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Ketan Jog | 18.Jun.15GST in India

Sulzer ChemtechMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechPage 1

Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechContentsQuick Re-capWhat has changed since December 2014Way ForwardImplementation MatrixGST CouncilGST NetworkObjectivesWorkflowData Capturing StructuresTax BoostersInteractive

Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : Constitutional Authority to levy TaxesUnion ListState ListConcurrent ListIncome TaxCustom DutyExcise DutyService taxCentral Sales TaxStamp duty in respect of bills of exchange, cheques, promissory notes, etcTaxes on lands and buildingsExcise duty on alcoholic liquor etcEntry tax (Levied by State)Sales TaxRoad TaxLuxury TaxStamp duty in respect of documents other than those specified in the provisions of List IStamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp dutyTaxes levied under Current authority of the ConstitutionMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : Course of EventsExisting Tax system was sought to be replaced by a Single Tax called GST as recommended by Kelkar Committee in 2003.ButSingle GST concept was rejected in favor of a DUAL GST One for the Centre (CGST) and other for State (SGST).It has now become CGST, SGST and IGST & Addl IGST!!!. IGST is Integrated GST on Inter State Transactions. Addl IGST is @ 1% for upto 2 Years.Finance Minister, Shri Arun Jaitley presented the Constitution Amendment Bill (CAB) in the Loksabha on 19.Dec.14, which now provides for Concurrent jurisdiction for levy & collection of GST by the Centre & the States.CAB was passed by Lok Sabha in Budget session on 6.May.15, but Rajya Sabha referred it to Select Committee, which is due to comment on the bill in Monsoon Session.

Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : Constitutional Setup : as per Proposed CABBy UnionBy StatesBy Both Union & StatesIncome TaxCustom DutyExcise DutyService taxCentral Sales TaxStamp duty in respect of bills of exchange, cheques, promissory notes, etcInterstate sale of Goods & Services (IGST)Excise on Petrol, Crude, Diesel, ATF, Tobacco products.( ? Notified Date ?) Taxes on lands and buildingsExcise duty on alcoholic liquor etcEntry tax (Levied by State)Sales TaxRoad TaxLuxury TaxStamp duty in respect of documents other than those specified in the provisions of List IOn all Goods & Services except Alcoholic Liquor (CGST and SGST)Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp dutyTaxes that will be levied under authority of the ConstitutionMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : DefinitionsGoods & Services Tax : Article 366A (Clause 12A) of the Constitution of India :means any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor for human consumption.On the following, GST will be levied wef date recServices : Article 366A Clause (26A) of Constitution says Services means anything other than goods.Goods : means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : Basic ConceptsTax on domestic consumption. No differentiation between Goods and Services.Tax leviable at each point of sale or provision of service. Input Tax Credit is available at every stage.Treats whole country as a single jurisdiction.Uniform Tax rates across the whole jurisdiction.No distinction in Tax rates on Imported or Domestic Goods.Single Tax jurisdiction allows ease of allowing Input Tax Credit.Destination based tax for interstate transactions (IGST)- ultimate tax will be collected by the state in which goods are finally consumed. Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : How will the Tax look on an InvoiceSupply within State:

Supply from One State to Another

Exports

The Base for both CGST and SGST is same no tax on taxTax Rate is assumed 10%Revenue Neutral Rate as worked out earlier : 12% (2005)

Basic value charged for supply of goods or services10,000Add: CGST @ 10%1,000Add: SGST @ 10%1,000Total price charged for local supply of goods or services12,000Basic value charged for supply of goods or services10,000Add: IGST @ 20%2,000Add: Additional IGST @ 1%100Total price charged for interstate supply of goods or services12,100Basic value charged for supply of goods or services10,000Add: CGST \ SGST \ IGST NILNilTotal price charged for export of goods or services10,000Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : Set Off or Input Tax CreditNature of Input TaxCan be utilized for payment ofCGST(Amount goes to CBEC)CGSTIGSTSGST(Amount goes to State)SGSTIGSTIGST(Amount goes to CBEC)

CGSTSGSTIGSTCentral Government to act as a Clearing House & transfer the funds across States Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechRe-cap : BenefitsReduction in the number of taxes at the Central and State level.

Decrease in effective tax rate for many goods.

