10 Questions Answered about Goods & Services Tax

Economy & Finance

kotak-securities
  • Questions Answered about Goods & Services Tax 10
  • Q1. WHAT IS GST?
  • Goods and Services Tax or GST is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value- added goods and services at each stage of sale or purchase in the supply chain. What is GST?
  • Q2. WHO BEARS THIS TAX?
  • The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. Who bears this Tax?
  • Q3. What will happen?
  • GST is likely to improve tax collections and boost India's economic development by breaking tax barriers between States and integrating India through a uniform tax rate. What will happen?
  • Q4. You may wonder why this tax reform is so important for the country and how it will help the common man? HERE’S HOW-
  • As multiple taxes on a product or service are eliminated and a single tax comes into place, the tax structure is expected to be much simpler and easier to understand. Paperwork will become simpler and there will be a reduction in accounting complexities for businesses. A simple taxation regime can make the manufacturing sector more competitive and save both money and time. Experts opine that the implementation of GST would push up GDP by 1%-2%. I. Simpler tax structure
  • A simpler tax structure can bring about greater compliance, thus increasing the number of tax payers and in turn tax revenues for the Government. The current state of the Indian economy demands fiscal consolidation and reduction in fiscal deficit. GST is the country’s best bet to achieve fiscal consolidation. As there is not much scope to reduce Government expenditure, increasing tax revenues is the best alternative to improve the fiscal health. II. Increased tax revenues
  • GST will eliminate all other forms of indirect taxing. This will effectively mean that the tax paid by the final consumer will come down in most cases. Lower prices will help in boosting consumption, which is again beneficial to companies. The biggest positive of GST is that goods and services will be taxed on a common basis. III. Competitive pricing
  • When the cost of production falls in the domestic market, Indian goods and services will be more price-competitive in foreign markets. This can bode well for exporters, who compete with manufacturers abroad facing a lower cost structure. IV. Boost to exports
  • Q5. What is the cascading impact of Taxes on landed costs?
  • Let us understand the cascading impact of indirect taxes through an example of a typical value chain. There are multiple incidences on taxes and cascading impact on the cost of finished goods. a) Custom Duty + Counter Veiling Duty + Cess paid on imported Goods Sales Tax / VAT paid on domestic purchases, which include the excise duty paid by the raw material manufacturer. Sales Tax / VAT are also charged on the excise duty element. What is the cascading impact of Taxes on landed costs?
  • b) Excise duty on the cost of manufactured goods. So, this excise duty also gets levied on the sales tax element (or custom duty & cess) paid on raw materials imported as stated above. c) Service Tax on Transportation Sales Tax (CST or VAT) on the sales of Finished Goods cost, which also includes the excise duty elements, sales tax paid on raw materials and service tax paid on transportation. Practically, the sales tax at this stage gets levied on all the taxes paid in the previous steps. What is the cascading impact of Taxes on landed costs? (Contd.)
  • Q6. HOW WILL IT BENEFIT THE CENTRE AND THE STATES?
  • It is estimated that India will gain $15 billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services. How will it benefit the centre and the states?
  • Q7. WILL THIS BE AN EXTRA TAX?
  • It will not be an additional tax. CGST will include central excise duty (Cenvat), service tax, and additional duties of customs at the central level; and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the State level. Will this be an extra tax?
  • Alcohol, tobacco, petroleum products are likely to be out of the GST regime. Q8. What are the items on which GST may not be applied?
  • Q9. Which countries are implementing VAT/GST? No. Region No. of Country No. of Countries ASEAN 7 Asia 19 Europe 53 Oceania 7 Africa 44 South America 11 Caribbean, Central & North America 19
  • • Afghanistan, Bahamas, Bhutan, Kiribati, Marshall Islands, Micronesia, Palau, Sao Tome and Principe, Syria • Gulf Cooperation Council (Bahrain, Kuwait, Qatar, Saudi Arabia, Oman and the United Arab Emirates) Q10. Which countries are working towards a VAT/GST system?
