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About GST

GST Suvidha Provider (GSP)

A Challenge we can convert in to an opportunity for you
Bodhtree has been shortlisted as the GSP ( GST Suvidha Provider) by GSTN ( GST Network ) for implementing GST for Tax payers across the country.
GST is the biggest tax reform since Independence impacting the way business strategies are defined, planned and executed.
For all GST enquiries, Please email us at gst@bodhtree.com

GST benefits

Filing GSTR1 in WayGST (Telugu)

Filing GSTR1 in WayGST (Tamil)

What is GST – Introduction

The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, seeks to amend the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in India. The proposed amendments in the Constitution will confer powers both to the Parliament and the State legislatures to make laws for levying GST on the supply of goods and services on the same transaction.

Why GST is introduced ?
Multiplicity in Taxation : Presently, the Constitution empowers the Central Government to levy excise duty on manufacturing and service tax on the supply of services. Further, it empowers the State Governments to levy sales tax or value added tax (VAT) on the sale of goods. This exclusive division of fiscal powers has led to a multiplicity of indirect taxes in the country. In addition, central sales tax (CST) is levied on inter-State sale of goods by the Central Government, but collected and retained by the exporting States. Further, many States levy an entry tax on the entry of goods in local areas.

This multiplicity of taxes at the State and Central levels has resulted in a complex indirect tax structure in the country that is ridden with hidden costs for the trade and industry due to No uniform tax rates and structure across States. Also the Cascading effect resulted in artificial inflation.

What is the GST Structure ?
The proposed dual GST envisages taxation of the same taxable event, i.e., supply of goods and services, simultaneously by both the Centre and the States. Therefore, both Centre and States will be empowered to levy GST across the value chain from the stage of manufacture to consumption. The credit of GST paid on inputs at every stage of value addition would be available for the discharge of GST liability on the output, thereby ensuring GST is charged only on the component of value addition at each stage. This would ensure that there is no ‘tax on tax’ in the country.

The benefits of GST
GST will simplify and harmonise the indirect tax regime in the country. It is expected to reduce cost of production and inflation in the economy, thereby making the Indian trade and industry more competitive, domestically as well as internationally. It is also expected that introduction of GST will foster a common or seamless Indian market and contribute significantly to the growth of the economy.

GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.

Basic Features of GST

Dual GST
Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

Inter-State Transactions and the IGST
The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.

Destination-Based Consumption Tax: GST will be a destination-based tax. This implies that all SGST collected will ordinarily accrue to the State where the consumer of the goods or services sold resides.
Central Taxes to be subsumed

  1. Central Excise Duty
  2. Additional Excise Duty
  3. The Excise Duty levied under the Medicinal and Toiletries Preparation Act
  4. Service Tax
  5. Additional Customs Duty, commonly known as Countervailing Duty (CVD)
  6. Special Additional Duty of Customs-4% (SAD)
  7. Cesses and surcharges in so far as they relate to supply of goods and services.

State Taxes to be subsumed

  1. VAT/Sales Tax
  2. Central Sales Tax (levied by the Centre and collected by the States)
  3. Entertainment Tax
  4. Octroi and Entry Tax (all forms)
  5. Purchase Tax
  6. Luxury Tax
  7. Taxes on lottery, betting and gambling
  8. State cesses and surcharges in so far as they relate to supply of goods and services.

Rates of GST with band
GST rates will be uniform across the country. However, to give fiscal autonomy to the States and the Centre, there will a provision of a tax band over and above the rate of the floor rates of CGST, SGST and IGST. Initially, the rates of CGST, SGST and IGST are expected to be closely aligned to the Revenue Neutral Rates (RNR) of the Centre and the States.
Goods and Services Tax Network (GSTN)
A not-for-profit, Non-Government Company called Goods and Services Tax Network (GSTN), jointly set up by the Central and State Governments will provide shared IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders.
GST Suvidha Provider (GSP)
The GSTN has selected few companies to acts GSPs through whom the IT infrastructure can be accessed in a safe and easy manner for all tax payers. This eco-system is built to harness the power of Indian IT companies to facilitate smooth transition of the Tax payers discrete systems in to a uniform Portal with seamless reconciliation, compliance, Tax payments and Refunds.

How it works

The Goods and Services Tax constitutional amendment having been promulgated by the Govt of India, the rollout of the GST Bill will be a collective effort of the Central and State Governments, the tax payers and the IT platform provider i.e. GSTN, CBEC and State Tax Departments. Besides these main participants there are going to be other stakeholders e.g. Central and States tax authorities, RBI, the Banks, the tax professionals (tax return preparers, Chartered Accountants, Tax Advocates, STPs etc.), financial services providing companies like ERP companies and Tax Accounting Software Providers etc.

Bodhtree provides end to end solutions for all your GST related activities.

GST Rates Analysis

  1. IT services are proposed to be taxed at 18% at (sl no 36 – residual categories of the GST rate for services)
  2. IT software (shrink wrapped) on media falling under HSN 8523 – 18% (ref: chapter wise rate wise gst schedule)
  3. Software products (electronic downloads) – 18% (Sl no 36 – residuary category of the GST rate for services).
  4. Temporary transfer or permitting the use or enjoyment of any Intellectual Property (IP) to attract the same rate as in respect of permanent transfer of IP – 12% (sl no 20 of the GST rate for services)
    The above referred entries iii and iv under services may lead to disputes re classifications for software downloaded electronically, as permitting right to use IP will be at 12%. Software products usually are sale of copyrighted items, and not the copyright itself i.e. – it is sale of right to use the IP. Therefore, despite harmonizing the rates of shrink wrapped software products and software services including electronic downloads at 18%, classification issues may continue.
  5. On rent-a-cab services, it appears to be a neutral situation where the rate is 5% without ITC, and it is same for radio taxi, and cabs (entry 6, 7).
  6. 1% TCS will render selling online as a relatively expensive channel. TCS on ecommerce will require registrations of all sellers even if they were below the income threshold, leading to additional compliance. This makes selling using online channel more onerous for the small enterprises.
  7. On laptops, computers & networking equipment, 18% is higher than expected, as earlier effective Tax (VAT and Excise duty) was about 14%-15%. Peripherals like projectors and some printers to attract an even higher rate of 28%.
Summary of GST rates of Software and related Items (before and after)
Goods / Services category GST rate Indirect Tax rate under current regime* Remarks
Electronic supply of software 18% 15% (service tax) plus 5% (VAT)
Software services, ie, development, design, programming, customisation, adaptation, upgradation,
enhancement, implementation of information technology software;
18% 15% (service tax)
Temporary transfer or permitting use of IP 12% 15% (service tax)
Shrink Wrapped software product (on media) 18% 15% (excise duty & VAT)* Will increase cost
Laptops, desktops, peripherals, parts, etc 18% 15%* Increased cost for companies
Printer, photo copying, fax machines, ink cartridges Ambiguity on the type of printers hence more details are awaited. Expected around 28% 13%* (ADP printers) Increased cost for companies
Monitors and projectors (capable of connecting to ADP) 28% 13% * Increased cost for companies
Majority of Networking products 18% 13%* Increased cost for companies
Mobile phones Imported 12% Over 13.5%*
Domestics manufacturing 12% 11%* Slight increase in cost to end customer

*Please note that this is effective rate of indirect taxes for products is a total of VAT and Excise duty (after considering abatement, where applicable)
  Schedule of GST rates for services
  Chapter wise rate wise gst schedule 18.05.2017

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