You need to pay a single GST instead of all. State cesses and surcharges in so far as they relate to supply of goods and services. At present there is no input tax credit available for CST. you can use service tax credit for the payment of tax on sale of goods etc. Entry tax not on in lieu of octroi. CST will be removed and need not pay. By reducing the tax burden the competitiveness of Indian products in international market is expected to increase and there by development of the nation. Purchase tax ( This is not sure still under discussion ) 5|Continuous internal Assessment . VAT/Sales tax 2. Ensure better compliance due to aggregate tax rate reduces. Uniformity of tax rates across the states 5. surcharges not included under CENVAT. Entertainment Tax ( unless it is levied by local bodies) 3. 5. Overall tax compliance cost will reduce for government and can concentrate on GST The following indirect taxes from state and central level is going to integrated with GST 1. 6. Taxes on lottery. Input tax and service tax set off is out of reach to the manufacturer and dealers. 8. 6. Prices of goods are expected to reduce in the long run as the benefits of less tax burden would be passed on to the consumer.

the proposed model will have two component called CGST – Central goods and service tax for levied by central Govt. instead only CGST & SGST exists. SGST – State goods and service tax levied by state Govt. Dual GST means. Central Excise Duty.Goods and Services Tax 1. The end user.e. Additional Customs Duty. Any economic activity which is not supply of goods is treated a supply of service. 7. commonly known as countervailing Duty ( CVD) Special Additional duty of custums-4% ( SAD) Surcharges Cessess The above taxes dissolve under GST. 2. 3. consumer cannot recover taxes but a business can recover by claiming input tax setoff. 6. The Excise Duty levied under the medical and Toiletries Preparation Act Service Tax. Additional Excise Duty. 8. i. Supply of goods and supply of services will be considered as taxable event under GST. There would have multiple statute one CGST statute and SGST statute for every state. 4. 6|Continuous internal Assessment . 5. But it is proposed that dual CST is suitable for federal country like India. Many countries are following single GST.

The dealer whose turnover is below prescribed limit need not pay tax. The applicability of taxes is as usual there would be a prescribed limit of annual turnover. Tax is collected on the basis of value addition on each stage of sale. The central GST would be paid to central and state GST paid to state government in the prescribed account head. The input tax credit of SGST can be utilized for the payment of SGST only and input tax credit on CGST can be utilized for the payment of CGST only. Making it clearer. also some goods and services are exempted under GST. input tax credit of CGST cannot be utilized for the payment of SGST and vice versa. It is same as VAT. However there is an exemption for the above in the case of interstate transaction . Both CGST and SGST would have to be charged in an every service bill and sale bill and paid after adjusting input credit available on both. 7|Continuous internal Assessment . The power of levying service tax is rest with central Government and a constitutional amendment is necessary for empowering states for levying service tax.For interstate transaction IGST is proposed and would be implemented along with CGST and SGST. This means that cross utilization of input tax credit will not be allowed.Goods and Services Tax Each tax payer allotted a pan based identification number containing 13 or 15 digit number.

except from the list of exempted goods which fall outside its purview. Here. The GST model has some aspects which are as follows: Components: GST will be divided into two components. Applicability: GST will be applicable to all Goods and Services sold or provided in India.5 crore and service would have a separate threshold that too will be appropriately high. please subscribe our newsletter for stay update with us. 8|Continuous internal Assessment . Rate: Rates charged across all states and the central level will be uniform along with the regulations. The GST system is based on the same concept as VAT. namely. GST rates is not yet announced by government. set-off is available in respect of taxes paid in the previous level against the GST charged at the time of sale. We will more updates on GST in coming days. Taxpayer would have to submit periodical return as prescribed by law in common format for CGST and SGST. however it is assumed that aggregate total of CGST & SGST would be 14 % to20%. definitions and classifications. but not final A lower rates for essential commodities Standard rates for general goods Special rates for precious metals For services may be single rates for CGST and SGST. The rate structure would be as follow.Goods and Services Tax Threshold for annual turnover for goods and services would be 10 lakh for SGST and threshold of CGST for goods may be 1. Central Goods and Service Tax and State Goods and Service Tax.

Shri S. Government of India has sanctioned financial assistance for projects in the North Eastern States. The Centre and the States have agreed upon the basic structure in keeping with the principles of fiscal federalism enshrined in the Constitution. Input Tax credit: The facility of Input Tax Credit at Central level will only be available in respect of Central Goods and Service tax. but would also subsume many other Central and State taxes. Himachal Pradesh and Jammu & Kashmir. 2010 would be accelerated. has prepared a model and roadmap for the GST. To facilitate the development of capability in States to share their data through TINXSYS. In other words. Government of India and the States. 9|Continuous internal Assessment .Goods and Services Tax Payment: GST will be charged and paid separately in case of Central and State level. the ITC of Central Goods and Service tax shall not be allowed as a set-off against State Goods and Service tax and vice versa. The budget for 2009-10 has provision of Rs408 crore for a Mission Mode Project. The Central Government has given its suggestions to the EC on the model.P. Chauhan in Lok Sabha. 2010. The budget speech of 2006-2007 contained a proposal to introduce Goods and Services Tax (GST) in India with effect from April 01. The Empowered Committee of the State Finance Ministers (EC). The broad contour of the GST model is that it will be a dual GST comprising of a Central and a State GST.S. to provide financial support to computerisation needs of the Commercial Taxes Departments of States. including Gujarat. This information was given by Minister of State for Finance. a nation-wide computerization project called “Tax Information Exchange System(TINXSYS)” to enable exchange of critical data on inter-State sale among States. It has been reiterated in the budget speech of 2009-10 that the process for smooth introduction of GST with effect from April 01. together fund on equal basis. on the request of Central Government and after due consultation among States. The proposed GST is not instead of CST alone. Palanimanickam in reply to a question raised by Shri P. the Government of India also supports projects for computerization of various State VAT administrations.

to arrive the scenario for a better tax system. the taxpayer and the Tax authorities. India waits for the GST.Goods and Services Tax Pan Linked identification: Each taxpayer shall be provided with an unique 13 to 15 digit ID number for filing periodical returns with the Central and State government. Added to it the Direct Tax Code can also replace the Income Tax Act. to overcome such miseries implementation of GST is being considered. Vat fails to include taxes such as Luxury tax. Thus. Added to this one of the main component of overall tax structure. But before getting introduced to this system of GST. whereas. are not included in it. though introduction of CENVAT and VAT has considerably helped in reduction of such multiplicity but still the sorrow continues to prevail. The dilemma of multiplicity of taxes is being experienced in India over a number of years. etc. we get an overview of what the system of GST (Goods and Service tax) is likely to be and upon its implementation what benefits are we going to derive from it. Entertainment tax and others. one must have a general idea about the whole system. Service Tax is ignored in both the cases. Goods and Service Tax. Refurbishing the current tax system requires implementation of such a new methodology that it is able to eliminate the drawbacks of the present system of taxation in India. Thus. GST or Goods and Service Tax will include a uniform rate of taxation in all respect and would allow an implementation of an incessant link from the primary producer of goods and service to the retailer’s stage and will also eradicate all cascading effects in such process. All in all a very good proposal which one can look forward to which reduces the complexities of the tax system in respect to both. Additional Excise Duty. The problem on account of CENVAT is that taxes like Additional Custom Duty. 10 | C o n t i n u o u s i n t e r n a l A s s e s s m e n t . 1961).