  • To learn more about GST, click here http://bit.ly/1zxTowC
  • Get eBooks Website Thank You! Don’t forget to follow Kotak Securities on SlideShare to get regular updates! DEMAT Account http://bit.ly/SlideShareSMS http://bit.ly/WEBSITESS http://bit.ly/11x9LdZ https://www.facebook.com/kotaksecurities https://plus.google.com/+kotaksecurities https://twitter.com/kotaksecurities http://bit.ly/1uLnfcQ http://bit.ly/1uLnfcQ http://on.fb.me/sf445u
  • Disclaimer: • Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com . Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: NSE INB/INF/INE 230808130, BSE INB 010808153/INF 011133230, OTC INB 200808136, MCXSX INE 260808130/INB 260808135/INF 260808135, AMFI ARN 0164 and PMS INP000000258. NSDL: IN-DP-NSDL- 23-97. CDSL: IN-DP-CDSL-158-2001 Investments in securities are subject to market risk; please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Derivatives are a sophisticated investment device. The investor is requested to take into consideration all the risk factors before actually trading in derivative contracts..Compliance Officer Details: Mr. Sandeep Chordia. Call: 022 - 4285 6825, or Email: [email protected] . In case you require any clarification or have any concern, kindly write to us at below email ids: • Level 1: For Trading related queries, contact our customer service at [email protected] and for demat account related queries contact us at [email protected] or call us on: Online Customers – 30305757 (by using your city STD code as a prefix) or Toll free numbers 18002099191 / 1800222299, Offline Customers – 18002099292 • Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at [email protected] or call us on 022-42858445 and if you feel you are still unheard, write to our customer service HOD at [email protected] or call us on 022-42858208. • Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Name: Sandeep Chordia) at [email protected] or call on 91- (022) 4285 6825. • Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach CEO (Mr. Kamlesh Rao) at [email protected] or call on 91-(022) 6652 9160. http://www.kotak.com/ mailto:[email protected] mailto:[email protected] mailto:[email protected] mailto:[email protected] mailto:[email protected] mailto:[email protected]
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  • Questions Answered about Goods & Services Tax 10
  • Q1. WHAT IS GST?
  • Goods and Services Tax or GST is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value- added goods and services at each stage of sale or purchase in the supply chain. What is GST?
  • Q2. WHO BEARS THIS TAX?
  • The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. Who bears this Tax?
  • Q3. What will happen?
  • GST is likely to improve tax collections and boost India's economic development by breaking tax barriers between States and integrating India through a uniform tax rate. What will happen?
  • Q4. You may wonder why this tax reform is so important for the country and how it will help the common man? HERE’S HOW-
  • As multiple taxes on a product or service are eliminated and a single tax comes into place, the tax structure is expected to be much simpler and easier to understand. Paperwork will become simpler and there will be a reduction in accounting complexities for businesses. A simple taxation regime can make the manufacturing sector more competitive and save both money and time. Experts opine that the implementation of GST would push up GDP by 1%-2%. I. Simpler tax structure
  • A simpler tax structure can bring about greater compliance, thus increasing the number of tax payers and in turn tax revenues for the Government. The current state of the Indian economy demands fiscal consolidation and reduction in fiscal deficit. GST is the country’s best bet to achieve fiscal consolidation. As there is not much scope to reduce Government expenditure, increasing tax revenues is the best alternative to improve the fiscal health. II. Increased tax revenues
  • GST will eliminate all other forms of indirect taxing. This will effectively mean that the tax paid by the final consumer will come down in most cases. Lower prices will help in boosting consumption, which is again beneficial to companies. The biggest positive of GST is that goods and services will be taxed on a common basis. III. Competitive pricing
  • When the cost of production falls in the domestic market, Indian goods and services will be more price-competitive in foreign markets. This can bode well for exporters, who compete with manufacturers abroad facing a lower cost structure. IV. Boost to exports
  • Q5. What is the cascading impact of Taxes on landed costs?
