GST in India

CA Pranjal Joshi
Mcom, FCA, DipIFR (UK), Cert.
Business Valuation (ICAI)

M/s Pranjal Joshi & Co

Chartered Accountants
 GST stands for Goods and Service Tax.
 GST shall amalgamate large number of Central and State
Taxes into a single tax.
 It is expected that the burden of taxes on goods and services
shall get reduced.
 Introduction of GST would also make Indian products
competitive in the domestic and international markets.
 It would mitigate cascading or double taxation and shall make
India as one common national market.
Present Indirect Tax System – Cascading
effect of tax – Example
Particulars Value Tax
Manufacturing of Goods 100,000
Add – Excise Duty @ 12.5% 12,500 12,500
Ex-FactoryValue 112,500
Add –Vat @ 13.5% (On Rs. 112,500) 15,188 15,188
Taxable amount before Octroi 127,688
Add- Octroi @ 5.5% (On Rs 127,688) 7,023 7,023
Total Amount in the hands of Customer 134,711 34,711

Percentage of tax to transaction value = 34,711/1,00,000 * 100 = 34.71% (Rs.34,711) Aggregate of all taxes =
12.5% + 13.5% + 5.5% = 31.50% (Rs.31,500)
Cascading effect of tax i.e. tax on tax = 3.21% (Rs.3,211)
 GST – Destination
Based Consumption Tax
 At present VAT is collected and retained by originating state
 Under GST, tax to accrue to the taxing authority which has
jurisdiction over the place of consumption also termed as place
of supply
 Supplies imported into country to attract GST
 Supplies exported outside country not to attract GST
 GST – Salient features
 Government is claiming it to be 1 Nation 1
Market and 1 Tax.

 World wide it is more or less true.

 But now add Indian Tadaka.

 GST in India is –

 Dual Structure–Dual Levy–Dual Control

GST – Current levies that will get merge
Central Govt taxes and duties to be State Govt taxes and duties to be
merged in GST merged in GST
a) Central Excise duty a) State VAT
b) Duties of Excise (Medicinal and Toilet b) Central Sales Tax
Preparations) c) Purchase Tax
c) Additional Duties of Excise (Goods of d) Luxury Tax
Special Importance) e) Entry Tax (All forms)
d) Additional Duties of Excise (Textiles and f) Entertainment Tax (not levied by the
Textile Products) local bodies)
e) Additional Duties of Customs g) Taxes on advertisements
(commonly known as CVD) h) Taxes on lotteries, betting and gambling
f) Special Additional Duty of Customs i) State cesses and surcharges insofar as far
(SAD) as they relate to supply of goods or
g) Service Tax services
h) Cesses and surcharges insofar as far as
they relate to supply of goods or services
GST – what is not subsumed
 Following duties and taxes are NOT included in GST –
 Central Excise duty on specified petroleum items & tobacco
products (these may be included later)
 Basic Customs Duties
 Excise on Liquor
 Property Tax
 Tax on sale / consumption of electricity
 Stamp duties
 Dual
Structure of
GST -
 Intra State (within the state) supply of Goods and Services shall attract
= CGST (GST levied by Centre) + SGST (GST levied by State)
 Inter state supply of Goods and Services shall attract = IGST (An
Integrated GST to be collected by Centre)
 IGST shall also be applicable for –
 Import of Goods and Services,
 Inter state supplies of Goods and Services
 Inter state stock transfer of Goods and Services.
 Exports would be zero-rated.
Taxable event – Supply
of Goods and Service
and valuation
Taxable Event in GST regime -
ExistingTax Taxable Event Taxable Event in GST
Regime
Excise Duty Manufacture of excisable goods
Service Tax Provision of Service
VAT/Sales Tax Transfer of title in goods within state
Supply of goods/services
CST Transfer of title in goods outside state

CVD On import in lieu of excise duty

SAD On import in lieu of VAT
Entry Tax/ LBT Entry of specified goods in the State for sale,
use or consumption
Entertainment tax Provision of entertainment
Supply of Goods and Services -
Location of Supplier + Place of Supply = In the same State

Intra State Supply = CGST + SGST

Otherwise it will be Inter State Supply

Between two By / to SEZ

Cross Border Non Intra state
states Developer

IGST
Taxable Supply -
 Taxable supply may comprise of the following –
 Forward charge – Supply with consideration
 Forward Charge – Supply without consideration for specific transactions
 Notified supply of services through ecommerce operator
 Reverse charge for goods and services
 Reverse charge for supply from un-registered person
 TDS provisions
 Liability shall arise = At the time of supply of goods and services
 Valuation of taxable supply to be determined
 Place of supply of Goods and Services shall be governing point as to
charging of GST.
 Step wise methodology -
1
• Determine whether there is supply

2
• Determine whether supply is taxable or not (incl on reverse charge basis)

3
• Determine whether it is supply of goods or services

4
• Determine the “time of supply”

5
• Determine the “place of supply”

6
• Determine the “valuation of supply”

7
• Charge IGST or CGST + SGST as applicable
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