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Goods and Service Tax (GST)

GST is a single tax on the supply of goods and services applied throughout India. It replaces multiple taxes and aims to reduce costs for businesses and consumers. Under GST, taxes are collected at each stage of production with credits given for prior-stage taxes paid, such that the tax is ultimately paid only by the final consumer. The four GST tax slates are 5%, 12%, 18%, and 28%. Key impacts include streamlining of taxes for e-commerce businesses, higher costs for some services, and centralized registration requirements for service providers operating across states.

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272 views19 pages

Goods and Service Tax (GST)

GST is a single tax on the supply of goods and services applied throughout India. It replaces multiple taxes and aims to reduce costs for businesses and consumers. Under GST, taxes are collected at each stage of production with credits given for prior-stage taxes paid, such that the tax is ultimately paid only by the final consumer. The four GST tax slates are 5%, 12%, 18%, and 28%. Key impacts include streamlining of taxes for e-commerce businesses, higher costs for some services, and centralized registration requirements for service providers operating across states.

Uploaded by

Saurabh Kumar Sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Goods and Service Tax

(GST)
1. Basics of GST
2. Working Model of GST
3. GST Compliances- Monthly and Annual Filings
4. GST Impact on E-Commerce
5. GST Impact on Services ( IT/ITES)
BASICS of GST
GST is a single tax on the supply of goods and services, right from
the manufacturer to the consumer

The Input Tax credit paid at each stage will be available in the
subsequent stage of value addition, which makes GST essentially
a tax only on value addition at each stage.

It is the end consumer who will bear only the GST charged by the
last dealer in the supply chain, with set-off benefits at all the
previous stages.

With the streamlining of the multiple taxes, the final cost to the
consumer will turn out to be low because of elimination of
double charging system.
Taxes to be subsumed

CENTRAL TAXES STATE TAXES


• Central Excise Duty • Central Sales Tax
• Service Tax • State VAT
• Additional Duties of Excise • Luxury Tax
• Duties of Excise (Medicinal and • Entry Tax and Octroi (all forms)
Toilet Preparations) • Entertainment and Amusement
• Additional Duties of Customs Tax (except when levied by the
(known as CVD) & Special local bodies)
Additional Duty of Customs • Taxes on lotteries, betting and
(SAD) gambling
• Surcharge and Cess levied by • Purchase Tax
Centre so far as they relate to • Surcharges and Cesses levied
supply of goods and services by the State
• Surcharge & Cess levied by
Centre
Taxes not to be subsumed
● Basic Customs Duty ● Export Duty ● Toll Tax
● Road and Passenger Tax ● Electricity Duty
● Stamp Duty ● Property Tax

Note: Alcoholic beverages for human consumption are proposed to be


kept out of the purview of GST

Note: GST on petroleum products would be levied from a notified date to


be recommended by the GST Council
GST Rates
•The four GST slabs are 5%, 12% 18% and 28%. The fifth rate
for gold and precious metals, which was earlier proposed at
4%, will be decided later but is likely to be lower.
• Basic food such as milk, food grains, vegetables, will
be exempt under the GST.
• Other essential items such as edible oil, tea, spices, packaged
food items etc. the GST rate may likely be 5%.
• Two standard rates of 12% and 18% will cover almost every
other goods and services.
• Luxury cars, tobacco and aerated drinks would also be levied
with an additional cess on top of the highest tax rate.
GST Working Model
Q. How a particular transaction of goods and services
would be taxed simultaneously under Central GST (CGST)
and State GST (SGST)?

• The Central GST and the State GST would be levied simultaneously on
every transaction of supply of goods and services except the
exempted goods and services.

• Further, both would be levied on the same price or value

• While the location of the supplier and the recipient within the
country is immaterial for the purpose of CGST, however, SGST would
be chargeable only when the supplier and the recipient are both
located within the State.
Working Example of GST under CGST & SGST
How GST will operate under
Integrated GST (GST) ?
• Integrated GST (IGST) would be levied and collected by the
Centre on inter-State supply of goods and services.

• The GST on supplies in the course of Inter-State trade or


commerce shall be levied and collected by the
Government of India.

