2. Points at Glance Overview of Indirect taxes in India Why GST ?
Constitutional Framework.
Major tax reforms in India.
Cascading effect of taxes.
GST Balance sheet.

3. Overview of Indirect taxes in India
Excise
Service Tax
Customs
Indirect Taxes
Sales Tax
Entry Tax
Luxury Tax
Entertainment Tax
Disclaimer : These are only few of taxes which we see in our routines, Many other taxes please don’t mind due to constraint of space.

4. Why GST ? One Tax One Nation Removal of cascading effect of taxes
Free Movement of Goods and Services
Rationalize structure of indirect taxation
Continuous chain of set – off till the consumer
Wider Coverage of input tax , sales tax and service tax set-off

5. Power to Tax Constitution of India Union List State List
Concurrent List
Supreme body to Govern the nation
Central Govt. can frame the legislation on entries covered in this list.
State Govt. can frame the legislation on entries covered in this list.
Central & State Govt. both can frame the legislation on entries covered in this list simultaneously.

6. Constitutional Amendments
Article 366 (12A)
“Goods and service tax” means any tax on supply of goods, or services or both except taxes on supply of alcoholic liquor for human consumption.
To be extended to crude, diesel, petrol, natural gas, and ATF from a date to be notified on recommendation of the GST council.
Not yet extended to union territories without legislatures.
Article 246 A
246 A(1) Notwithstanding anything contained in article 246 and 254 parliament, and subject to clause (2), Legislature of every state, have power to make laws with respect to goods and services tax imposed by union or by such state.
246 A(2) Parliament has exclusive power to make laws respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter state trade or commerce.

7. Constitutional Amendment Process
Amendment to implement GST is to follow the following steps;
To be passed in the Rajya Sabha with two third majority
After being subject to months of haggling and histrionics, the Goods & Services Tax (GST) finally had its historic day in the Rajya Sabha with the passage of the Bill to amend the Constitution, paving the way for what is popularly referred to as the concept of “one nation, one tax”. on 04 Aug’ 2016
To be passed in the Lok Sabha with two third majority
Lok Sabha, unanimously passed the 101nd Constitutional Amendment Bill on Aug’ 2016
Stage 1
Ratification by at least half of the State Legislatures
Orissa become 16th state to ratify the constitutional amendment wef. 01 Sep’ 2016
Constitution (101st Amendment) (GST) Bill, 2014, Assented by President on Sep’ 2016
Assent of the President
Jammu and Kashmir, Karnataka, Kerala, Manipur, Tamil Nadu, Uttar Pradesh, Uttarakhand, West Bengal have not ratified till date.

8. GST Council to be formed within 60 Days (A. 279A)
Legislative Process
GST Council to be formed within 60 Days (A. 279A)
In Process, GST Council has already prescribed registration, Invoice and Returns Forms & Rules
Formed on 13 Sep’2016 chaired by Union finance minister, and State finance ministers and representatives from union terretories as members
GST Council to recommend law & procedures for GST
Taxes to be subsumed, exemption, model Legislature, principles of levy, apportionment of IGST, Place of supply, Rates- floor rate and bands, threshold
Stage 2
Centre and State Governments to pass respective Legislations for the implementation of GST
CGST/IGST- Winter session / Money Bill Budget session.
31 Legislatures (29 + 2)
GST Council is working meticulously to roll out GST w.e.f April 1, 2017

9. Additional Customs Duty
Excise
Service Tax
Additional Customs Duty
(CVD)
Special Additional Duty
(SAD)
Sales Tax / VAT
Octroi / Entry Tax/ Luxury Tax/
Entr. Tax/
Taxes on lottery, etc
Purchase Tax
Taxable event is Manufacture of goods
Median Rate 12.5%
Taxable event is sale, Rates 5%, 12.5%, 20%
Taxable event is provison of Service
Median Rate 14% + Cesses
Equivalent to Excise duty
Median Rate 4%

