RIRM SPECIAL ROLL OUT: GST AND RERA Program on June 28, 2017 at City Club – IV, Opposite Galleria Market, Gurugram from 9:00 am to 6:00 pm

The Goods & Services Tax (GST) is a technology based taxation system much different from the current VAT, Excise & Services Tax regime. Stated to be a landmark reform in Indirect Taxation System of the Country, it has several aspects of compliance only through digital technology. Though it will be implemented from 1st July,2017 yet large number of traders across the Country are still not aware/educated about the basic fundamentals of GST and the compliance obligations.

In order to make trade and other sectors of economy aware of the core factors of GST and its compliance thereof, the Confederation of All India Traders (CAIT) has prepared a GST White Paper pertaining to important aspects of GST and its compliance, which will make everyone familiar with GST and and will help Traders & others to comply. In this regard your worthy cooperation will go a long way in empowering traders and others about GST compliance.

In this context, a Press Conference will be held on Monday, the 26th June,2017 at 3.00 p.m. at Conference Hall, NDMC Convention Centre, Parliament Street, Opposite Jantar Mantar, New Delhi to release ” GST White Paper” and to seek your valued cooperation for disseminating vital information of GST to traders and people in general.

We shall be grateful if you kindly depute a Staff Correspondent and Photographer of your esteemed publication to cover the same. Goods and Services Tax will be levied on each of these stages, which makes it a multi-stage tax. How? We will see that shortly, but before that, let us talk about ‘Value Addition’.
Let us assume that a manufacturer wants to make a shirt. For this he must buy yarn. This gets turned into a shirt after manufacture. So, the value of the yarn is increased when it gets woven into a shirt. Then, the manufacturer sells it to the warehousing agent who attaches labels and tags to each shirt. That is another addition of value after which the warehouse sells it to the retailer who packages each shirt separately and invests in marketing of the shirt thus increasing its value.

GST will be levied on these value additions – the monetary worth added at each stage to achieve the final sale to the end customer.
There is one more term we need to talk about in the definition – Destination-Based. Goods and Services Tax will be levied on all transactions happening during the entire manufacturing chain. Earlier, when a product was manufactured, the centre would levy an Excise Duty on the manufacture, and then the state will add a VAT tax when the item is sold to the next stage in the cycle. Then there would be a VAT at the next point of sale.

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So, earlier the pattern of tax levy was like this:

Now, Goods and Services Tax will be levied at every point of sale. Assume that the entire manufacture process is happening in Rajasthan and the final point of sale is in Karnataka. Since Goods & Services Tax is levied at the point of consumption, so the state of Rajasthan will get revenue in the manufacturing and warehousing stages, but lose out on the revenue when the product moves out Rajasthan and reaches the end consumer in Karnataka. This means that Karnataka will earn that revenue on the final sale, because it is a destination-based tax and this revenue will be collected at the final point of sale/destination which is Karnataka.

How is GST applied?

 GST is a consumption based tax/levy. It is based on the “Destination principle.” GST is applied on goods and services at the place where final/actual consumption happens.
 GST is collected on value-added goods and services at each stage of sale or purchase in the supply chain. GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services.
 The manufacturer or wholesaler or retailer will pay the applicable GST rate but will claim back through tax credit mechanism.
But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respects, GST is like a last-point retail tax.
GST is going to be collected at point of Sale.

The GST is an indirect tax which means that the tax is passed on till the last stage wherein it is the customer of the goods and services who bears the tax. This is the case even today for all indirect taxes but the difference under the GST is that with streamlining of the multiple taxes the final cost to the customer will come out to be lower on the elimination of double charging in the system.
Let us understand the above supply chain of GST with an example.

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The current tax structure does not allow a business person to take tax credits. There are lot of chances that double taxation takes place at every step of supply chain. This may set to change with the implementation of GST.
Indian Government is opting for Dual System GST. This system will have two components which will be known as
 Central Goods and Service Tax (CGST) and
 State Goods and Service Tax (SGST).
The current taxes like Excise duties, service tax, custom duty etc will be merged under CGST. The taxes like sales tax, entertainment tax, VAT and other state taxes will be included in SGST.
So, how is GST Levied? GST will be levied on the place of consumption of Goods and services. It can be levied on :
▪ Intra-state supply and consumption of goods & services
▪ Inter-state movement of goods
▪ Import of Goods & Services.

GST & Real Estate Sector

18.14.0. Under the present indirect tax regime , in the residential segment, completed properties do not attract service tax. In case f under construction properties, consumers pay service tax and cesses adding upto 15%. Since however, an abatement of 75% in case of properties costing upto Rs. 1 crore or with carpet area upto 2000 Sq. ft. and abatement of 70% on other properties is allowed, the effective rate of service tax works out to 3.75% and 4.5% respectively.
 18.14.1 The impact of GST in residential properties segment will depend on the determination of rates and also on whether and, to what extent, abatement is allowed. In case the current service tax plus VAT outgo is higher than the liability under the GST, it will provide relief to the consumers. In the reverse case it may be additional burden on the sonsumers.
 18.14.2 From developer’s point of view, with the provision of input tax credit in respect of materials like iron and cement, the incidence of is likely to be lower and if, as provided in GST law, the benefit is passed on to the flat buyers, it will be further gain to them by way of lower price.
 18.14.3 Much will therefore, depend upon the applicable rate, availability of abatement and effectiveness of implementation in the matter of grant of input credit and enforcement of antiprofiteering measures.
 18.14.4 It may be mentioned that there is a demand from certain States to keep the real estate sector out of the purview of the GST. The impact of such a demand is a matter that is reportedly being examined and decision remains to be taken in the GST Council.
Benefits of GST Bill implementation
 The tax structure will be made lean and simple
 The entire Indian market will be a unified market which may translate into lower business costs. It can facilitate seamless movement of goods across states and reduce the transaction costs of businesses.
 It is good for export oriented businesses. Because it is not applied for goods/services which are exported out of India.
 In the long run, the lower tax burden could translate into lower prices on goods for consumers.
 The Suppliers, manufacturers, wholesalers and retailers are able to recover GST incurred on input costs as tax credits. This reduces the cost of doing business, thus enabling fairer prices for consumers.
 It can bring more transparency and better compliance.
 Number of departments (tax departments) will reduce which in turn may lead to less corruption.
 More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.
 Companies which are under unorganized sector will come under tax regime.

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