BANGALORE UNIVERSITY – MBA 4 Semester

Chapter – 1 Introduction to GST

Synopsis of “History of GST in India”:

GST Full Form Goods and Services Tax
The Constitution (One Hundred and First Amendment)
Introduced as Act
Act 2016
Constitutional Amendment Bill Constitution 122nd Amendment Bill, 2014
Meeting in 1999 between Prime Minister Atal Bihari
Idea of GST first raised during Vajpayee and three former RBI governors namely IG
Patel, Bimal Jalan and C Rangarajan.
GST Bill First published in 16th Lok
December 19, 2014
Sabha on
GST Bill - Date Passed in Rajya Sabha 03 August 2016
Amended GST Bill was passed by the
8 August 2016
Lok Sabha on
GST Bill received assent from President
8 September 2016
Pranab Mukherjee on
Article Article 368 of the Constitution
First state which ratified the GST bill Assam (on 12 August 2016)
GST  introduced by Arun Jaitley
Chairman of GST Council Arun Jaitley
Lok Sabha and Rajya Sabha passed all
the four key GST Bills (CGST, SGST, 27 March, 2017
IGST, UTGST) on
GST came into force across India
July 1, 2017
(except Jammu & Kashmir) on
GST launched in Jammu and Kashmir on July 8, 2017

What are the taxes that GST replaces?

The GST replaces numerous different indirect taxes such as:

1. Central Excise Duty, Service Tax, Countervailing Duty, Special Countervailing Duty, Value Added
Tax (VAT), Central Sales Tax (CST), Octroi, Entertainment Tax, Entry Tax, Purchase Tax, Luxury
Tax, Advertisement taxes, Taxes applicable on lotteries.

GST classification of common items:

Tax Rates
S. No. List of items
(%)
 Household necessities including edible oil, spices,
sugar, tea, and coffee (except those instant packing
1. 5% and noodles) Coal, Indian Sweets, and Life-saving
drugs and medications are covered under this GST
slab.
This slab includes all the computers its parts and
2. 12%
processed and instant food products.
Commodities like toothpaste, hair oils, soaps,
3. 18% cleaner’s industrial intermediaries and capital
goods come under this category.
All the luxury items like cars, high-end bikes,
consumer appliances like AC and Refrigerators and
4. 28%
other electrical goods, cigarettes, aerated drinks
come under this high tax reform category.

Taxable and Exempted Goods Under GST

Understand List of GST Exempted / Non-GST Goods in Details

1. GST Exempted Goods

2. List of Goods Exempt Under GST
o Eggs, Honey and Milk Products
o Fruits and Dry Fruits
o Tree, Plants & Vegetables
o Pizza, Cake, Bread, Pasta & Waffles
o Books, Brochures, Newspapers
3. Nil Rated
This type of supply attracts a GST of 0%. Input tax credit cannot be claimed
on such supplies. Some items which are nil rated include grains, salt, jagery .

4. Fruits, milk, curd, etc.

Exempted :
This supply includes items which are used for everyday purposes. Since they
are basic essentials, they do not attract any GST at all. You will not be able to
claim any ITC on such supplies. Some examples include bread, fresh What s
Taxable supply under GST
Taxable supply:

“Taxable supply” means a supply of goods or services or both which is leviable to

tax under Central Goods and Service Tax Act, 2017.

Value of taxable supply

The value of a supply of goods or services or both shall be the transaction value,
which   is the price actually paid or payable for the said supply of goods or services
or both where the supplier and the recipient of the supply are not related and the
price is the   sole consideration for the supply.

GST Composition Scheme

Composition Scheme is a simple and easy scheme under GST for taxpayers. Small
taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of
turnover. This scheme can be opted by any taxpayer whose turnover is less than
Rs. 1.0 crore*.

A taxpayer whose turnover is below Rs 1.0 crore* can opt for Composition
Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs
75* lakh.

As per the CGST (Amendment) Act, 2018, a composition dealer can also supply
services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher.
This amendment will be applicable from the 1st of Feb, 2019. Further, GST
Council in its 32nd meeting proposed an increase to this limit for service providers
on 10th Jan 2019*.

Turnover of all businesses registered with the same PAN should be taken into
consideration to calculate turnover.

GST Rates in India

Most of the products and services that are subject to the new tax regime have been
categorized under four tax slabs - 5%, 12%, 18% and 28%. However, GST rates
will not apply on some goods and services, like fresh meat, milk, chicken, curd,
fresh fruits, jute, fish, eggs, butter milk, vegetables, natural honey, bread, salt,
besan, bindi, judicial papers, newspapers, handloom, prasad, sindoor, bone grist,
horn meal, hoof meal, palmyra jaggery, printed books, bangles, horn cores, bone
meal, cereal grains hulled, etc.

The rates for essential food items have been kept either nil or very low. The reason
to do this is because food items make up for about 50% of the consumer basket and
contribute rather significantly to ensuring that widespread inflation is kept in
check. Luxury goods and negative items are, however, taxed at a higher rate so as
to maintain revenue neutrality for state and central governments.