10. Major Tax reforms in India
Goods & Services Tax (GST)
Value Added Tax (VAT)
Cenvat Credit Rules 2004
Input Credit allowed of Excise and Service tax against Excise and service tax Liability on output/Services.
VAT Credit allowed of purchase goods against VAT Liability on sale.
“One Tax one nation” Credit allowed of almost all taxes against output liability.
Central Levy not creditable against State Levy’s
Central Levy not creditable against State Levy’s
Central Levy creditable against State Levy’s

11. Position after VAT : GST
VAT v/s GST
VAT was introduced in the Indian taxation system from April 1, 2005 in an effort to address the problems associated with earlier sales tax.
India is one of the 123 countries across the world that are following the VAT mode, which is an improvement in several aspects.
Position before VAT
VAT
Position after VAT : GST
There was a cascading effect of tax. I.e., Tax on Tax
VAT is the tax on value addition only thereby removing the cascading effect
However, the cascading effect is not removed completely. GST is an improvement over VAT
Essence of GST is to correct certain shortcoming of VAT like bringing central levied taxes under a cogent tax net, which is not possible in VAT system. Hence, GST has been modelled as an extension of the current VAT that would make the tax system more smoother more functioning more comprehensive.

12. Cascading effect : Supply of Goods
CGST / IGST +
SGST
Service Tax
With Implementation of GST this cascading effect of tax on the same goods will be eliminated as CGST/IGST/SGST will creditable against the tax paid on inputs.
Furthermore, Intersectoral credit will also allowed between inputs and input services and Central levy’s V/s State levy’s
This would result in lower cost and seamless flow of transactions.
Tax on Service
CGST / IGST +
SGST
Factory
Service Tax
CGST / IGST +
SGST
Excise Duty +
VAT / CST
Tax on Service
Tax on Goods
CGST / IGST +
SGST
VAT / CST
Tax on Goods
Retail
CGST / IGST +
SGST
Taxes In Red becoming Cost
Taxes in Green allowed as Credit
VAT / CST
Consumer
Tax on Goods

13. Cascading effect : Supply of Goods
Present
Stage of Supply chain
Purchase value of Input
Value addition
Value of Output at removal
Central levy %
State Levy VAT/CST
@ 10 %
Total Tax on Output at removal
Net Tax Payable
Manufacturer
100 30
130 13 14 27
27 – 8 – 9 = 10
Wholesaler
= 143 20
163 - 16
16 – 14 = 2
Retailer 10
173 17
17 – 16 = 1
Consumer
= 190
GST
Stage of Supply chain
Purchase value of Input
Value addition
Value of Output at removal
Total Tax on Output at removal
15 %
Input Tax Credit
Net Tax Payable
Manufacturer
100 30
130 19 13
19.5 – 13 = 6.5
Wholesaler 20
150
22.5
19.5
22.5 – 19.5 = 3
Retailer 10
160 24
24 – 22.5 = 1.5
Consumer
= 184

14. Scenario in GST India Any other Country BCD + IGST
Manufacturer/ Supplier
Customer
Export
Import
India
Any other Country
BCD + IGST
Local Supply
Customer
Inter – State Supply
State Border
IGST (Services)
IGST (Goods)
Customer
CGST
+ (Goods)
SGST
IGST (Services)
Manufacturer / Supplier
Utilisation of Input Credit
International Border

15. Taxes not to be subsumed in GST
Basic Customs Duty.
 Swachh Bharat Cess.
Krishi Kalyan Cess.
Taxes by local bodies
Clarification needed for
Auto cess ?
NCCD ?
Infrastructure cess?
GST

16. GST Balance Sheet           A Starling Fact :
Globally when GST is passed, the ruling Government fails to gain majority in next term
Removal of Cascading effect of taxes , Tax the Goods and services on value addition only. 
Seamless flow of credit 
Destination based tax, Tax will collected by consuming state and central. 
Free Movement of goods , Speedy transportation, no intruption at state borders. 
Rationlisation of Statutory Reportings / Assesments, Bulid transparency across the economy, 
Temporary blockage of Cash Flow. 
Multi tax on Stock lying in depot, warehouse as on cut-off date. 
Temporary surge in inflation. 
Recording / Reporting obligation on small business mans. (Treshhold limit 19 Lacs) 
Question mark on area based exemption and Foreign trade policy.

17. GST- One Tax One Nation
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