Roadmap To Gst

ROADMAP TO GST Presented By: Harkesh Bansal(5) Pankaj Jain(13) Jaimin Patwa(19) Shweta Singh(22)











Union Budget 2008–Proposal to introduce GST
What is GST?
GST Framework – An Example
Proposed Road map to GST
GST – Global Scenario
Why is GST considered as the preferred tax structure?
Challenges Ahead
Conclusion

 

























– ROADMAP TO GST Budget 2008: “Following an agreement between the Central Government and the State Governments, the rate of Central Sales Tax was reduced from 4 per cent to 3 per cent in this financial year. It is now proposed to reduce the rate to 2 per cent from April 1, 2008. Consultations are underway on the compensation for losses, if any, and once agreement is reached the new rate will be notified. I am also happy to report that there is considerable progress in preparing a roadmap for introducing the Goods and Services Tax with effect from April 1, 2010.” P. Chidambram
















 

 GST is a comprehensive value added tax on goods and services  It is collected on value added at each stage of sale or purchase in the supply chain  No differentiation between Goods and Services as GST is levied at each stage in the supply chain  Seamless input tax credit throughout the supply chain  At all stages of production and distribution taxes are a pass through and tax is borne by the final consumer

GST FRAMEWORK -AN EXAMPLE Transaction of Manufacturer

Transaction of Trader

18.416.8

Effective Tax Structuring

PROPOSED ROAD MAP TO GST April 1, 2010

Unified GST ?

20%?

Central VAT

2009 ?

State VAT

2009 ?

14% ? 12.5%? CENVAT (14%)

Service Tax (12%)

Central Taxes

CST (2% - 0% ?)

State VAT (RNR -12.5%) State Taxes

State Service Tax?

    

Central excise duty Additional excise duty Service tax Additional Customs duty Cess

STATE  Value added tax or sales tax  Entertainment tax (unless it is levied by local bodies)  Luxury tax  Taxes on lottery, betting and gambling  State cess and surcharges if they relate to supply of goods and services  Entry tax in lieu of Octroi


















































CENTRAL








-GLOBAL SCENARIO  More than 140 countries have already introduced GST/National VAT  Most countries have a single GST rate , Canada and Brazil alone have a dual VAT  Standard GST rate in most countries ranges between 15-20%  All sectors are taxed with very few exceptions/ exemptions  Full tax credits on inputs – 100% set off

 A simple tax structure with only one or two rates of taxes  Uniform single tax across the supply chain  Reduced transaction cost in the hands of the tax payers  Increased tax collections due to wider tax base and better compliance



 




































 

PREFERRED TAX STRUCTURE?

 

 





 



































 
















 









 

 Improvement competitiveness services.

in international cost of indigenous goods and

 Enhancement in efficiency in manufacture and distribution due to economies of scale  GST encourages an unbiased tax structure that is neutral to business processes, product substitutes and geographical locations


















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 Integration of a large number of Central & State Taxes – multiplicity of taxes and tax rates  Protecting and balancing the present & the future revenues of the Centre & the States  Safeguarding the interest of less developed States with lower revenue potential  Operating a seamless input credit system – pure VAT  Integrating the origin based tax with the destination based GST  Standardization of systems and procedures at national level


















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 Uniform dispute settlement machinery  Equipping the tax administration to implement the new system of levy and collection  Adoption of information technology to improve efficiency and reduce transaction cost  How much time will businesses get to align themselves to this new piece of legislation?











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– Implementation of GST should not be in a phased manner – This will give certainty to the businesses and result in high compliance – GST should be so designed that it should be revenue fair with sufficient growth of revenue to the Centre and every State.







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• would ensure that the suggested models take into account the problems faced during Inter-State transactions and any revenue loss.