Removal of the current cascading effect of taxes

Reduction of transaction costs of the taxpayers through simplified tax compliance

Increased tax collections due to wider tax base and better compliance

Govt Expects Tax Collections to increase by 90K CroresMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechWhat has changed since December 2014Lok Sabha has passed the GST CABFinance Minister has stated in LS the Tax Rate will be much lower than 25%.Rajya Sabha has referred it to Select Committee.Select Committee is expected to decide onAddl IGST If it is really necessaryPlace of Supply RulesRevenue Neutral Rate (RNR) effective GST Rate

Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechWay ForwardMonsoon Session of Parliament to commence in July, in which Rajya Sabha is expected to Approve the CAB.After CAB passage in Rajya Sabha, atleast 15 States have to ratify it in their respective State Legislative Assemblies.Then, President shall give his assent for enactment.GST Council to be formed within 60 Days of Enactment of CAB.GST Law & Rules to be announced by Centre & States and to be opened for Public Opinion.GST Network (IT Infrastructure) for handling GST to be introduced.Centre & States have agreed to share 50% of Costs of GSTN.

Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechImplementation StructureActivityResponsibilityRegistration,File Returns,Tax PaymentsTax PayerRegistration Acceptance,Acceptance & Return ConsolidationChallan ReconciliationsMatching of Input Tax CreditPreparing MIS for Govt & PublicHelpdesk and Facilitation CentresGSTN(IT Infrastructure for facilitating GST)Assessment, Audits and Law EnforcementRefundsDispute ResolutionTax AuthoritiesPolicy Statements, Liasioning agency for Centre & StatesGST CouncilTax Payments & ReconciliationsBanks & RBITax Payer and Tax Authorities are expected to Interact only THRU GSTNMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechGST CouncilIndia is a country of 29 States & 7 Union Territories.To Implement a Uniform GST all over India, a need for a Political Administrative Body was felt, which will take over from the Empowered Committee of State Finance Ministers after GST Implementation GST Council.Principal Objective : Recommend Sharing of IGST between Centre and States.Other areas of Operation

GST Council will include Union FM, MoS and atleast 1 Minister nominated by each State Govt.Framing Model LawsDecide threshold limit of turnover.Define Rates Bands / Floor rates GSTDefine Special rates during any natural calamityFrame & Oversee Special Provisions for Special StatesResolution of Disputes regarding levy and collection of taxes between States / Centre.Set Principals for Addl IGST (1%)Decide effective when Crude, Petrol, HSD, Natural Gas, Aviation Fuel to be included in GSTMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechGSTN : ObjectivesClear IT Migration Strategy to GSTSimplicity for Tax PayersRespect Autonomy of the StatesUniformity of Policy Administration across the whole CountryEnable digitization of the whole chainReduce tax LeakagesLeverage current IT Investments made by StatesCommon File Formats

NSDL is the Implementing Agency selected by the Government to roll out GSTNMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechGSTN : WorkflowRegistration : Single PAN based registration number to be issued to all Tax Payers. A registration number can be extended to States on request.Returns Filing : Accept Tax Returns and proceed with Preliminary ProcessingReturns filed will be forwarded to CBEC; If States desire (in cases they do not have required Infrastructure), Returns will be forwarded to States as well.Harmonized System of Nomenclature to be implemented for Goods, in line with GATT.Business Rules Engines to refer to Tax Rates, Revenue Sharing Rules etc in Returns.Challan Matching with Tax Returns & Input Tax Credit ReportsTax paid under IGST by the selling dealer in the Exporting State will be available as ITC to the Purchasing Dealer in the Importing State. Info uploaded by Tax Payer will flow to CBEC, States and later CBDT, MCA.

Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechGSTN : Data Capturing Structure

Whole EntityBranch / LocationInvoice / DocumentHSN NomenclatureMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechGSTN : Tax Boosters Type of FraudIn System Checks Fraudulent InvoiceMatching with Data uploadedImproper Input Tax CreditMatching with Data uploadedFraudulent Use of Exempt RulesBusiness Rules Engine ValidationFalse Payment ProofMatching with E-Payments Unrecorded SalesData MiningMisuse of CompositionData MiningWrong Benefit of Lower Tax RateData MiningUnder-Invoicing DeclarationData MiningNon-Existent DealersData MiningGSTN to have Intelligent Deterrents to check FraudsResults of these Tax Boosters to be forwarded in due course for Audits, Appeals, Refund ProcessingMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechQUESTIONS & COMMENTS?InteractiveMonthly Finance Meet - GST| 18.Jun.15| slide #Sulzer ChemtechTHANK YOU!!Monthly Finance Meet - GST| 18.Jun.15| slide #Sulzer Chemtech