Some of the commodities and services subject to 5% GST are:

 Apparel below Rs. 1000, Packaged food items, Branded paneer, Frozen
vegetables Cream, Skimmed milk powder, Coffee, Tea, Spices, Pizza bread,
Rusk, Sabudana, Cashew nut, Cashew nut in shell, Raisin,Fish fillet,
Kerosene, Coal, Medicine, Agarbatti (incense sticks),Postage or revenue
stamps, Fertilizers, LPG supply to household consumers by private LPG
distributors, Rail and economy class air tickets, Small restaurants.

Some of the commodities and services subject to 12% GST are:

 Butter, Cheese, Ghee, Almonds, Dry fruits in packaged form, Animal fat,
Sausage, Umbrella, Sewing machine, Cellphones, Ketchup & Sauces, Sugar
boiled confectionery, Bio-diesel, Pasta, Bio-pesticides, Mechanical sprayer
 Air tickets by business class

Some of the commodities and services subject to 18% GST are:

 Biscuits (All categories), Cornflakes, Pastries and cakes, Jams, Sauces

 Soups, Ice cream, Instant food mixes, Tissues, Camera, Speakers, Printers
(other than multifunction printers), Shampoo, hair cream and hair dye
 Restaurants in hotel premises where room tariff is Rs 7500 or more,
 Telecom services

Some of the commodities and services subject to 28% GST are:

 Pan masala, Aircraft for personal use, Gambling and race club betting
 5-star hotels, Cigarette, Small cars, High end motor cycles, Consumer
durables such as AC, Fridge, Luxury and Sin items.
 Registration under CGST, SGST AND IGST IN INDIA

What is GST Registration

In the GST Regime, businesses whose turnover exceeds Rs. 40 lakhs* (Rs 10 lakhs for NE and
hill states) is required to register as a normal taxable person. This process of registration is called
GST registration.

For certain businesses, registration under GST is mandatory. If the organization carries on
business without registering under GST, it will be an offence under GST and heavy penalties will
apply.

GST registration usually takes between 2-6 working days. We’ll help you to register for GST in
3 easy steps.

*CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs 40 lakhs. The
notification will come into effect from 1st April 2019.

Complete Online Document Submission & Application Tracking

 Filing of Application for GST Registration

 Secure GST Identification Number
 Dedicated manager to process your GST registration end to end
 Completely Online – No need to visit office
 CA Assisted GST Filing for all your GST needs

What is GSTN ( Goods and Service Tax Network )?

The Goods and Service Tax Network (GSTN) is a non-profit, non-government

organization which manages the entire IT system of the GST portal. Read more
here!

The Goods and Service Tax Network (or GSTN) is a non-profit, non-government
organization. It will manage the entire IT system of the GST portal, which is the
mother database for everything GST.

Structure of GSTN
Private players own 51% share in the GSTN, and the rest is owned by the
government. The authorized capital of the GSTN is ₹10 crore (US$1.6 million), of
which 49% of the shares are divided equally between the Central and State governments, and the
remaining is with private banks.

Shareholder Shareholding
Central Government 24.5%
State Governments & EC 24.5%
HDFC 10%
HDFC Bank 10%
ICICI Bank 10%
NSE Strategic Investment Co 10%
LIC Housing Finance Ltd 11%
Total 100%

Goods and Service Tax Suvidha Providor and Eco System

GSP stands for GST Suvidha Provider.

A GSP is a service provider who helps the taxpayer to comply with the
provisions of the GST law through its web platform. Goods and Service Tax
Network (GSTN) will receive the returns filed by companies through GST
Suvidha Provider.

Indian Government has appointed 34 GST Suvidha Providers (GSPs) who

will be allowed to develop simple applications to be used by taxpayers for
interacting with GSTN.

GSTN has selected 34 companies who will be known as GST Suvidha

Providers (GSPs). Those GSPs can also develop application softwares which
will be used by taxpayers for interacting with the GSTN.

Why do you need services of GSP?

The tax automation will be very critical under GST because it would be very
difficult to comply all regulatory requirements under Goods and Service
Tax (GST). 
The high level of synchronization of data will be required and all such
information will be transferred between the taxpayer’s system and the GST
Network (GSTN) system. 

It would be very difficult to achieve this synchronization without

automation. These application service providers will provide innovative and
convenient methods of interacting with the GST Systems, from registration,
to uploading invoice details, to filing returns. 

In other words, GSTN can interact only with GSP, not with tax payers.

What is the concept of GST Eco-system?

A common GST system will provide linkage to all State/UT Commercial Tax
departments, Central Tax authorities, Taxpayers, Banks and other stakeholders.
The eco-system consists of all stakeholders starting from taxpayer to tax
professional to tax officials to GST portal to Banks to accounting authorities. The
diagram given below depicts the whole GST eco-system