Biggest Tax Reform Since Independence…..

By Rahul Kumar(132073405)

Tax Structure in India• Direct Tax :

e.g.: Income Tax, Corporate Tax, Wealth Tax

• Indirect Tax :e.g.: Excise duty, custom duty, Service Tax, Octrai Tax, VAT.

Method Of Taxation Progressive Tax :

Increasing rate of tax for Increasing Value orVolume.

Regressive Tax :Decreasing rate tax for Increasing Value or Volume

Proportional Tax :Fixed rate of tax for every level of income or production

Short comings in currentTax System

Tax Cascading (Tax on Tax)ComplexityTaxation at Manufacturing LevelExclusion of ServicesTax EvasionCorruption

Gst• Goods and service tax (GST) is a comprehensive tax

levy on manufacture, sale and consumption of goods and service at a national level.

• Gst is a tax on goods and services with value addition at each stage.

• Gst will include many stateand central level indirect taxes.

• It overcomes drawback present tax system

Model Of GSTGST Structure

centre GST

GST to be levied by the

Centre

State GST

GST to be levied by the State

Dual GST

GST to be levied by the Centre and the States concurrently

Proposed GST Rate

Presently it is (26.5 % , CENVAT-14 % and State VAT 12.5% )

Items Total GST rates (in %)

Centre State

Goods 20 12 8Services 16 8 8Essential Goods

12 6 6

EXAMPLE OF GST SYSTEM

Product Excluded fromGST

Petroleum Product Alcohol Tobacco Product

Benefits of GST Transparent Tax System Uniform Tax system Across India Reduce Tax Evasion Export will be more competitive

Critics say that GST would impact negatively on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent.

Some Economist says that CGST, SGST and IGST are nothing but new names for Central Excise/Service Tax, VAT and CST and hence GST brings nothing new for which we should cheer.

Demerit of GST

Hurdles in Implementation

Dispute between centre and Tax over Tax Sharing Highly sophisticated IT infrastructure required . Issue of taxing e-commerce is to be appropriately

addressed and integrated. Political Imbalace

Why does India Need GST

• GST is being introduced majorly due to 2 reason

1. The current indirect tax structure is full of uncertainties due to multiple rates.

2. Due to multiple rates there are multiple forms.

• GST the tax complexity in the prevailing tax regime.

Thank You