Standardised PPT on GST INDIRECT TAXES COMMITTEE THE

Standardised PPT on GST INDIRECT TAXES COMMITTEE THE

Standardised PPT on GST INDIRECT TAXES COMMITTEE THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA Disclaimer and Copy right 2 This presentation has been prepared to provide a standard user presentation. The views expressed in this presentation are those of Speaker(s). The Institute of Chartered Accountants of India may not necessarily subscribe to the views expressed by the speaker(s). The information cited in this presentation has been drawn from various sources. While every efforts have been made to keep the information cited in this presentation error free, the Institute or any office do not take the responsibility for any typographical or clerical error which may have crept in while compiling the information provided in this presentation. Further, the information provided in this presentation are subject to the provisions contained under different acts and members are advised to refer to The Institute of Chartered Accountants of those India relevant provision also.This

For standardised clarifications PPT write to us [email protected] may beat used by any person with due acknowledgement to the Indirect Taxes Committee of ICAI. Indirect Taxes Committee, ICAI 3 GST Constitutional Provisions and Features of Constitution (101st Amendment) Act, 2016 Indirect Taxes Committee, ICAI Overview 6 Other Specific Amendments 1

Reason for Amendment and Timelines 2 Taxing Powers 101st Constitutional Amendment Act, 2016 3 Schedule VII Entries 5 GST Council 4 Definitions Indirect Taxes Committee, ICAI 4 101st Constitution Amendment Act 5

Under previous regime Centre levied Excise duty on manufacture, Service tax on services etc. while States levied VAT, Entry Tax, Luxury Tax etc. Need for 101st Constitution Amendment Act Creating a unified system of taxation by subsuming existing indirect taxes and duties; Assigning concurrent powers to Centre and States to levy GST on all supplies of goods or services or both. Indirect Taxes Committee, ICAI Timeline 6 Constitution (101st Amendment) Act, 2016 was passed on 08.09.2016; GOI appointed 16 Sept. 2016 as the date on which the provisions of the Constitution (101st Amendment) Act came into force; and with 1 year deadline for existing provisions to continue till 15th Sep, 2017.

Section 12 of the Act (GST Council Provisions) made effective by GOI on 12th September 2016; First GST Council met on 22nd September 2016. Indirect Taxes Committee, ICAI Power of Taxation under the Constitution 7 Article 265: Taxes not to be imposed save by authority of law. No tax shall be levied or collected except by authority of law. The Power to levy tax has been allocated between: Parliament State Indirect Taxes Committee, ICAI Legislature Article 246 - Power of Union and

State to make laws 8 Article 246 of the Indian Constitution, distributes legislative powers including taxation, between the Parliament of India and the State Legislatures; Schedule VII enumerates the subject matters on which the Parliament and States have the powers to make laws in three lists: List I (Union List); List II (State List); and List III (Concurrent list) Indirect Taxes Committee, ICAI Schedule VII

9 List I (Union List) List II (State List) List III (Concurrent List) entailing subjects on which only the Parliament has the exclusive powers to make laws entailing subjects on which only the State Legislatures are competent to make laws

entailing subjects on which both the Parliament and the State Legislatures are competent to make laws Indirect Taxes Committee, ICAI Article 254 10 Inconsistency between laws made by Parliament and laws made by the State Legislatures : If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List: The law made by Parliament shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.

Indirect Taxes Committee, ICAI Amendments to List I vide 101st Constitutional Amendment Act 11 Entr Provision prior to Amendment y amendment Entry Duties of excise on tobacco Duties of excise on the 84 and other goods manufactured following goods manufactured or produced in India except: or produced in India, namely: (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance Indirect Taxes Committee, ICAI included in sub-paragraph (b) (a) petroleum crude; (b) high speed diesel;

(c) motor spirit (commonly known as petrol); (d) natural gas; (e) aviation turbine fuel; and (f) tobacco and tobacco products." Amendments to List I Cont Entry Provision prior to amendment Entry 92 Taxes on sale or purchase of newspaper and advertisements published therein Entry 92 Taxes on services C Entry Taxes on the sale or purchase of goods other 92A than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. Entry 92 Taxes on the consignments of goods (whether B the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce. Indirect Taxes Committee, ICAI

12 Amendment Omitted Omitted No Change No Change Amendments to List II Entry Provision prior to amendment 13 Amendment Entry Taxes on the entry of goods into a 52 local area for consumption, use or sale therein. (Octroi / Entry Tax) Omitted Entry Taxes on advertisements other than 55 advertisements published in the newspapers [and advertisements broadcast by radio or television].

