Goods & Service Tax (GST)

By :- CA Abhinav Jain

What it is ?

• GST is an integrated scheme of taxation that does not discriminate between goods and services

• GST is levied only on the value-added at every stage of production

• In this system every person is liable to pay tax on his output and is entitled to get input tax credit (ITC) on the tax paid on its inputs

• Ultimately the final consumer shall bear the tax

GST (A Step towards Tax Reform)

• GST will amalgamate a number of central and state tax viz. excise, VAT, sales tax , entertainment tax, luxury tax in SINGLE TAX

• mitigate cascading or double taxation in a major way and pave the way for a Common National Market

• make Indian products competitive in the domestic and international markets

• This will have a beneficial impact on GDP growth

• easier to administer

GST (A Step towards Tax Reform)

• Tax rate would go down but no. of assesse increased

• According to experts, India will gain $15 billion a year.

• divide the burden of tax between manufacturing and services.

• Prices are likely to come down and lower prices mean more consumption, and more consumption means more production, thereby helping in the growth of the companies

• GST which is value tax and being used widely in 150 countries

GST (A Step towards Tax Reform)

Oh Really !!!!!MONEY BLOCKED

• GST have to be paid as soon as there is stock transfer• But the company will be able to claim credit only when it

finally sells the goods

• Which could take months. • It will lead to increase working capital requirements

company's money will be blocked.

GST (A Step towards Tax Reform)

Oh Really !!!!!LACK OF CLARITY

• No clarity with regards to the utilization of input tax credit accumulated prior to the implementation of the GST.

• Company have fears whether the same would be eligible for utilization or not.

As per an article in the Business Standard,

recently a company based in Israel delayed its capital investments of Rs.1 billion in India due to the confusion prevailing on the above aspect

GST (A Step towards Tax Reform)

Oh Really !!!!!WHERE IS SINGLE TAX

• India is going to opt Dual GST Structure• Under the Dual-GST structure, there will be 2 GST rates

• Central GST and • State GST

• This is nothing but the rename of service tax & VAT

GST (A Step towards Tax Reform)

Oh Really !!!!!DO WE GET COMMON NATIONAL MARKET

• There could be a category of goods and services that enjoy tax exemption by the Centre

• But are taxed by the states OR vice versa

• The multiplicity of rates will add to the complexity of arriving at an impact on price.

• Different price at different states

GST (Present Status)• The Lok Sabha has already passed a vital legislation to

introduce the bill rejecting the demand of the opposition for sending it to the Standing Committee

• It is now in Rajya Sabha

• The chances of passing the bill in the remaining three days is tough, given the current mood of the Congress and CPM.

• If passage of the bill is pushed to the winter session, the delay is likely to effect implementation of GST on April 1, 2016.

GST (Present Status)

• Traders are opposed to it, saying that in the current form, it is more complex and needs to be simplified.

• Stiff opposition by manufacturing stateCompensation is not sufficient state’s contention

• J&K is unlikely to implement GST regime as it will take away the state's authority of legislating on taxes,

Thank You