3
TAXATION IN
INDIA
DIRECT INDIRECT
TAXES TAXES
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POWER TO LEVY TAX 4
SCHEDULE –VII- THREE LISTS
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INDIRECT TAXES 5
• CENTRAL EXCISE DUTY • CST
• ADDITIONAL EXCISE • PURCHASE TAX
DUTY ENTERTAINMENT TAX
•
EXCISE DUTY ON
MEDICINAL & TOILET
• VAT
LUXURY TAX
PREPARATION ACT • ENTRY TAX
CUSTOMS DUTY • BETTING AND GAMBLING
• SERVICE TAX SURCHARGES AND
• SURCHARGES AND • CESSES
CESSES
• •
•
6
PRE GST SCENARIO
CENTRAL EXCISE(CG) VAT(SG) SERVICE TAX(CG)
LIABILITY AT THE TIME LIABILITY AT THE TIME OF SALE LIABILITY AT THE TIME OF
OF REMOVAL SERVICE
EXCISE DUTY AS PER VAT AS PER RESPECTIVE SERVICE TAX AS PER
CENTRAL EXCISE TARIFF ACT STATE VAT ACT FINANCE ACT 1994
P e your
Quarterly Return Monthly Return Half Yearly Return
l screenshot
Taxable/Exempted Taxable/Exempted a here
Taxable/Exempted
c
EXCISE CONSULTANT VAT CONSULTANT SERVICE TAX CONSULTANT
CENVAT AS PER CENVAT INPUT CREDIT ONLY CENVAT AS PER
CREDIT RULES 2004 LOCAL PURCHASES CENVATCREDIT RULES 2004
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Article 246A: Special Provision for GST 9
• to give power to the Parliament and the
respective State/Union Legislatures to make
laws on GST respectively imposed by each of
them.
• the power to make laws under the IGST Act will
rest exclusively with the Parliament.
• the article excludes the following products
from the scope of GST until a date
recommended by the GST Council:
• Petroleum Crude; High-Speed Diesel ;Motor Spirit
;Natural Gas
• Aviation Turbine Fuel
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Article 269A: Levy and
Collection of 10
GST for Inter-State Supply
• Levy and collection of GST by Centre and State;
• the manner of distribution of revenue from such
supplies between the Centre and the State;
• allows the GST Council to frame rules in this regard.
• the power to levy IGST on import transactions lies with
CG;
• Import of goods was subject to Countervailing
Duty (CVD) in the earlier scheme of taxation.
• IGST levy helps a taxpayer to avail the credit of
IGST paid on import along the supply chain,
which was not possible before.
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Article 279A: GST Council 11
• gives power to
the President to
constitute a joint
forum of the
Centre and States
called the GST
Council.
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• The GST Council
is an apex
member
committee to
modify, reconcile
or to procure any
law or regulation
based on the
context of Goods
and Services Tax
in India.
1
FORMATION OF GST COUNCIL 2
• (a) the Union Finance Minister as Chairperson;
• (b) the Union Minister of State in charge of Revenue or
Finance;
• (c) the Minister in charge of Finance or
Taxation or any other Minister nominated by
each State Government.
• (d) Vice Chairperson to be chosen among the
members.
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RECOMMENDATIONS 13
• The taxes, cesses and surcharges that may be
subsumed;
• The goods and services that may be subjected
to or exempted from GST;
• Goods and Services Tax Laws, principles of
levy, apportionment of Goods and Services
Tax levied under Article 269A and the
principles that govern the
place of supply;
• The threshold limit of turnover below which
goods and services may be exempted;
• Rates, floor rates, band, special rates;
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Arunachal
Pradesh, Assam, Jammu
and Kashmir, Manipur,
Meghalaya, 14
Mizoram, Nagaland,
Sikkim, Tripura,
Himachal Pradesh
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and Uttarakhand
• Date on which GST
• Special provision with
be levied on
petroleum crude,
respect to the States of
HSD, Petrol, natural arising between the
gas and ATF and Centre and States.
• Any other matter
relating to the goods
and services tax, as
the Council may
decide.