• Such tax shall be apportioned between the Union and the


States in the manner as may be provided by the law
Working example of GST
under IGST Model
How to adjust Input Tax Credit (ITC) ?
Setoff of IGST, CGST & SGST will be as follows in the chronological order

Credit Off To be adjusted with


IGST 1. IGST
2. CGST
3. SGST
CGST 1. CGST
2. IGST
SGST 1. SGST
2. IGST
GST Return Filing Process
Returns under GST
Return / Form Details Frequency Due Date

GSTR – 1 Outward sales by business Monthly 10th of next month

GSTR – 2 Purchases made by Business Monthly 15th of next month

GSTR – 3 GST monthly return along with the Monthly 20th of next month
payment of amount of tax

GSTR – 4 Quarterly return for GST Quarterly 18th of month next quarter

GSTR – 5 Periodic return by Non-Resident foreign Monthly 20th of next month


taxpayer

GSTR – 6 Return for Input Service Distributor (ISD) Monthly 15th of next month

GSTR – 7 GST Return for TDS Monthly 10th of next month

GSTR – 8 GST return for ecommerce suppliers Monthly 10th of next month

GSTR - 9 GST Annual Return Annually 31st of next financial year


E-Commerce Businesses under GST Regime

E-commerce industry in India is faced with the levy of multiple taxes,


with every state imposing its own set of rules and taxes. The lack of
clarity on the tax treatment of the various types of e-commerce
transactions has resulted in a chaotic tax environment for the
industry.
GST Law recognizes the need for rules specific to the e-commerce
industry, with specific provisions with respect to e- commerce
broadly under two categories :

• The e-commerce operator and


• Suppliers on e-commerce platforms
An e-commerce operator is a person who owns, operates or manages digital
or electronic facility or platform for electronic commerce. The requirements
from an e-commerce operator under GST are-

• All e-commerce operators are mandatorily required to register under GST


irrespective of their turnover.

• Certain service categories may be notified, on supply of which, tax shall be


paid by the e-commerce operator, and If the e-commerce operator does not
have an establishment in a state, any person representing the e-commerce
operator will be liable to pay the tax

• E-commerce operator should collect tax @ 2% on the net value of taxable


supplies made through their platform, where the consideration, with
respect to such supplies, has to be collected by the operator & need to file
GSTR 8 by 10th of the month
Suppliers on e-commerce platforms are persons who supply
goods or services on an e-commerce platform. The
requirements from suppliers on e-commerce platforms are-

• All suppliers on e- commerce platforms are mandatorily required


to register under GST. Hence, even e-commerce suppliers whose
aggregate turnover does not exceed the threshold limit for
registration will have to compulsorily register

• A person who supplies goods or services through an e-commerce


operator will not be eligible for registration under composition
Scheme. Hence, even if the person’s aggregate turnover does not
cross Rs. 50 Lakhs, he/she does not have the option to become a
composition tax payer

• Suppliers on e-commerce platforms are required to file periodical


returns under GST ( GSTR 1, GSTR 2A, GSTR 2, GS ITC 1)
Service Sector ( IT / ITES) under GST Regime
• Service Sector contributes significantly in export as well as
provide a large scale employment, and covers a wide variety of
activities such as Information technology, Information
Technology Enabled Services, hotel and restaurants, transport,
Warehousing –storage, financing, insurance, real estate, and
other business services.
• Currently Service tax provisions applies to all over India except
J&K, but GST will extend to all over India including J&K and also
allows Central Govt. to collect the service taxes on rendered
services in the state of J&k.
• Currently, service tax is levied @15% on Services rendered
which includes 0.5% for Swatch Bharat Cess and 0.5% for Krishi
Kalyan Cess , under GST regime services will be charged @
higher rate of 18% to 26% which will make the services costlier.
• Earlier, Service Providers could not claim input credit of
VAT/Excise paid by them on purchase of assets or any other
goods. But under GST, they can claim input tax credit charged on
the same and hence can reduce their GST liability.
Service Sector ( IT / ITES) under GST Regime
• At Present there are disputes between Central and State Governments
on various services in nature of products / SAAS model, wherein both
central govt and state governments are sending notices.

• But with the introduction of single tax GST regime, the double taxation
effect due to disputed goods and services in the current tax system will
get eliminated. In GST tax structure both supplies of goods and
services will be treated once with the unique rate of tax respectively.

• Currently there are centralized registration provisions under Service


tax that mean provider of services can render services from any place
in India, under GST regime centralized registration will not be available
as the dealer or the service provider needs to get registered with that
particular state Govt from where he is intended to provide services.

• In current Service tax system there are provisions for two half-yearly
returns in regards to services rendered during that period but in GST
Model law there are multiple returns prescribed adding to compliance
costs.
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