94 0 gst-concepts
TRANSCRIPT
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8 April 2013 1
GOODS AND SERVICES TAX
(GST)
-CONCEPT, MODEL & EMERGING CONSENSUS -
VIVEK JOHRI
JOINT SECRETARY(TRU)
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PRESENTATIONPLAN
BackgroundMilestones
Format of discussions
Economics of GST
Basic conceptsKey features (Tax base, taxes to be
subsumed, credit mechanism)
Why GSTPolitics of GSTConstitutional
provisions
Administrative structure
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ROAD TO GST- MILESTONES
Budget 2006-07 announcement of the intent to
introduce GST by 1st April,2010
Preparation of roadmap and design- assigned to
the Empowered Committee of State Finance
MinistersApril 2008 EC submits its report to the Central
Government
October & December 2008- Central Governmentoffers its views/ comments
January 2009- Discussions on the revised report
resume
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ROAD TO GST- contd.
Three Working Groups set up to examine
List of exemptions & threshold
Modalities for taxation of services
Inter-State movement of goods and services
Budget 2009-10 : FM reaffirms the Governmentsintent to launch GST by 1.4.2010
10th November, 2009 Empowered Committee
releases its First Discussion Paper on Goods andServices Tax in India
Likely to release the Second Discussion Paper bymid- December, 2009
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FORMAT OF DISCUSSIONS
Dramatis personaeEmpowered Committee of State FinanceMinisters
Finance Ministers of all State Governments
Chairperson- Dr. Asim K Dasgupta, FinanceMinister of West Bengal
Secretariat at New Delhi
Government of India
Department of Revenue
CBEC
Stakeholders
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BASIC CONCEPTS
Origin vs. Destination principleConsumption type VAT vs.Production or Income type
Invoice method vs. Subtractionmethod
Cash basis vs. accrual basis
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BASIC CONCEPTS contd.
Concept of supplyAny transaction involving exchange of
value?
Supply of goods transfer of the right todispose of tangible property as owner?
Supply of services -Any transaction thatdoes not constitute a supply of goods
Linked to consideration treatment ofconsignment sales, stock transfers, jobwork etc.
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FEATURES OF PROPOSED GST
Dual GST having two concurrentcomponents
Central GST levied and collected by the Centre
State GST levied and collected by the States
CGST and SGST would be applicable tosupply of goods and services in India
Also applicable to import of goods andservices
Would apply to all stages of the valuechain primary, secondary and tertiaryincluding retail
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TAX TREATMENT BY ACTIVITY
VAT VAT Central
Excise +VAT/Sales tax
State taxes
+ ServiceTax
VAT + ST
+ Statetaxes
Service Tax
+ Propertytaxes
___
Agri-culture
Forestry,fisheriesand mining
Manufacturing
Construction,Electricity,gas & Water
supply
Trade,hotels,transport
&communication
Financialservices, realestate,
businessservices,Community &socialservices
Publicadmn
GOODS AND SERVICES TAX [except alcohol (State Excise +
sales tax), petroleum (Sales Tax + C Excise), electricity(electricity duty), real estate (stamp duty, property taxes)]
Tobacco (under GST + Central Excise)
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FEATURES OF GST contd.
Taxes to be subsumed within GST:
Barring few exemptions, the coverage would becomprehensive and it would apply to all goodsand services
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Central taxes Central Excise duty Additional duties of exciseAdditional duties of customs(CVD & spl. CVD) Service Tax Cesses & surcharges
State taxes State VAT Central Sales Tax M & T. P. excise duty Entertainment tax Luxury tax Entry taxTaxes on lottery, betting& gambling
Cesses & surcharges
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FEATURES OF GST contd.For demerit goods such as tobacco there may bean excise duty over and above the GST by theCentre
Crude petroleum, petrol, diesel & ATF may bekept out
Threshold exemption in both components of GST
Compounding scheme for dealers having taxableturnover up to a certain threshold above theexemption.
Input tax credit (ITC) of CGST for CGST andSGST for SGST would be permissible withoutinter-mixing
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FEATURES OF GST contd.
Exports out of India to be zero-rated for bothgoods and services.
Tax on Inter-state supply of goods and servicesto be administered by the Centre
Harmonization of business processes between theCentre & the States e.g. registration, return filingaudit and anti-evasion with information sharing
Rate structure and exemptions
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WHY GST- perceived benefits
To trade Reduction in multiplicity
of taxes
Mitigation of cascading/
double taxation Development of
common nationalmarket
Simpler tax regime
Fewer rates andexemptions
Conceptual clarity(goods vs. services?)
To Government Simpler tax system
Broadening of tax base
Improved compliance &revenue collections
Efficient use of resources
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CONSTITUTIONAL PROVISIONS
Problem of overlapping jurisdiction ofthe Union and the States basicstructure
Placement of respective entries in theLists primacy of union laws
Constitutional mechanism to deal with
Deviations, future changes in policy,coverage etc.
Guaranteed compensation to States
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ADMINISTRATIVE ISSUES
Respective Role of States & CentreHarmonization of key business processes
Registration
Return filing
Dispute settlement
Audit, enforcement, recovery etc.
Issues around IGST
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Thank you
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