• Council to be guided
by the need for a
harmonised structure
of goods and services
tax and for the
development of a
harmonised national
market for goods and
services.
• to devise mechanisms
to adjudicate disputes
1
GST Council Meetings 5
• Quorum:
• decisions by a majority
• Weightage of votes:
• Central Government – 1/3rd of the total votes cast, and
• State Governments – 2/3rd of the total votes cast
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16
STATEMENT OF OBJECTS AND
REASONS
• The Constitution is proposed to be amended to
introduce the goods and services tax for
conferring concurrent taxing powers on the
Union as well as the States including Union
Territory with Legislature to make laws for
levying goods and services tax on every
transaction of supply of goods or services or
both.
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L
THE O
F
GST E ADD ALL OF SERVICE TAX
RECIP X
C
I
E S
E
ADD
A
LL
O
F
V
A
T
A
D
D
A
L
SPRINKLE
OTHER LOCAL
18 TAXES
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SERVE ON TECHNOLOGICAL 19
PLATTER- THE GSTN
GST NETWORK
ITEMS KEPT OUT OF GST 20
21
THE JOURNEY TO GST
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2
SALIENT FEATURES OF GST 2
• IGST to be levied on supply of goods or services
• All transactions and processes only through
electronic mode – Non-intrusive
administration
• PAN Based Registration;
• Registration only if turnover more than Rs. 20 lac
• Option of Voluntary Registration
• Deemed Registration in three days
• Input Tax Credit available on taxes paid on
all procurements (except few specified
items)
SALIENT FEATURES OF GST 23
• Credit available to recipient only if
invoice is matched – Helps fight huge
evasion of taxes
• Set of auto-populated Monthly
returns and Annual Return
• Composition taxpayers to file Quarterly
returns
• Automatic generation of returns
• GST Practitioners for assisting filing of
returns
• GSTN and GST Suvidha Providers
(GSPs) to provide technology based
assistance
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2
SALIENT FEATURES OF GST 4
• Interest payable if refund not sanctioned in time
• Refund to be directly credited to bank accounts
• Comprehensive transitional provisions for
smooth transition of existing tax payers to
GST regime
• Special procedures for job work
• System of GST Compliance Rating
• Anti-Profiteering provision
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2
SALIENT FEATURES OF GST 5
• Separate electronic ledgers for cash and credit
• Tax can be deposited by internet banking,
NEFT / RTGS, Debit/ credit card and over the
counter
• Cross utilization of IGST Credit first as IGST and
then as CGST or SGST /UTGST
• Concept of TDS for Government Departments
• Concept of TCS for E-Commerce Companies
• Refund to be granted within 60 days
• Provisional release of 90% refund to exporters within 7
days
TCS refers to the tax which is collected by ECO when the supplier
TDS is deducted when the recipient of goods or supplies some goods/ services through its portal & payment for that
services make some payment under a contract. supply is collected by ECO.
2
COMPONENTS OF GST 6
C
E CGST SGST
N U
T N
R I
UTGST IGST
A O
L STATE
N
TERRITORY INTEGRATED
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27
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IS TAX
IT ?!!
