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INTRODUCTION TO INDIRECT TAXATION & GST

TAX IS THE PRICE WHICH WE PAY FOR A CIVILISED SOCIETY. GOVERNMENT NEEDS FUNDS FOR VARIOUS PURPOSES LIKE
MAINTENANCE OF LAW & ORDER, DEFENCE, SOCIAL/ HEALTH SERVICES. GOVERNMENT OBTAINS FUNDS FROM
VARIOUS SOURCES OUT OF WHICH ONE MAIN SOURCES, IS TAXATION.

TAXES ARE BROADLY CLASSIFIED AS DIRECT TAX & INDIRECT TAX.

DIRECT TAX INDIRECT TAX

TAX ON INCOME, WEALTH, PROFESSION ETC. OF
PERSONS
TAX PAYER PAYS TAXES DIRECTLY TO
GOVERNMENT
DIRECT TAX BECOME PAYABLE AFTER THE INCOME
REACHES THE TAX PAYER
INCOME TAX IS THE MAJOR DIRECT TAX
DIRECT TAX RATE IS NOT FLAT.
HIGHER THE INCOME, HIGHER THE RATE
TAX ON CONSUMPTION OF GOODS & SERVICES
TAX PAYER PAYS TAXES INDIRECTLY THROUGH
INTERMEDIARIES LIKE IMPORTER, SUPPLIERS
INDIRECT TAX BECOME PAYABLE EVEN BEFORE THE
GOODS/ SERVICES REACH THE TAX PAYER
GST & CUSTOMS ARE THE MAJOR INDIRECT TAX
INDIRECT TAX ARE FLAT OR FIXED.
THE POOR & THE RICH PAY THE SAME TAX.

ADVANTAGES OF INDIRECT TAX

1. GOVERNMENT REVENUE

2. WIDER TAX BASE

3. EASE OF COLLECTION

4. LOW COLLECTION COSTS

5. LESS EVASION

6. TAX ON LUXURY/ HARMFUL ITEMS

7. INVISIBLE BURDEN ON CONSUMER

INTRODUCTION TO GST

GOODS & SERVICE TAX MEANS ANY TAX ON SUPPLY OF GOODS OR SERVICES OR BOTH. GST IS AN INDIRECT TAX i.e. TAX
IS PAID BY THE SUPPLIER BUT ULTIMATELY BORNE BY THE CONSUMER.

THE IDEA OF GST IN INDIA WAS FIRST MOOTED BY THE KELKAR TASK FORCE IN 2004.

GOODS AND SERVICE TAX (GST) IS AN INDIRECT TAX APPLICABLE THROUGHOUT INDIA (ALL OVER) FROM 1ST JULY, 2017
BY REPLACING TAXES LEVIED BY THE CENTRAL AND STATE GOVERNMENT.

FEATURES OF GST

1. TAX ON CONSUMPTION

2. GST IS A DESTINATION BASE TAX

3. VALUE ADDED TAX

4. CONTINUOUS FLOW OF CREDIT

5. TAX ON SUPPLY
GST IS NOT APPLICABLE ON:

GST IS APPLICABLE ON ALL GOODS & SERVICES, EXCEPT

1. ALCOHOLIC LIQUOR FOR HUMAN CONSUMPTION

2. PETROLEUM PRODUCTS- PETROLEUM CRUDE, DIESEL, PETROL, AVIATION TURBINE FUEL, NATURAL GAS

3. REAL ESTATE SECTOR

BENEFITS OF GST

1. COMMON NATIONAL MARKET- ONE NATION ONE TAX

2. MAKE IN INDIA

3. LOW TAXES

4. LOW COST

5. SINGLE REGISTRATION

6. NO TAX EVASION

7. SIMPLE AUTOMATED PROCEDURE

8. IMPERSONAL TAX ADMINISTRATION

GST COUNCIL

THE GST COUNCIL HAS TO BE CONSTITUTED BY THE PRESIDENT WHICH WILL BE A JOINT FORUM OF THE CENTRE AND
THE STATES, SHALL CONSIST OF THE FOLLOWING MEMBERS:

