1

Basics of GST
Presented by:
1.Manjunath.D

Contents
1. Why GST is required ?
Present system of Taxes and their statutes
What is the requirement of shifting to GST now?
Impact of GST
2. Why Constitutional Amendment Bill is
passed?
Present powers of levying taxes
3. GST Structure
4. Taxes that are going to get Subsumed
5. Taxes that are not going to get Subsumed
6. Products that does not fall under GST
7. Features of GST
8. How will imports & Exports be taxed under
GST?
9. Composite Scheme & Exemptions
10.GST Council & Miscellaneous

ST

VAT

Excis
e

GST

1.Why GST is required ?

Present system of Taxes and their statutes

*Tax rates are hypothetical

1.Why GST is required ?

What is the requirement of shifting to GST

now?
1. To remove Cascading Effect (Tax on Tax)

In the above example, VAT is collected on the value of cloth

including Excise Duty. That is nothing but levying Tax on Tax.
To remove the above kind of cascading effect, GST is in.
2. To provide Credit of taxes paid earlier

In the above example, Mr. Chandra can claim Input Credit

only on VAT amount paid earlier of Rs. 82,500 and he cannot
claim Excise Duty of Rs. 150,000 paid earlier.
To provide credit for all kind of taxes paid GST is in.

1.Why GST is required ?

What is the requirement to shift to GST

now?
Complexit
y

Remove
Trade
Barriers

Changing
Business
Models

Cascadin
g Effect

Input
Credit

1.Why GST is required ?

Impact of GST

Reduce
UniquePrices
Prices&
throughout
Increase
Less working Capital
demand
the India
requirement

2. Why Constitutional Amendment Bill passed?

Present powers of levying taxes

Excise Duty (On Manufacture)
As per the Constitution of India, only center has got power to levy
tax on manufacture of Goods except on alcoholic liquor for Human
Consumption, Opium, Narcotics.

VAT (On Sale of Goods)

As per the Constitution of India, only State has got power to levy tax
on Sale of Goods.

Service Tax (On Provision of

Services )

As per the Constitution of India, only Centre has got power to levy
tax on Provision of Services.

2. Why Constitutional Amendment Bill ?

8
Therefore, in order to give such power parallelly for Centre and
State, the Constitution of India has been amended vide The
Constitution (101 Amendment) Act, 2016
Article 246-A of the Constitution empowers the Centre and States to
levy and collect the GST on Supply of both Goods and (or) Services
Under GST regime, both Centre and States shall have power to
levy & collect tax on Goods and Services.

3. GST Structure

9
1. CGST - Centre Goods and Service Tax
2. SGST State Goods and Service Tax
3. IGST Integrated Goods and Service Tax
Sale of Goods and Services
Supply of Goods and Services

Within State

CGST &
SGST

Out of State/Import

IGST

4. Taxes that are going to get Subsumed

10

Central Taxes

State Taxes

Excise Duty:
On Manufacturing

VAT:
On Intra State sale

Service Tax:
On Provision of Services
Customs Duty:
On Import of Goods
CST:
On interstate sale

Entry Tax:
On Entry of goods in to the
State
Luxury Tax:
Tax on Luxury goods
Entertainment Tax:
On Ent. Events
Tax on Lotteries

5. Taxes that are NOT going to get Subsumed

11

Central Taxes

Basic
Customs Duty

State &
Municipal Taxes
Toll tax
Municipal
Octroi

6. Products that does not fall under GST

12

Alcohol for Human Consumption

Petroleum Products

High speed diesel

Natural Gas

Aviation Turbine Fuel

Electricity

Currently these products are kept away from GST. Existing taxation
system shall apply till notified.
Tobacco & Tobacco products would also be subject to GST. However,
still Centre has power to levy Excise duty on these products.

7. Features of GST
13 Destination Based Tax/ Consumption Tax (vs) Origin Based Tax/ Production
Tax
In Destination based tax, taxes are levied where goods or services are consumed.
In Origin based tax, taxes are levied where goods or services are produced.
In GST model, Goods and Services get taxed based on Consumption and the place of
consumption will decide the State that will collect tax.
Here, the producing/selling state gets nothing, while the consuming states receive complete
share of revenue.
In the long-term aspect the destination-based taxation is a boon for less developed States
who consume more than what they produce.
Selling states may try to put restrictions on interstate sales to avoid flow of revenue to
outside state. This could hamper the progress of trade and overall growth of India.

8. How will imports & Exports be taxed under GST?

14
Imports
The Additional Duty of Excise/CVD and the Special Additional Duty/SAD
presently being levied on imports will be subsumed under GST.
As per explanation to clause (1) of Article 269A of the Constitution, IGST will
be levied on all imports into the territory of India.
Under GST, States where imported goods are consumed will now gain their
share from this IGST paid on imported goods.
Exports

Exports will be treated as Zero rated supplies. No tax will be payable on export of
goods or services.

However, Credit of input taxes paid will be available and same can be claimed as
refund.

9. Composite Scheme & Exemptions

15 Composite Scheme:
Tax payers with total turnover in Financial year up to
eligible for Composite Scheme.

50 Lakhs shall be

Under this scheme, taxpayers are not allowed to take Input credit
Minimum rate prescribed for taxpayers opting for Composite Scheme is 1%
Composite Scheme is optional
Exemptions:
Tax payers of below states with aggregate turnover as below are exempt
from GST.

North Eastern States &

Sikkim
All other states

5 Lakhs
10 Lakhs

10. GST Council & Miscellaneous

16
GST Council:
Formed by Finance Minister along with State Finance & Revenue ministers.
Decisions of Rates, Exemptions, Rules, special provisions were discussed.
Its guiding principle is harmonizing the GST structure
Disputes between Centre & State are resolved here.
Decisions at council are taken on majority basis.
Miscellaneous
Harmonized System of Nomenclature(HSN) code is adopted for goods in GST
Services are will be classified as per Services Accounting Code(SAC)
GSTN (GST Network) is formed for implementation of GST from Backend.
To implement GST still CGST Bill, IGST Bill & all SGST bills are required to be
passed.

17

Thank You