Goods and Services Tax

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SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

Goods & Services Tax

Report submitted to Dr. Dhirendra Deshpande in partial fulfillment for the degree of Masters in Business Administration

Symbiosis International University, Pune

Abstract: This report is an attempt to understand the impact of GST on Indian economy. The report defines Sales Tax and Value-Added Tax (VAT). It then looks at the Goods and Services Tax (GST) design in India which has been adapted to suit the Indian taxation system. The report ends with the probable impact of GST on Indian economy and the limitations of the implementation of GST.


Contents
Introduction3
Sales Tax3
Types of sales tax3
Sales tax in India4
Value- Added Tax (VAT)6
Importance of VAT in India6
Advantages Of VAT6
Disadvantages of VAT7
Items covered under VAT7
Tax implication under Value Added Tax Act8
VAT vs. Sales Tax8
Goods and Services Tax (GST)10
Introduction10
The Need for GST10
Benefits of GST11
How GST Will Work12
GST vs. VAT14
GST vs. SALES TAX15
Limitation of GST16

Introduction
This report is an attempt to understand the impact of GST on Indian economy. The report starts by defining Sales Tax and Value-Added Tax (VAT). It then looks at the Goods and Services Tax (GST) design in India which has been adapted to suit the Indian taxation system. The report ends with the probable impact of GST on Indian economy. Sales Tax

A sales tax is a tax paid to a governing body by a seller for the sales of certain goods and services. Laws allow the seller to collect funds for the tax from the consumer at the point of purchase. Laws may allow sellers to itemiz (state item by item) the tax separately from the price of the goods or services, or require it to be included in the price (tax-inclusive). The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale. When a tax on goods or services is paid to a governing body directly by a consumer, it is usually called a use tax. Often laws provide for the exemption of certain goods or services from sales and use tax. Types of sales tax

Gross receipts taxes: This tax has been criticized for its "cascading" or "pyramiding" effect, in which an item is taxed more than once as it makes its way from production to final retail sale. •Excise taxes: Applied to a narrow range of products, such as gasoline or alcohol, usually imposed on the producer or wholesaler rather than the retail seller. •Use tax: Imposed directly on the consumer of goods purchased without sales tax, generally items purchased from a vendor who is not under the jurisdiction of the taxing authority (e.g., a vendor in another state). Use taxes are commonly imposed by states with a sales tax, but are usually only enforced for large items such as automobiles and boats. •Securities turnover excise tax on the trade of securities. •Value added taxes: In which tax is charged on all sales, thus avoiding the need for a system of resale certificates. Tax cascading is avoided by applying the tax only to the difference ("value added") between the price paid by the first purchaser and the price paid by each subsequent purchaser of the same item. •Fair Tax: A proposed federal sales tax, intended to replace the U.S. federal income tax. •Turnover tax: Similar to a sales tax, but applied to intermediate and possibly capital goods as an indirect tax.

Sales tax in India
Central Sales tax is generally payable on the sale of all goods by a dealer in the course of inter-state Trade or commerce or, outside a State or, in the course of import into or, export from India. According to S3, a sale or purchase shall be deemed to take place in the course of interstate trade or commerce in the following cases: 1.When the sale or purchase occasions the movement of goods from one State to another; 2.When the sale is affected by a transfer of documents of title to the goods during their...
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