(A) UNION FINANCE MINISTER – CHAIRPERSON

(B) THE UNION MINISTER OF STATE, IN-CHARGE OF REVENUE OF FINANCE – MEMBER

(C) THE MINISTER IN-CHARGE OF FINANCE OR TAXATION OR ANY OTHER MINISTER NOMINATED BY EACH STATE
GOVERNMENT – MEMBERS

GOODS & SERVICES TAX NETWORK (GSTN)

GSTN, SHORT FOR GOODS AND SERVICE TAX NETWORK, IS A NON-PROFIT NON-GOVERNMENT COMPANY. IT

PROVIDES SHARED IT INFRASTRUCTURE AND SERVICE TO BOTH CENTRAL AND STATE GOVERNMENTS INCLUDING
TAXPAYERS AND OTHER STAKEHOLDERS. THE REGISTRATION FRONT END SERVICES, RETURNS, AND PAYMENTS TO
ALL TAXPAYERS WILL BE PROVIDED BY GSTN. IN A NUTSHELL, IT WILL BE ACTING AS THE INTERFACE BETWEEN THE
GOVERNMENT AND THE TAXPAYERS.

INFOSYS HAS BEEN APPOINTED AS MANAGED SERVICE PROVIDER.

DATA ACCESS

 THE TAXPAYER CAN ACCESS HIS OWN DATA

 THE TAX OFFICIAL HAVING JURISDICITION AS PER GST LAW
 DATA CAN BE ACCESSED BY AUDIT AUTHORITIES
  NO OTHER ENTITY CAN HAVE ANY ACCESS TO DATA AVAILABLE WITH GSTN

FUNCTIONS
 MANAGE THE WEBSITE www.gst.gov.in
 PROVIDE SERVICES TO THE TAXPAYER FOR REGISTRATION, PAYMENT & RETURN
 FORWARD THE RETURNS TO CENTRAL & STATE AUTHORITIES
 MATCH TAX PAYMENT DETAILS WITH BANKING NETWORK
 RUN THE MATCHING ENGINE FOR MATCHING, REVERSAL, & RECLAIM OF INPUT TAX CREDIT

EXISTING LAWS REPLACED

THE VARIOUS CENTRAL, STATE & LOCAL TAXES WERE EXAMINED TO IDENTIFY THEIR POSSIBILITY OF BEING SUBSUMED
UNDER GST

CENTRAL TAXES

SUBSUMED NOT SUBSUMED

CENTRAL EXCISE DUTY CUSTOMS DUTY
ADDITIONAL DUTY ON EXCISE
SURCHARGE & CESSES
CENTRAL SALES TAX

STATE TAX

SUBSUMED NOT SUBSUMED

VALUE ADDED TAX STATE EXCISE DUTY
PURCHASE TAX STAMP DUTY
ENTRY TAX, OCTROI PROFESSION TAX
ENTERTAINMENT TAX ELECTRICITY DUTY
LUXURY TAX SALES TAX ON FIVE PETROLEUM PRODUCTS
BETTING, GAMBLING & LOTTERY TAX
SURCHARGE & STATE CESSES

CLASSIFICATION OF GOODS & SERVICES

HSN (HARMONISED SYSTEM OF NOMENCLATURE) CODE IS USED FOR CLASSIFYING THE GOODS UNDER THE GST. A NEW
SCHEME OF CLASSIFICATION OF SERVICES HAS BEEN DEVISED WHEREIN THE SERVICES OF VARIOUS DESCRIPTIONS HAVE
BEEN CLASSIFIED UNDER VARIOUS SECTIONS, HEADING & GROUP.EACH GROUP CONSISTS OF VARIOUS SERVICE CODE.

