TAXATION

SYSTEM
TAXATION SYSTEM

DIRECT TAX INDIRECT TAX

CENTRAL GOVT STATE GOVT

Corporate tax Excise Duty Entertainment tax
Income tax CST VAT
Wealth tax Custom Duty Luxury Tax
Service Tax Octroi/Entry Tax
PROBLEMS FACED IN THE PREVIOUS REGIME

Confusion and Mistrust

Complex and Lacking in Stability

Hidden tax on exports, no state tax on imports

High transaction costs

Narrow base
WHAT IS GST?

Indirect Tax which was introduced in India on 1st July 2017

The GST is governed by a GST Council and its Chairman is the Finance Minister of India.
GST was initially proposed to replace a slew of indirect taxes with a unified tax and was therefore set to
dramatically reshape the country's 2 trillion dollar economy.
It is the biggest tax reform since Independence
HISTORY OF
GST
COMPONENTS OF GST

CGST: Collected by the Central Government on an intra-state sale

SGST: Collected by the State Government on an intra-state sale
IGST: Collected by the Central Government for inter-state sale
 RATES OF GST

4 Main tax slabs ranging from 5% to 28%

Four rates are 5%,12%,18% and 28%
ADVANTAGES OF GST

It will replace all It will remove It will reduce One Nation Seamless flow
Ease of doing
Major Indirect cascading effect flow of BLACK One Tax One of goods across
buisness
Taxes MONEY Market nation
COMMODITIES NOT INCLUDED IN GST

Alchohol for human consumption

Petroleum Crude
High speed Diesel
Tobacco Products
Aviation Turbine Fuel
SCENARIO A : INTRA STATE SALE
Lets assume that an almond
trader in Mumbai,
Maharashtra supplies
almonds worth Rs.1 lakh to
a shop in Pune, Maharashtra
and the rate of CGST is 6%
and SGST is 6%.
The trader would then be
required to deposit the
In such a case, the almond
CGST component into a
trader would charge a
Central Government
CGST of Rs.6000 and SGST
account while the SGST
of Rs.6000 on the basic
portion into the account of
value of the product.
the concerned State
Government.
SCENARIO B: INTER STATE SALE

In such a case, the almond

Lets assume that an almond
trader would charge a IGST of
trader in Mumbai, Maharashtra
Rs.12000 on the basic value of
supplies almonds worth Rs.1
the product. The trader would
lakh to a shop in Chennai, Tamil
then be required to deposit the
Nadu and the rate of IGST is
IGST component into a Central
12%.
Government account.
DISADVANTAGES OF GST

Higher tax Mid-year GST

Change in Increase in taxes Petroleum
burden for Increase in implementation
business will lead to products are not
manufacturing operating costs = more increase in prices
software part of GST
SMEs complications
ADMINISTRATIVE ISSUES/BOTTLENECKS

Grant of ITC for inter-state transactions by receiving state depends on efficient banking and related mechanism
Lack of IT preparedness of certain States is a key bottleneck
Success of the proposed GST structure critically depends on operation of the effective IT system
Getting tax refunds for exempted goods based on budgetary allocation may delay refunds
INTRA STATE
GST
INTER STATE
GST
CONCLUSION

Overall, the implementation of GST has lead to a imbalance in the Indian

economy.
There are advantages and disadvantages of GST, but being implemented in
middle of a financial year leads to a large no. of doubts and chaos among the
citizens.
GST has being implemented in many countries but comparing with them, we
have the highest taxation amount demanded.
CONCLUSION

The no. of taxation slabs (5%,12%,18% and 28%) should be reduced as it leads to
widespread of confusing among consumers whether items are charged on different
rates.
A proper documentation of GST should be available to the general public to know
about GST properly.
It would take another one or two years to clear all clarifications regarding the GST
regime.
Once being straightened out, GST tax structure will make India a better economy
favourable for foreign investments.