Omitted Indirect Taxes Committee, ICAI Amendments to List II Entry 14 Provision prior to amendment Amendment Entry 54 Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of

inter-State trade or commerce or sale in the course of international trade or commerce of such goods Entry 62 Taxes on luxuries, including taxes Taxes on entertainments and on entertainments, amusements, amusements to the extent levied betting and gambling. and collected by a Panchayat or a Municipality or a Regional Council or a District Council. Indirect Taxes Committee, ICAI Article 246A - Power to impose GST [New Provisions] 246A(1) 246A(2) Explanation Goods under 279A(5) Indirect Taxes Committee, ICAI

15 Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such state Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. In respect of goods and services tax referred to in clause (5) of article 279A, Article 246A will take effect from the date recommended by the Goods and Services Tax Council. Petroleum crude, High Speed Diesel, Motor Spirit (commonly known as petrol), Natural Gas and Aviation Turbine Fuel Definition of GST Constitution (101st Amendment) Act, 2017 366(12A) Indirect Taxes Committee, ICAI Goods and services tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption GST Other Changes in Definition

17 Sl No Definitio n Article 1. Service 366 (26A) Anything other than goods 2. State 366 (26B) With reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature.

3. Goods 366 (12) includes all materials, commodities, and articles [Definition Already Present prior to 101 Constitutional amendment] 4. Supply Not Defined! Indirect Taxes Committee, ICAI Definition Levy and collection of GST in course of inter-State trade or commerce 18 Article 269A GST shall be levied and collected by the Central Government and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of GST Council.

Supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply in the course of inter-State trade or commerce Parliament will formulate the principles for determining the place of supply, and when a supply takes place in the course of inter-State trade or commerce. Indirect Taxes Committee, ICAI Article 269A When GST collected will not form part of Consolidated Fund of 19 India? The amount apportioned to a State from the tax collected on supplies in the course of inter-state trade or commerce Where an amount collected as tax levied in the course of inter-state trade or commerce has been used for payment of the tax levied by a State under article 246A. In other words, where IGST is used for payment of SGST. Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause inter-state trade or commerce. When SGST is used for payment of IGST. These clauses will ensure that no separate appropriation will be Indirect Taxes Committee, ICAI from the Parliament to disburse money to the states.

required GST Council Article 279A 20 Article 279A provides for constituting a council called the Goods and Services Tax council within 60 days from date of commencement of 101st Constitution Amendment Act, 2016. Members are as follows :(a) the Union Finance Minister as Chairperson; (b) the Union Minister of State in charge of Revenue or Finance; (c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government. (d) Vice Chairperson to be chosen among the members.

Indirect Taxes Committee, ICAI GST Council Recommendations 21 GST Council can make recommendations on the following: The taxes, cesses and surcharges that may be subsumed; The goods and services that may be subjected to or exempted from GST; Model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied under Article 269A and the principles that govern the place of supply; The threshold limit of turnover below which goods and services may be exempted; Rates, floor rates, band, special rates; Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand Date on which GST be levied on petroleum crude, HSD, Petrol, natural gas and ATF and Any other matter relating to the goods and services tax, as the Council may Indirect Taxes Committee, ICAI GST Council Meetings Quorum: One-half of the total number of Members of the Goods and Services Tax Council. All

decisions by a majority of not less than three-fourths of the weighted votes of the members present and voting Indirect Taxes Committee, ICAI 22 Weightage of votes: Central Government 1/3rd of the total votes cast, and State Governments 2/3rd of the total votes cast. Other important roles of GST Council: The GST Council to be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services. GST Council to devise mechanisms to adjudicate disputes arising between the Article 286 Restrictions on the States to impose tax

23 Prior to amendment, the clause restricted the states to impose taxes on sale or purchase of goods. Now it has been amended to provide that the state shall not impose any tax on the supply of the goods or services or both, where such supply takes place: a. Outside the State b. in the course of the import of the goods into, or export of the goods out of, the territory of India Further, the Parliament will formulate the principals for determining when a supply constitutes a supply as mentioned in the point above. Marginal Note to the Section has not been amended. It still reads Restrictions as to imposition of tax on the sale or purchase of goods Indirect Taxes Committee, ICAI Other Amendments Sl No Articl Provision as it stood prior to e 101st Constitutional Amendment 1.

