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GST

Presented by: Jeel Shah (20165014)


Jui Shah (20165015)
Gist of GST
GST is an international standard - Implemented in 150+ countries across globe.

Key Feature: Covers Taxes like


1. Service Tax (on input services)
2. Excise Duty (on procurement of inputs)
3. VAT/CST (on procurement of goods)
4. Entry Tax (on entry of goods in specified State)
5. Basic Customs Duty(on import of goods)
6. Additional Duty of Customs and Special Additional Duty (on import of goods)
Structure of GST

GST

Intra State Inter State

CGST (Central IGST (Integrated


GST) GST)

SGST (State
GST)
GST Rates

Zero Rated 5% 12% 18% 28% 28%+add cess

Essential Items Mass Standard Rates Standard Rates Cements, Luxury Cars,
including food Consumption on all goods on all goods white Goods, Tobacco,
Goods Medicines, Chemicals Cosmetic Aerated Drinks
Ex. Coconut oil, Footwear, Products, Non
oil seeds, Fertilizers Luxury Motor
Transportation Cars
Services
Cases of Oppositions Related GST

1. Protests by Textile Traders


Textile traders from Surat to Kolkata were in arms against GST. As per
their point of view, the 5% imposed tax on Textile would ruin the
industry.
Another reason was that suppliers of raw materials, that had annual
limit up to 20 lakh, must register under GST act, else their services would
not be considered. That had provoked suppliers and manufacturers of
Textile Industry.

Oppositions in States:
West Bengal : Strike till 30th June. Some five lakh textile and garment
shops across the state were closed.
Gujarat :
Traders of major cloth markets in cities Surat, Ahmedabad, Bhavnagar and
Rajkot remained shut in protest against five per cent GST on textiles.
"The three-day protest ends on June 29 before the GST Council meets for the
last time on June 30. If the council does not decide on scrapping the five per
cent GST on textiles, we will extend our protest," said GST Sangharsh Samiti
president Champalal Bodhra.
Incidentally, on June 30, the prime minister inaugurated 'Textile India 2017'- a
four-day mega fair - at Mahatma Mandir in Gandhinagar to attract around
1,500 exhibitors from the country and abroad.

Tamil Nadu and Rajathan:


Demanding exemption for textiles from the GST, Retail and wholesale shops
and yarn merchants were on a three-day shut down.
2. Morbi Ceramic Industry stared at loss :

The ceramic industry of Morbi was staring at a business slowdown in the wake of
the imposition of the proposed 28% rate of the goods and services tax (GST) on the
sector.

The industry has been clamoring for a cut in the GST rate on ceramic items from
the proposed 28% to 12%.

However, in a move to save the industry from a total collapse, Morbi ceramic units
have given a big push to the exports market in the hope that this would help them
survive domestic losses. According to sources, exports from Morbi have gone up
from Rs 4,000 crore to Rs 6,000 crore in the past one year alone.
3. Shell companies in Lime light after GST Roll out:

A probe by the ministry of corporate affairs showed that Delhi tops the list with
over 26,000 shell companies, followed by Hyderabad at 25,000.

Officials suspect that some firms, especially those in jewellery and textiles, are
exploring ways to find loopholes in GST to reduce, delay or avoid tax payments just
because of tax burdens.

A provision in the GST law mandates companies transferring goods to a branch


outside the state to pay inter state GST. If the company sells goods outside the
state, it gets six months to pay IGST. This provision is prompting some firms to close
their branches and start shell companies at branch locations to defer the payment,
said an official source in commercial taxes department.
Myths and their Realities Regarding GST:
1. MYTH: Since GST will replace all other taxes on all goods and services,
we are in a single tax regime.
REALITY: Though this was the original idea, petroleum products
petrol, diesel are still outside GST's ambit and, therefore, their tax
rates vary significantly across states.

2. MYTH: The life of small businessmen will become difficult under GST
because of computerized billings, need for Internet connectivity.
REALITY: Shops can do manual billing under GST and Net connectivity
is needed only at the time of filing monthly return and can be
managed from a cyber cafe.
3. MYTH: For every good or service that has been brought under GST,
there won't be any additional tax.

REALITY: GST only subsumes central and state taxes and the levies
charged by local bodies are still outside its ambit.
Using this loophole, the Tamil Nadu government has allowed its local
bodies to charge 30% tax on movie tickets over and above GST. GST is
18% for movie tickets up to 100 and 28% for tickets that cost more
than 100. But be-cause of local body levies, tax in Tamil Nadu will be
48% for tickets up to 100 and 58% for tickets that cost more. Not
surprisingly, the cinema hall owners in the state went on strike.
4. MYTH: Personal expenses will go up on account of GST making it
inflationary because tax rates have been fixed at higher levels18%,
28%.
REALITY: Though the GST rates seem high, it is only because the
entire tax is now visible to the consumer.
Earlier most taxescentral and state excise, additional excise,
purchase tax, etc. did not reflect on your bill.
If one adds up all the taxes, it would have been more for most items
(i.e effective tax rates will be lower for most products).
GST IMPLEMENTATION ISSUES:
INPUT TAX CREDIT
The main objective of any value added tax system (like
the GST) is the prevention of double taxation. This is
done by providing credits at every step of the
production chain, efficiently taxing only the extent of
the value that has been added.
Arduous documentation requirement
Under the Section 16 (11) of the Model GST Law, an
input tax credit can only be received when:
The buyer received a tax invoice from the supplier
The buyer has received goods/services
The taxes charged on purchase have been
deposited/paid by the supplier
The supplier has filed GST Returns
CASH FLOW ISSUES
Administrative load linked with the tax on the
buyer instead of the supplier
Non-payment of taxes by the supplier
Discrepancies found in the suppliers
documentation at a later stage
EFFECT ON SMEs
Advantage is not having to pay taxes on the
goods and services provided by small
businesses
This will allow small businesses to have higher
profit margin, at the same time it will also
permit them to offer a lower price than their
larger competitors, steamrolling the playing
field between small and large businesses to
quite an extent.
FMCG
CONSUMER DISCRETIONARY
FINANCIAL
ENTERTAINMENT
PHARMA & HEALTHCARE
LOGISTICS
logistics players in India have
been maintaining multiple
warehouses across states to
avoid CST levy and state entry
taxes. Most of these
warehouses are operating
below their capacity and thus
adding to their operational
inefficiencies.
Warehouse consolidation across
the country
high investments in
infrastructure wherein 100% FDI
is allowed.
warehouses at strategic
locations such as Nagpur
GST will disrupt the existing
ecosystem and will make it
more efficient and competitive
going forward.
HOSPITALITY, AVIATION & RECREATION
SERVICES
POWER & CAPITAL GOODS
AUTOMOBILES

Source: www.kredx.com
GST
INDIA V/S OTHER COUNTRIES
A total of 160
countries have
opted GST so far.
India has highest
rate of GST at
18% compared
to emerging
market
economics.
India has two
types of
GST hence called
as duel GST.