ANTI-PROFITEERING MECHANISM
ANTI-PROFITEERING MEASURES HAVE BEEN INCORPORATED UNDER GST LAW TO PROVIDE BENEFIT OF REDUCTION IN
GST RATES TO THE CONSUMERS IN TERMS OF REDUCED PRICES AND NOT ALLOW MORE PROFIT MARGINS TO THE
BUSINESSMEN. THE SUPPLIERS OF GOODS AND SERVICES MUST PASS ON ANY REDUCTION IN THE RATE OF TAX OR THE
BENEFIT OF INPUT TAX CREDIT TO CONSUMERS BY WAY OF COMMENSURATE REDUCTION IN PRICES.
E-WAY BILL SYSTEM

E-WAY BILL IS AN ELECTRONIC WAY BILL FOR MOVEMENT OF GOODS TO BE GENERATED ON THE EWAY BILL PORTAL. A
GST REGISTERED PERSON CANNOT TRANSPORT GOODS IN A VEHICLE WHOSE VALUE EXCEEDS RS. 50,000 (SINGLE
INVOICE/BILL/DELIVERY CHALLAN) WITHOUT AN E-WAY BILL THAT IS GENERATED ON EWAYBILLGST.GOV.IN.
WHEN AN E-WAY BILL IS GENERATED, A UNIQUE E-WAY BILL NUMBER (EBN) IS ALLOCATED AND IS AVAILABLE TO THE
SUPPLIER, RECIPIENT, AND THE TRANSPORTER.

E-WAY BILL WILL BE GENERATED WHEN THERE IS A MOVEMENT OF GOODS IN A VEHICLE/ CONVEYANCE OF VALUE
MORE THAN RS. 50,000

 IN RELATION TO A ‘SUPPLY’
 FOR REASONS OTHER THAN A ‘SUPPLY’ ( SAY A RETURN )

FORM
IT HAS TWO COMPONENTS: PART A COMPRISING OF DETAILS OF GSTIN OF RECIPIENT, PLACE OF DELIVERY (PIN CODE),
INVOICE OR CHALLAN NUMBER & DATE, VALUE OF GOODS, HSN CODE, TRANSPORT DOCUMENT NUMBER & REASON
FOR TRANSPORTATION & PART B COMPRISING OF TRANSPORTER DETAILS (VEHICLE NUMBER)

DUAL GST
INDIA ADOPTED A DUAL GST WHERE TAX IMPOSED CONCURRENTLY BY THE CENTRAL AND STATES
CENTRAL GOODS AND SERVICES TAX ACT, 2017 (CGST): CGST LEVIED AND COLLECTED BY CENTRAL GOVERNMENT. IT IS
A REVENUE SOURCE TO THE CENTRAL GOVERNMENT OF INDIA, ON INTRA-STATE SUPPLIES OF TAXABLE GOODS OR
SERVICES OR BOTH.

STATE GOODS AND SERVICES TAX ACT, 2017 (SGST): SGST LEVIED AND COLLECTED BY STATE GOVERNMENTS/UNION
TERRITORIES WITH STATE LEGISLATURES (NAMELY DELHI PONDICHERRY & JAMMU & KASHMIR) ON INTRA-STATE
SUPPLIES OF TAXABLE GOODS OR SERVICES OR BOTH. IT IS A REVENUE SOURCE OF THE RESPECTIVE STATE
GOVERNMENT.

UNION TERRITORY GOODS AND SERVICES TAX (UTGST): UTGST LEVIED AND COLLECTED BY UNION TERRITORIES
WITHOUT STATE LEGISLATURES, ON INTRA-STATE SUPPLIES OF TAXABLE GOODS OR SERVICES OR BOTH. THE
FOLLOWING ARE UNION TERRITORIES WITHOUT LEGISLATURE: 1. CHANDIGARH 2. LAKSHADWEEP 3. DAMAN AND DIU 4.
DADRA AND NAGAR HAVELI 5. ANDAMAN AND NICOBAR ISLANDS 6. LADAKH

INTEGRATED GOODS AND SERVICES TAX ACT, 2017 (IGST): IGST IS A MECHANISM TO MONITOR THE INTER-STATE
TRADE OF GOODS AND SERVICES AND ENSURE THAT THE SGST COMPONENT ACCRUES TO THE CONSUMER STATE. IT
WOULD MAINTAIN THE INTEGRITY OF ITC CHAIN IN INTER-STATE SUPPLIES. THE IGST RATE WOULD BROADLY BE EQUAL
TO CGST RATE PLUS SGST/UTGST RATE. IGST WOULD BE LEVIED AND COLLECTED BY THE CENTRAL GOVERNMENT ON
ALL INTER-STATE TRANSACTIONS OF TAXABLE GOODS OR SERVICES.