ONE 28%
NAT 18%
ION 12%
ONE
5%
3%
GOLD BULLION
0.25%
R
A
W
DI
A
M D
O S
N
NIL/0%
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EXPORTS
28
29
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30
BENEFITS OF GST
• Overall reduction in
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prices for consumers;
• Reduction in
Multiplicity of
Taxes,
Cascading and
Double
Taxation;
• Uniform Rate of Tax and
Common National
Market;
• Broader
Tax Base
and
decrease
in BLACK
transaction
s;
• Free flow of Goods and
Services-No Check
Posts
• Non-intrusive Electronic
Compliance System
3
BUSINESS TRANSACTION 2
MANUFATUR RETAIL
ER WHOLE SALER ER
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THE EFFECT OF GST ON CONSUMER 33
SUPPLY FROM MANUFACTURER TO
WHOLESALER
TRANSACTION PRE GST REGIME GST REGIME
COST 10,000.00 10,000.00
ADD: PROFIT @ 40% 4,000.00 4,000.00
MANUFACTURER’S PRICE 14,000.00 14,000.00
ADD: EXCISE DUTY @12% 1,680.00 -
TOTAL VALUE(A) 15,680.00 14,000.00
ADD: VAT @ 14.5% 2,273.60 -
ADD: CGST@9% - 1,260.00
ADD: SGST @9% - 1,260.00
INVOICE VALUE 17953.60 16,520.00
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SUPPLY FROM WHOLESALER TO
RETAILER
TRANSACTION PRESENT REGIME GST REGIME
COST 15,680.00 14,000.00
ADD: PROFIT @ 10% 1,568.00 1,400.00
TOTAL VALUE(B) 17,238.00 15,400.00
ADD: VAT @ 14.5% 2499.51 -
ADD: CGST@9% - 1,386.00
ADD: SGST @9% - 1,386.00
INVOICE VALUE 19737.51 18,172.00
SUPPLY FROM RETAILER TO
CONSUMER 35
TRANSACTION PRESENT REGIME GST REGIME
COST 17,238.00 15,400.00
ADD: PROFIT @ 10% 1723.80 1,540.00
TOTAL VALUE(C) 18,961.80 16,940.00
ADD: VAT @ 14.5% 2,749.46 -
ADD: CGST@9% - 1,524.60
ADD: SGST@9% - 1,524.60
INVOICE VALUE TO FINAL CUSTOMER 21,711.26 19,989.20
SAVING TO END CUSTOMER
1,722 (7.9%)
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CGST ACT 2017 36
CONTENT CHAPTE SECTIONS RULES
R
PRELIMINARY I 1-2
ADMINISTRATION II 3-6
LEVY AND COLLECTION OF TAX III 7-11
TIME AND VALUE OS SUPPLY IV 12-15 27-35 CHAP IV
INPUT TAX CREDIT V 16-21 36-45 CHAP V
REGISTRATION VI 22-30 3-26 CHAP II AND III
TAX INVOICE, DEBIT VII 31-34 46-55 CHAP VI
NOTES, CREDIT NOTES
ACCOUNTS AND RECORDS VIII 35-36 56-58 CHAP VII
RETURNS IX 37-48 59-84 CHAP VIII
PAYMENT OF TAX X 49-53 85-88 CHAP IX
REFUNDS XI 54-58 89-97 CHAP X
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CGST ACT 2017 37
ANTI PROFITEERING
RULES 122-137
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E WAY BILL
RULES 138-
138D CHAP XVI
CONTENT CHAP SECTION RULES
ASSESSMENT XII 59-64 98-102 CHAP
XI
AUDIT XIII 65-66
INSPECTION, SEARCH, SEIZURE AND ARREST XIV 67-72 139-141 CHAP XVII
DEMANDS AND RECOVERY XV 73-84 142-161 CHAP XVIII
LIABILTIY TO PAY IN CERTAIN CASES XVI 85-94
ADVANCE RULING XVII 95-106 103-107A CHAP XII
APPELS AND REVISIONS XVIII 107-121 108-116 CHAP III
OFFENCES AND PENALTIES XIX 121-138 162 CHAP XIX
TRANSITIONAL PROVISIONS XX 139-142 117-121 CHAP XIV
MISCELLANEOUS XXI 143-174
3
IGST ACT 2017 8
CONTENT CHAPTER SECTION RULES
S
PRELIMINARY I 1-2
ADMINISTRATION II 3-4
LEVY AND COLLECTION OF TAX III 5-6 AS
PRESCRIBED
DETERMINATION OF NAUTER OF SUPPLY IV 7-9
PLACE OF SUPPLY OF GOODS OR SERVICES OR BOTH V 10-14 IN
IGST RULES
REFUND OF INTEGRATED TAX TO INTERNATIONAL TOURIST VI 15
ZERO RATED SUPPLY VII 16
APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS VIII 17-19
MISCELLANEOUS IX 20
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FEW
DEFINI
TIONS
42
2(52) “goods” means
• Every kind of movable property other
than money and securities
• but includes actionable claim,
• growing crops, grass and things
attached to or forming part of the land
which are agreed to be severed before
supply or under a contract of supply;
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43
HARMONISED SYSTEM OF
NOMENCLATURE
• conceived and developed by the World Customs
Organization (WCO) with the vision of classifying goods from
all over the World in a systematic and logical manner.
