BASIC CONCEPTS

OF GST
INTRODUCTION
GST amalgamates a
number of state and
This tax system is
GST stands for central taxes and it
very transparent and
Goods and Service majorly aims at
removes the
Tax reduction of tax
cascading effect
burden on the
consumers .

GST rates varies

from 5%-28%
DIRECT AND INDIRECT
TAXES
* DIRECT TAX INCOME
TAX(C)
AGRICULTURAL
TAX IT(S)
INDIRECT PROFESSIONAL
TAX TAX(S)

ENTERTAINME
CUSTOM OCTROI NT TAX(S)
GST(C/S)
DUTY, BASIC (MUNICIPALI
(C) TIES)

FOOT NOTE: C- CENTRAL GOVERNMENT , S- STATE

GOVERNMENT
 • Income tax: it is the tax levied on

DIRECT
earnings of an individual, HUF,
AOP and Firms
• Agricultural income

TAX
• Professional tax

• GST : It is a comprehensive

INDIRE
indirect tax on manufacture, sale
and consumption of goods and
services throughout India

CT TAX
• Custom duty: it is levied import
and exports
• Octroi
• Entertainment and Amusement
tax
OTHER TAXES

OTHER TAXES
Stamp
duty, Property
Education
Registration tax-
cess/surcha
fees and municipal
rge
transfer tax
charges
MEANING OF GST
• GST is an indirect tax levied on the supply of goods and services .
• GST is a value added tax levied on most of goods and services sold
for domestic consumption. It is paid by the consumers but it is
remitted to the government by the businesses selling the goods &
services.
• It provides revenue for the Government & it’s a single tax avoiding
double taxation.
DEFINITION OF GST
• According to Goods & Services Tax Act, 2017, GST means tax on
supply of goods or services or both, except taxes on supply of
alcoholic liquor for human consumption, tobacco products &
petroleum products.

• Levied

• Cesses and surcharges

• Octroi
FEATURES OF GST
• Applicable on supply of goods & services as against the concept of tax on
manufacture or on sale of goods or on provision of services.
• Principle of destination based consumption taxation as against the principle of
origin based taxation.
• GST levied by the centre called Central GST (CGST), levied by State [ including
Union territories with legislation] called State GST(SGST). Union territories
without legislature would levy Union territory GST(UTGST).
• Integrated GST will be levied on inter-state supply of goods/ services. This will be
collected by the centre so that the credit chain is not disturbed.
• Applicable on all goods & services except Alcohol for human consumption.
• Exports would be Zero rated.
OBJECTIVES OF GST
⮚ To ensure one country- one tax.
⮚ To ensure consumption based tax.
⮚ Uniform GST registration, payment and input tax
credit.
⮚ To eliminate cascading effect
⮚ Subsumation of all indirect taxes.
⮚ Reduction of tax evasion and corruption.
⮚ To increase productive.
⮚ To increase tax to GDP ratio and revenue surplus.
 NEED FOR GST IN INDIA

⮚ The introduction of GST is likely to rationalize it and plug the loop holes
in the system.
⮚ This enables the government to stop pilferage and rationalise the overall
taxation regime.
⮚ GST will help the over all tax burden of many organisation.
⮚ Indian economy is getting more and more globalised.
⮚ Nos. of FTA agreements are signed
⮚ This will lead to nation wide transparent system in taxation
⮚ This enable the Indian industries to compete
 BENEFITS OF IMPLEMENTING OF GST

• FOR BUSINESS AND INDUSTRY

⮚ Easy compliance
⮚ Uniformity of tax and structures
⮚ Removal of cascading
⮚ Improved competitiveness
⮚ Gain to manufactures and exporters

