Why GST
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Transcript of Why GST
Taxes in India
• Every Indian Citizen generally pays– Income tax
• Business man– Customs Duty– Excise Duty– VAT– LBT/Entry tax/Octroi
• Profession– Profession tax– Service tax
• At home– Stamp Duty– Electricity Duty– Wealth tax
• Travelling– Tolls, luxury tax, Service tax
• For movie– Entertainment tax
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Major taxes in India
Tax
Direct tax
Income Tax
Capital Gain Tax
MATWealth Tax
STT
Indirect tax
Customs Duty
Excise DutyCentral
StateService tax
VAT/CST
Octroi/Entry Tax/LBT
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Constitution of India
• Article 265: No tax shall be levied or collected except by the authority of law.
• No Concentration of Powers• Separation of Powers:
– Union List– State List
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India has a Two tier Taxation System• Income tax• Service Tax• Customs duties• Central Excise• Sales Tax
Central government(Union List)
• Stamp Duty• State excise• Entertainment tax • Local Sales Tax• Land Revenue• Profession tax
State government(State List)
• Local Body Tax • Octroi• Cess• Entertainment tax • Profession tax
Local bodies(State List – Delegated to
Local Bodies)
Unique features of Indirect taxes
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• Affects top line of any business
• Recoverable from end customer ultimately
• Transaction based tax
• Premise based tax
• Set off Provisions available
• Procedural Laws
• Frequent changes in legislature
• High penal consequences
Issues with Tax System
• Multiple Taxable Events• Different Threshold Limits• Multiple Rate Structure• Litigation Issues• Different Valuation Provisions• Interpretation of Goods and Services• VAT vs service tax• Different kinds of Exemptions• Frequent Notifications• Multiple Composition Schemes
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Taxable event
Customs Duty• Import into or export out of
India-• Crossing the customs
frontiers
Excise Duty• Manufacture of goods
Service tax• Provision of services
VAT/CST• Sale of goods
Profession tax• On carrying on profession,
trade
Entry tax• Import into the State for
sale, use or consumption
Stamp Duty• On execution of documents
LBT/Octroi• Import into local limits• for sale, use or consumption
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Multiple Taxable Events
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Tax law Taxable event
Central excise Manufacture of goods
Customs Import into or export out ofIndia
Service tax Provision of Service
VAT Sale of goods
Stamp duty On execution of Documents
Profession tax On carrying on profession/trade
Different threshold limits
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Tax law Threshold limit
Customs NO*Baggage = General: 45000/-
Central Excise 1.5 Crores
Service tax 10 lakhs
VAT 10 lakhs (Varies from State to State)
LBT 5 lakhs
Multiple Rates
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2.06%
1%12.36%
12.5%
5% 20%
12.36%
6.18%
7.5%+12.36%+7.5%+12.36%+4%
5%
2%
GSC Intime Services Pvt. Ltd.
Litigation Issues
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Commissioner (Appeals)
Tribunal
High Court
Supreme Court
Taxable values…
Tax laws Taxable Value
Service Tax • Gross Amount Charged for the provision of Service• Intercontinental Consultants & technocrats Pvt. Ltd. vs. Union of
India 2013 (29) STR 9 (Del.) admitted in 2014 (35) STR J99 (SC)
Excise • Price actually paid or payable including any amount paid orpayable by reason of, or in connection with the sale except ED, VATand other taxes
• CCE, Mumbai vs. Fiat India Pvt. Ltd. 2012 (283) ELT 161 (SC)
Customs • price actually paid or payable when sold for export to India fordelivery at the time and place of importation or for export fromIndia for delivery at the time and place of exportation
• Any amount paid or payable for costs and services, includingcommissions and brokerage, engineering, design work, royaltiesand licence fees, costs of transportation to the place ofimportation, insurance, loading, unloading and handling charges…
• Ashok Traders vs. UOI 1987 (32) ELT 262 (Bom.)
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…Taxable values
Tax laws Taxable Value
VAT Valuable consideration paid or payable including any sum charged foranything done by the seller in respect of the goods at the time of orbefore delivery thereof except cost of insurance or installation, ifcharged separatelyIncluding Central Excise/Custom Duty paid(Maharashtra State)
Stamp Duty • Market value or the transaction value whichever is higher• Sometimes flat rate of SD on the transaction
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Goods vs Services
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Infotech Software Dealers Association vs. Union of India 2010 (20) STR 289 (Mad.)AGS Entertainment Pvt. Ltd. vs. Union of India 2013 (32) STR 129 (Mad.)
VAT vs Service tax
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Valley Hotel & Resorts 2014 (35) STR 28 (Uttarakhand)Hotel East Park 2014 (35) STR 422 (Chhattisgarh)
Exemptions, exclusions etc.
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Service TaxMega
ExemptionNegative List
Service Provided
outside India
M-VAT
Schedule ‘A’
Central ExciseExemptions
for SSI
Other full/partial exemptions
Composition Schemes
• Numerous Composition Schemes– MVAT
• Developer – 1%• Restaurants - 8%/10%• Bakers – 4%/6% • Retailers – 1%/1.5%
– Central Excise• Compounded levy Scheme
– LBT• Basis of Turnover
– 1,00,000 to 2,00,000 : 4,000…– 9,00,000 to 10,00,000 : 20,000
• Valuation for Composition Schemes?• Tax on Tax?
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TAX on TAX??
• Constitutional Issues– State List/Union List
• Objective of Revenue Collection
• VAT + Excise/Customs Duty– Cascading Effect
• VAT on Service Tax?– Article 366(29A) : Deemed Sales
• VAT on Service?– Freight Charges
• Anything done by the dealer?
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Procedures…
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RegistrationRegistration
PaymentsPayments
ReturnsReturns
RefundsRefunds
Ca. Jayesh GogriDirector
2/22 Nityanand Nagar, Sahar Road, Andheri (East),Mumbai-400 069.
+91 22 2684 0208+91 9821 012 151
[email protected]@gscintime.com
Right advice at right time…
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