• a six digit uniform code that classifies more than 5,000
products and is accepted worldwide.
• set of defined rules is used for taxation purposes in
identifying the rate of tax applicable to a product in a
country.
• to determine the quantum of product exported or imported in and
out of a country.
• to analyze the movement of goods across the World.
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44
HSN IN INDIA
• since 1986 in the Central Excise and Customs regime.
• a much more detailed classification that added another
two digits to the 6-digit structure.
• Indian manufacturers under GST shall be required to
follow a 3-tiered structure of HSN
• turnover < INR 1.5 Crores need not follow HSN
• turnover > INR 1.5 Crores < INR 5 Crores shall be using the 2
digit HSN codes
• turnover > INR 5 Crores shall be using the 4 digit HSN codes
• Those dealers who are into imports or exports shall
mandatorily follow the 8 digit HSN codes
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45
Understanding the digits of HSN Code
• contains 21 sections,
• with 99 Chapters,
• about 1,244 headings, and
• 5,224 sub-headings.
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4
6
CHAPTER 62
Articles of apparel and clothing accessories, not
knitted or crocheted
6213 HANDKERCHIEFS- Scarves
and articles of the scarf type,
square or approximately square, of
which no side exceeds 60 cm
6213.90
Made of textile
Material
6213.90.90
6
Made of Silk or silk waste
2
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1
.
9 d
0 e
1 f
0 i
M b
a r
d e
a
47
2(102) “services”
means
• anything other than
goods, money and
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• but includes
activities relating
to the use of consideration is
money or its charged;
conversion by
cash or by any
other mode,
• from one form,
currency or
denomination,
to another
form, currency
or
denomination
• for which a separate
48
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Service Accounting Codes (SAC) 49
• The SAC code is a 6 digit number
Section 5 :
Constructi
on
Services
Heading No.9954 Construction services
Group 99541 Construction services of buildings
Construction services of single dwelling or multi dewlling or multi-storied residential
995411
buildings
Construction services of other residential buildings such as old age homes, homeless
995412
shelters, hostels etc
Construction services of industrial buildings such as buildings used for production
995413 activities (used for assembly line activities), workshops, storage buildings and other
similar
industrial buildings
Construction services of commercial buildings such as office buildings, exhibition &
995414 marriage halls, malls, hotels, restaurants, airports, rail or road terminals, parking
garages,
petrol and service stations, theatres and other similar buildings.
Construction services of other non-residential buildings such as educational
995415 institutions, hospitals, clinics including vertinary clinics, religious establishments,
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20 museums and other similar buildings
995416 Construction Services of other buildings n.e.c
Services involving Repair, alterations, additions, replacements, renovation, maintenance
995419
or
remodelling of the buildings covered above.
50
2(75) “money” means
• the Indian legal tender
or any foreign currency,
• cheque, promissory
note, bill of
exchange, letter of
credit, draft, pay
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order, traveller
cheque, money
order, postal or
electronic remittance value;
or any other
instrument
recognised by the
Reserve Bank of
India when used as a
consideration to
settle an obligation
or exchange with
Indian legal tender of
another
denomination but
shall not include any
currency that is held
for its numismatic
51
2(59) “input” means
• any goods other than capital goods used or
intended to be used by a supplier in the
course or furtherance of business;
2(60) “input service” means
• any service used or intended to be used
by a supplier in the course or furtherance
of business;
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2(62) “input tax” in relation to a registered
person, means 52
the central tax, State tax, integrated tax or Union territory tax
charged on any supply of goods or services or both made to him
and includes—
(a) IGST charged on import of goods;
(b)the tax payable under the provisions of sub-sections (3) and
(4) of section 9;
(c)the tax payable under the provisions of sub-sections (3)
and (4) of section 5 of the Integrated Goods and Services
Tax Act;
(d)the tax payable under the provisions of sub-sections (3)
and (4) of section 9 of the respective SGST; or
(e)the tax payable under the provisions of sub-sections (3)
and (4) of section 7 of the UTGST, but does not include the
tax paid under the composition levy;
2(63) “input tax credit” means the credit of
input tax
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An important feature of the sales tax is the adjustment of input tax paid on purchases and imports, as a registered person has to
pay sales tax only on his value addition.