• FOR CENTRAL AND STATE GOVT

⮚ Simple and easy administer
⮚ Better control on leakages
⮚ Higher revenue efficiency
• FOR CUSTOMERS
⮚ Single and transparent tax
⮚ Relief in overall tax burden
⮚ Uniform price throughout the country
⮚ Simpler tax system
DUAL MODEL
⮚ CGST
⮚ SGST
⮚ IGST
 SUBSUMING OF TAXES
• GST is usually described as indirect, comprehensive ,broad based
consumption tax. Dual GST which will be implemented in India will
subsume many taxes.
• PRINCIPLES OF TAX SUBSUMATION:
• Taxes should be in the nature of indirect tax.
• Fairness and transparency - center and state
1
• should be a part of the transaction chain which could be
imports/manufacture/production of goods or provision of services
2
• free flow of tax credit in intra and inter state levels
• Taxes cannot be subsumed if the levies are not directly related to ss
3 of goods or services
 CONSTITUTION (ONE HUNDRED AND
FIRST)AMENDMENT ACT 2016
• To address all tax related issues the constitution (122nd amendment)Bill was
introduced in the Lok Sabha on 19/12/2014.
• The Bill provides for levy of GST on all goods and services except alcohol
for human consumption.
• The tax shall be levied separately but concurrently by both Union (CGST)
and State including union territories (SGST) and the Parliament will have
the authority to levy the inter state tax (IGST).
• The Central government in addition to GST can levy excise duty on tobacco
and tobacco products
• A Goods and Service Tax Council shall be constituted comprising the Union
Finance Minister , Minister of Finance and State Finance Minister to
recommend on the rates, exemptions and threshold ,taxes to be subsumed
• The constitution amendment bill was passed by the Lok Sabha in
May 2015.
• The bill was referred to the select committee of Rajya Sabha on
12/05/2015.The select committee submitted the report on the Bill
on 22/07/2015.
• The bill was passed with certain amendments was finally passed
in the Rajya Sabha and then in Lok Sabha in August 2016 .
• The President gave his assent on 8th September 2016 and the bill
was finally implemented on 16th September 2016
 JOURNEY OF GST IN INDIA
• A model road map for GST in India by Empowered Committee of State Finance Minsters in April 2008.
• GST reforms and inter- governmental consideration in India by Department of Economic Affairs, Ministery of
Finance, Government of India in March 2009
• First discussion paper on GST in India by Empowered Committee of State Finance Minsters in November 2009.
• Report of Task Force- 13th Finance Commission Task force setup by 13th Finance Commission in December 2009.
• 115th Constitution Amendment (GST) Bill 2011 by Central Government in March 2011.
• Report on the 115th Constitution Amendment (GST) Bill 2011 by Parliamentary Standing Committee on finance
in August 2013.
• 122nd Constitution Amendment (GST) Bill 2014 by Central Government in December 2014.
• Report on the 122nd Constitution Amendment (GST) Bill 2014 by Select Committee of Rajya Sabha in July 2015.
• Report on the Revenue Neutral Rate and Structure of Rate for GST by Committee headed by Chief Economic
Adviser Dr Arvind Subramanian on possible tax rate under GST in December 2015.
• Report of the Joint Committee on Business Process for GST on GST payment process, registration, refund and
GST return by Empowered Committee of State Finance Minsters in 2015.
• GST bill was passed in Rajya Sabha on 3rd August 2016.
 BASIS OF
CHARGE
RESIDENTIAL STATUS AND INCIDENCE OF TAX
INTRODUCTION
• Tax is charged on the income of the Assessee. Under the Income Tax Act, 1961,
the total income of every person is computed based upon his/her Residential
Status. For the purpose of determining the residential status, Assessee’s are
classified into the following categories:
• Individual
• Firms
• Companies
• HUF
• Any other persons
RESIDENTIAL STATUS OF AN
INDIVIDUALS
• It refers to the status of an individual, which is determined on the
basis of his/her total stay in India. Under section 6, the residential
status of an individual is divided into the following categories:
• Residential status
a) Resident (fulfils at least One Basic Condition)
b) Non-Resident (fulfils none of the Basic conditions)
RESIDENT
a) Resident and Ordinarily Resident (fulfills BOTH ADDITIONAL
CONDITIONS)

b) Resident but not Ordinarily Resident (fulfills one or NONE of

the additional conditions)
BASIC CONDITIONS [SEC
6(1)]
• To find out whether an individual is Resident or Non Resident in India
during the pervious year, the following Basic conditions shall be applied:
a) First basic condition = Individual assessee must be in India for at least
182 days or more during the previous year
OR
b) Second basic condition = Individual assessee must be in India for atleast
60 days or more during the previous year and 365
days during 4 years preceding the previous
year.
• If an individual assessee fulfils any one of the basic condition,
he/she is said to be Resident in India.
• If an individual assessee fulfils none of the basic condition, he/she is
said to be Non-Resident in India.
NON RESIDENT
• An individual assessee who do not fulfil any of the basic conditions
under sec 6(1) is a non resident.
ADDITIONAL CONDITIONS
[SEC 6(6)]
• If an individual assessee becomes resident in India, the following
Additional Conditions U/s 6(6) shall be applied to find out whether an
individual assessee is Resident and Ordinary Resident or Resident but Not
Ordinary Resident.
• First additional condition : Resident in India for 2 out of 10 years preceding
the previous year
AND

• Second additional condition : stay in India for 730 days or more during 7
previous years immediately preceding the previous
year.
• If an individual assessee satisfies both the additional conditions,
he/she is said to be resident and ordinary resident in India.
• If an individual assessee satisfies one or none of the additional
conditions, he/she is said to be resident but not ordinary resident in
India.
IMPORTANT POINTS
• Meaning of stay in India
• Stay may be continuous or not be continuous
• Objective of stay is not important
• Calculation of ‘period of stay’ in India
EXCEPTIONS TO BASIC
CONDITION U/S[6(1)B]
• In the following cases, an individual has to stay in India for a period of 182
days or more instead of 60days or more during the relevant previous year.
• In case of an Indian citizen leaving India for the purpose of employment in
the previous year.
• In case of an Indian citizen leaving India as a crew member of a ship in
the previous year.
• In case of a person of Indian origin settled in foreign country coming on a
visit to India during the previous year.