248 2. 249 24 Amendment Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. The Power of the Parliament has been made subject to Article 246A. In other words, residuary power of the Parliament will not affect the States power to levy Goods and Service Tax under Article 246A. If Rajya Sabha has declared by resolution in national interest that Parliament should make laws with respect to any matter enumerated in the State List, Parliament can make laws for the whole or any part of the territory of India with respect to that matter while the Indirect Taxes Committee, ICAI

resolution remains in force. The resolution of Rajya Sabha can mandate the Parliament to make laws with respect to GST as provided in Article 246A also and not just restrict the same to matters specified in State List. Other Amendments 25 Sl No Articl e Provision as it stood prior to 101st Constitutional Amendment Amendment 3. 250 Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws with respect to any of the

matters enumerated in the State List This Power of the Parliament has been extended to Goods and Service Tax under Article 246A 4. 268 Stamp duties and excise duty on medicinal and toilet preparations shall be levied by the Government of India but shall be collected by states where such duties are levied within a state Duties of excise on medicinal and toilet preparations has been

deleted from this Article as GST subsumes the same 5. 268A Taxes on services shall be levied by the Service tax subsumed Government of India under GST and so Article 268A omitted Indirect Taxes Committee, ICAI Other Amendments 26 Sl No Article Provision as it stood prior to 101st Constitutional Amendment Amendment

6. 269 Taxes on the sale or purchase of goods / consignment of goods in the course of inter-state trade shall be levied and collected by Central Government but shall be assigned to the States. This Article has been amended to exclude Goods on which is GST will be levied under Article 269A in the course of inter-state trade or commerce. Thus this Article will be effective for goods kept out of GST viz. crude, Petrol, HSD, ATF etc. 7. 270

Article 270 provides that a portion of all taxes and surcharges on such taxes that are levied and collected by the Central Government shall be distributed to the states in manner that is Indirect Taxes Committee, ICAIthe This article has been amended to provide that the taxes collected by the Central Government under Article 246A(1) [CGST] shall also be distributed between the states in the manner prescribed. Further, the taxes collected IGST which has been used in payment of CGST and the amount apportioned to central government in IGST shall also be distributed to the states. Other Amendments Provision as it stood prior to 101st Constitutional Amendment 27

Sl No Articl e 8. 271 Parliament has been provided with the The power to levy a power to levy surcharge on any of taxes surcharge has not been and duties levied by it. extended to GST levied under Article 246A. 9. 368 Any amendment to the Constitution that seeks to make any changes that will affect the rights of states as enumerated in Proviso to Article 368(2) shall require ratification of state assemblies of not less that 50% of the states. Indirect Taxes Committee, ICAI Amendment

Article 279-A has been inserted in the proviso. Thus, any change that is sought to be made in relation to GST Council will require the ratification of not less than 50% of the states. Other Important Clauses 28 Parliament shall on the recommendation of the GST Council, provide for compensation to the States for loss of revenue arising on account of implementation of the GST for a period of five years. Any law relating to tax on goods or services in force in any State before the commencement of 101st Constitutional Amendment Act shall continue to be in force until amended or repealed by a competent Legislature or until expiration of one year from such commencement, whichever is earlier. Indirect Taxes Committee, ICAI

Timeline - GST Enactments 29 After receiving presidential assent on 12th April, 2017 the following enactments came into force with effect from 1 st July, 2017 The Central Goods and Services Tax Act, 2017 The Integrated Goods and Services Tax Act, 2017 The Union Territory Goods and Services Tax Act, 2017 The Goods and Services Tax (Compensation to States) Act, 2017 Indirect Taxes Committee, ICAI Timeline - GST Enactments 30 In view of Article 370 (Temporary provisions with respect to the State of Jammu and Kashmir) the following enactments came

into force with effect from 8th July, 2017 as applicable to the State of Jammu and Kashmir; (i) The Central Goods and Services Tax (Extension to Jammu and Kashmir) Act, 2017 (ii) The Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Act, 2017 Indirect Taxes Committee, ICAI 31 Thank You For any Clarification, Please Contact Indirect Taxes Committee of ICAI Email: [email protected], Website: www.idtc.icai.org

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