● Output tax is the total amount of sales tax charged at current rate of sales tax on taxable sales made during the month i.e.
total sales excluding exempt and zero-rated supplies.
● Input tax is the amount paid by the registered person on business purchases and imports. He can claim a deduction for the
sales tax paid as input tax if used in the manufacture of taxable supplies.
● Tax Due for a particular tax period will be the output tax minus input tax during that tax period
Example: If a registered person purchases goods for Rs.100 and pays Rs.15 as sales tax (input tax)@ 15% his total purchase
price becomes Rs 115. If he/she sells the goods for Rs 200 and charges Rs 30 @ 15%(as output tax) his total sale price becomes
Rs 230.
Output tax (15% of 200) = Rs. 30
Less: Input tax (15% of 100) = Rs. 15
Tax due (Rs. 30 minus Rs. 15) = Rs. 15
56
2(18) “business vertical” means:
• a distinguishable component of an
enterprise
• that is engaged in the supply of
individual goods or services or a
group of related goods or
services
• which is subject to risks and
returns that are different from
those of the other business
verticals.
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45
TAXABLE PERSONS HAVING MULTIPLE BUSINESS VERTICALS
• One State – One Registration compulsory
• Assesse may opt multiple business
vertical registration Eg:
Busin
PHARMA ess
vertical
1
Person Busin
with same Tamil nadu HOTEL ess
PAN Vertica
l2
Business
vertical 3
ELECTRONICS
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STATE/TERRITORY REGISTRATION 58
33 1Z 9
STAT P ENTITY CODE
E CODE AN
CHECK DIGIT
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59
“non-resident taxable
person” means
• any person
who
occasionally
undertakes
transactions
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involving
supply of
goods or
services or
both,
• whether as
principal or
agent or in
any other
capacity,
• but who has
no fixed place
of business or
residence in
India;
60
2(119) “works contract” means
• a contract for building,
• construction, fabrication, completion,
• erection, installation,fitting out,
• Improvement, modification, repair,
maintenance,
• renovation, alteration or commissioning
• of any immovable property
• wherein transfer of property in goods
(whether as goods or in some other form) is
involved in the execution of such contract;
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2(98) “reverse charge” means
• the liability to pay tax
• by the recipient of supply of goods or services
or both
• instead of the supplier of such goods or
services or both
• under sub-section (3) or sub-section (4) of
section 9, or
• under sub-section (3) or subsection (4)
of section 5 of the Integrated Goods and
Services Tax Act;
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62
IGST 2(6) “export of services”
means
• the supply of any service when,––
• (i) the supplier of service is located in India;
• (ii) the recipient of service is located outside India;
• (iii) the place of supply of service is outside India;
• (iv) the payment for such service has
been received by the supplier of service
in convertible foreign exchange; and
• (v) the supplier of service and the recipient
of service are not merely establishments of
a distinct person in accordance with
Explanation 1 in section 8;
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63
Igst 2(11) ‘‘import of services”
means
• the supply of any service, where––
• (i) the supplier of service is
located outside India;
• (ii) the recipient of service is
located in India; and
• (iii) the place of supply of service is in
India;
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IGST 16. (1) “zero rated supply”
means
• any of the following supplies of
goods or services or both,
namely:––
• (a) export of goods or services or both; or
• (b) supply of goods or services or
both to a Special Economic Zone
developer or a Special Economic
Zone unit.
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GST ECOSYSTEM
