CAASA Tax Table 1st edition

ABHISHEK SHANKAR AGARWAL & ASSOCIATES CHARTERED ACCOUNTANTS

TAX TABLE [1ST EDITION]

CA ABHISHEK AGARWAL, ACA, DISA M| 9831982004 E|[email protected] W| www.caasa.org

GOODS & SERVICE TAX GST (Goods and services tax) is a broad based single comprehensive indirect tax levied

at each point of goods sale or provision of services. Under the model, the seller or service

provider can claim the input credit of tax which he has already paid while purchasing the

goods or procuring the service.

The proposed GST in India is a dual tax. The reference of GST was first made in Indian

Budget in 2006 by Mr. P Chidambaram as a single centralized indirect Tax in which tax

is to be collected by centre and then it is to be distributed between centre and States. This

was the standard format of Goods and service Tax.

In our country states have also right to collect indirect taxes on sale of goods hence this

“single centralized” form of GST was rejected by the states at the initial stage itself.

Hence a compromise is made on Dual GST in this respect in which both states and centre

will impose and collect tax on a single transaction of sale and service in the form of State

Goods and service tax "SGST" and Central Goods and service tax "CGST"

TAXES TO BE SUBSUMED

At the Central level, the following

taxes are being subsumed:

At the State level, the following

taxes are being subsumed:

a. Central Excise Duty

a. State Value Added

Tax/Sales Tax(VAT)

b. Additional Excise Duty

b. Entertainment Tax (other

than the tax levied by the

local bodies), Central Sales

tax (levied by the Centre

and collected by the

States),

c. Service Tax c. Octroi and Entry tax,

mailto:E%[email protected]




MODELS OF GST

Central Goods & Service Tax (CGST)

State Goods & Services Tax (SGST)

Integrated Goods & Service Tax (IGST)

1. CGST: -

Under CGST framework, there will be a single GST and the Union would levy the

same. The Central Government would administer the tax and the States would be

having revenue sharing arrangement.

2. SGST:-

Under this model States alone levy GST and the Centre withdraws from the field

of GST completely.

Three Models Of GST

CGST SGST IGST

d. Additional Customs Duty

commonly known as

Countervailing Duty

d. Purchase Tax,

e. Special Additional Duty of

Customs.

e. Luxury tax

f. Taxes on lottery, betting

and gambling.

CGST levied and collected by

the Centre.

SGST levied and collected by

the State.

It is levied and collected by

the Centre.





3. IGST: - Transaction between States to have only one type of tax –IGST which

goes to the Centre.

GOODS & SERVICE TAX NETWORK (GSTN)

For the implementation of GST in the country, the Central and State Governments

have jointly registered Goods and Services Tax Network (GSTN) as a not-for-

profit, non-Government Company to provide shared IT infrastructure and services

to Central and State Governments, tax payers and other stakeholders.

The key objectives of GSTN are to provide a standard and uniform interface to the

taxpayers, and shared infrastructure re and services to Central and State/UT

governments.

GSTN is working on developing the common GST portal providing frontend

services:

• Registration,

• Returns, and

• Payments

to all taxpayers, as well as the backend IT modules for certain States that include

processing of:

• Returns,

• Registrations,

• Audits,

• Assessments,

• Appeals, etc.

All States, accounting authorities, RBI and banks, are also preparing their IT

infrastructure for the administration of GST.





There would no manual filing of returns. All taxes can also be paid online. All

miss-matched returns would be auto-generated, and there would be no need for

manual interventions. Most returns would be self-assessed.

THRESHOLD LIMIT UNDER GST

The threshold limit under central excise is 1.50 Crore and in service tax it is Rs.10

Lakhs. Further in case of Vat the limit in most of the states is also Rs.10 Lakhs but

in some of the states it is still Rs. 5 Lakhs.

The proposed threshold limit under GST is Rs.10 Lakhs under both the formats

i.e. SGST and CGST though there was a demand of higher.

Generally it is called that GST will make a financially strong Centre than state and

this is based on firstly, threshold and secondly, the fact that now centre will get the

tax up to selling stage instead of manufacturing stage which it is getting under

Central Excise.

REGISTRATION

Existing dealers

VAT/Central excise/Service Tax

payers will not have to apply

afresh for registration under GST.

New dealer

Single application to be filed

online for registration under GST.

The registration number will be

PAN based and will serve the

purpose for Centre and State.

Unified application to both tax





authorities.

Each dealer to be given unique ID

GSTIN.

Deemed approval within three

days.

Post registration verification in risk

based cases only.

RETURN FILING

There are eight forms provided for in the GST business processes for filing for returns.

Filing of returns shall be completely online. All taxes can also be paid online.





WILL GST REDUCE TAX EVASION?

As we can see, all the distributors will prefer to purchase with invoice, because it gives

them a better profit margin as he can claim taxes paid at the previous stage.

In the present scenario, the distributor has to bear the burden of excise duty that results in

avoiding the tax payments.

Hence, introduction of GST can create a scenario in which the customer will insist on

having a bill, resulting in overall decline in tax evasion incidences.





CST VS. IGST

When Vat was introduced in India in 2006 the CST was considered as the biggest hurdle

and it was promised that CST will be reduced by 1% every year and ultimately it will be

abolished. After reducing from 4 to 3 and 3 to 2% this promise was not followed and

since last several years it is there with 2%. The practical problems attached with “C

forms” are the result of this broken promise. Here it should be noted that the collection

from CST i.e. tax on interstate sales is the part of revenue of the supplier stage or

Manufacturer stage.

Now what will happen with CST in GST may be a question. In GST there will be no

place for CST hence manufacturing states which are generating huge revenue in this

respect will lose the same. There will be a mechanism in GST to control the trade

between two states and that mechanism will be called IGST- “Integrated Goods and

Service Tax” and through this mechanism ultimate tax will go to the consumer state.

IGST will not be a another (Third Tax) but it will be a complex mechanism that will

ensure that one part of tax is received by Centre and other part of tax to consumer state

and that will make GST a perfect destination based tax.

Now the revenue loss of the states will have to be compensated by the Central

Government.

RNR- REVENUE NEUTRAL RATE

The basic question which generally asked in case of GST is that what will be the rate of

tax. There will be two rates. One for states i.e. rate of SGST and second one is for centre

i.e. rate of CGST.

The Law makers want to fix a rate where Government can get at least the same tax which

both states and centre are getting under the present set up i.e. under VAT/CENTRAL

EXCISE/SERVICE TAX etc.This is called RNR and getting exact that rate is practically

very difficult since multiplicity of taxes and cascading effect will not be there under GST.

The GST council which will be established as per the provisions of the GST constitution

Bill will decide the final rate of tax as per their discussion and decision power.

Whatever may be the rate trade industry and consumers will find it too high but even in

that case Government will get same revenue, it is uncertain. The rate of tax will play a

major role in the success of GST but it will not be easy task for lawmakers to ascertain

and fix it.


CAASA Tax Table 1st edition

Business

Transcript of CAASA Tax Table 1st edition