  • Let us understand the cascading impact of indirect taxes through an example of a typical value chain. There are multiple incidences on taxes and cascading impact on the cost of finished goods. a) Custom Duty + Counter Veiling Duty + Cess paid on imported Goods Sales Tax / VAT paid on domestic purchases, which include the excise duty paid by the raw material manufacturer. Sales Tax / VAT are also charged on the excise duty element. What is the cascading impact of Taxes on landed costs?
  • b) Excise duty on the cost of manufactured goods. So, this excise duty also gets levied on the sales tax element (or custom duty & cess) paid on raw materials imported as stated above. c) Service Tax on Transportation Sales Tax (CST or VAT) on the sales of Finished Goods cost, which also includes the excise duty elements, sales tax paid on raw materials and service tax paid on transportation. Practically, the sales tax at this stage gets levied on all the taxes paid in the previous steps. What is the cascading impact of Taxes on landed costs? (Contd.)
  • Q6. HOW WILL IT BENEFIT THE CENTRE AND THE STATES?
  • It is estimated that India will gain $15 billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services. How will it benefit the centre and the states?
  • Q7. WILL THIS BE AN EXTRA TAX?
  • It will not be an additional tax. CGST will include central excise duty (Cenvat), service tax, and additional duties of customs at the central level; and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the State level. Will this be an extra tax?
  • Alcohol, tobacco, petroleum products are likely to be out of the GST regime. Q8. What are the items on which GST may not be applied?
  • Q9. Which countries are implementing VAT/GST? No. Region No. of Country No. of Countries ASEAN 7 Asia 19 Europe 53 Oceania 7 Africa 44 South America 11 Caribbean, Central & North America 19
  • • Afghanistan, Bahamas, Bhutan, Kiribati, Marshall Islands, Micronesia, Palau, Sao Tome and Principe, Syria • Gulf Cooperation Council (Bahrain, Kuwait, Qatar, Saudi Arabia, Oman and the United Arab Emirates) Q10. Which countries are working towards a VAT/GST system?
  • To learn more about GST, click here http://bit.ly/1zxTowC
  • Get eBooks Website Thank You! Don’t forget to follow Kotak Securities on SlideShare to get regular updates! DEMAT Account http://bit.ly/SlideShareSMS http://bit.ly/WEBSITESS http://bit.ly/11x9LdZ https://www.facebook.com/kotaksecurities https://plus.google.com/+kotaksecurities https://twitter.com/kotaksecurities http://bit.ly/1uLnfcQ http://bit.ly/1uLnfcQ http://on.fb.me/sf445u
  • Disclaimer: • Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com . Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: NSE INB/INF/INE 230808130, BSE INB 010808153/INF 011133230, OTC INB 200808136, MCXSX INE 260808130/INB 260808135/INF 260808135, AMFI ARN 0164 and PMS INP000000258. NSDL: IN-DP-NSDL- 23-97. CDSL: IN-DP-CDSL-158-2001 Investments in securities are subject to market risk; please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Derivatives are a sophisticated investment device. The investor is requested to take into consideration all the risk factors before actually trading in derivative contracts..Compliance Officer Details: Mr. Sandeep Chordia. Call: 022 - 4285 6825, or Email: [email protected] . In case you require any clarification or have any concern, kindly write to us at below email ids: • Level 1: For Trading related queries, contact our customer service at [email protected] and for demat account related queries contact us at [email protected] or call us on: Online Customers – 30305757 (by using your city STD code as a prefix) or Toll free numbers 18002099191 / 1800222299, Offline Customers – 18002099292 • Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at [email protected] or call us on 022-42858445 and if you feel you are still unheard, write to our customer service HOD at [email protected] or call us on 022-42858208. • Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Name: Sandeep Chordia) at [email protected] or call on 91- (022) 4285 6825. • Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach CEO (Mr. Kamlesh Rao) at [email protected] or call on 91-(022) 6652 9160. http://www.kotak.com/ mailto:[email protected] mailto:[email protected] mailto:[email protected] mailto:[email protected] mailto:[email protected] mailto:[email protected]
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