Venkat Project

7/21/2019 Venkat Project .

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A STUDY ON TDS ,ORDER & GROSS MARGIN BOOKING AND GOODS AND

SERVICE TAX

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CHAPTER-1

INTRODUCTION

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1.1TAXATION SYSTEM IN INDIA:

India has a well-developed tax structure with clearly demarcated authority between Central and

State Governments and local bodies.

Central Government levies taxes on income (except tax on agricultural income, which the State

Governments can levy), customs duties, central excise and service tax.

alue !dded "ax (!"), stamp duty, state excise, land revenue and pro#ession tax are levied by

the State Governments.

$ocal bodies are empowered to levy tax on properties, octroi and #or utilities li%e water supply,

drainage etc.

Indian taxation system has undergone tremendous re#orms during the last decade. "he tax rates

have been rationali&ed and tax laws have been simpli#ied resulting in better compliance, ease o#tax payment and better en#orcement. "he process o# rationali&ation o# tax administration is

ongoing in India.

Direc T!"e#

In case o# direct taxes (income tax, wealth tax, etc.), the burden directly #alls on the taxpayer.

I$c%e !"

!ccording to Income "ax !ct '', every person, who is an assessee and whose total income

exceeds the maximum exemption limit, shall be chargeable to the income tax at the rate or rates

prescribed in the *inance !ct. Such income tax shall be paid on the total income o# the previous

year in the relevant assessment year.

!ssessee means a person by whom (any tax) or any other sum o# money is payable under the

Income "ax !ct, and includes -

(a) +very person in respect o# whom any proceeding under the Income "ax !ct has been ta%en

#or the assessment o# his income (or assessment o# #ringe bene#its) or o# the income o# any other

person in respect o# which he is assessable, or o# the loss sustained by him or by such other

person, or o# the amount o# re#und due to him or to such other person

(b) +very person who is deemed to be an assessee under any provisions o# the Income "ax !ct

(c) +very person who is deemed to be an assessee in de#ault under any provision o# the Income

"ax !ct.

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'(ere ! )er#%$ i$c*+e#:

Individual

indu ndivided *amily (*)

!ssociation o# persons (!/0) 1ody o# individuals (1/I)

Company

*irm

! local authority and,

+very arti#icial 2udicial person not #alling within any o# the preceding categories.

Income tax is an annual tax imposed separately #or each assessment year (also called the tax

year). !ssessment year commences #rom 'st !pril and ends on the next 3'st 4arch.

"he total income o# an individual is determined on the basis o# his residential status in India. *or

tax purposes, an individual may be resident, non-resident or not ordinarily resident.

Re#ie$

!n individual is treated as resident in a year i# present in India5

'. *or '67 days during the year or

7. *or 8 days during the year and 39 days during the preceding #our years. Individuals

#ul#illing neither o# these conditions are non-residents. ("he rules are slightly more liberal #orIndian citi&ens residing abroad or leaving India #or employment abroad.)

Re#ie$ + $% Ori$!ri* Re#ie$

! resident who was not present in India #or :38 days during the preceding seven years or who

was non-resident in nine out o# ten preceding years is treated as not ordinarily resident.

N%$-Re#ie$#

;on-residents are taxed only on income that is received in India or arises or is deemed to arise in

India. ! person not ordinarily resident is taxed li%e a non-resident but is also liable to tax on

income accruing abroad i# it is #rom a business controlled in or a pro#ession set up in India.

;on-resident Indians (;


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S!+# I$i!$ I$c%e /%rei0$ I$c%e


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;ormally, a company is liable to pay tax on the income computed in accordance with the

provisions o# the income tax !ct, but the pro#it and loss account o# the company is prepared as

per provisions o# the Companies !ct. "here were large number o# companies who had boo%

pro#its as per their pro#it and loss account but were not paying any tax because income computed

as per provisions o# the income tax act was either nil or negative or insigni#icant. In such case,

although the companies were showing boo% pro#its and declaring dividends to the shareholders,

they were not paying any income tax. "hese companies are popularly %nown as @ero "ax

companies. In order to bring such companies under the income tax act net, section ''9A! was

introduced w.e.# assessment year ':-6.

! new tax credit scheme is introduced by which 4!" paid can be carried #orward #or set-o##

against regular tax payable during the subse=uent #ive year period sub2ect to certain conditions,

as under5-

Bhen a company pays tax under 4!", the tax credit earned by it shall be an amount,

which is the di##erence between the amount payable under 4!" and the regular tax.


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even where employer does not otherwise have taxable income. *ringe 1ene#its are de#ined as

any privilege, service, #acility or amenity directly or indirectly provided by an employer to his

employees (including #ormer employees) by reason o# their employment and includes expenses

or payments on certain speci#ied heads.

"he bene#it does not have to be provided directly in order to attract *1". It may still be applied i#

the bene#it is provided by a third party or an associate o# employer or by under an agreement

with the employer.

"he value o# #ringe bene#its is computed as per provisions under Section ''9BC. *1" is payable

at prescribed percentage on the taxable value o# #ringe bene#its. 1esides, surcharge in case o#

both domestic and #oreign companies shall be leviable on the amount o# *1". /n these amounts,

education cess shall also be payable.

+very company shall #ile return o# #ringe bene#its to the !ssessing /##icer in the prescribed #orm

by 3'st /ctober o# the assessment year as per provisions o# Section ''9B>. I# the employer #ails

to #ile return within speci#ied time limit speci#ied under the said section, he will have to bear

penalty as per Section 7:'*1.

"he scope o# *ringe 1ene#it "ax is being widened by including the employees stoc% option as

#ringe bene#it liable #or tax. "he #air mar%et value o# the share on the date o# the vesting o# the

option by the employee as reduced by the amount actually paid by him or recovered #rom him

shall be considered to be the #ringe bene#it. "he #air mar%et value shall be determined in

accordance with the method to be prescribed by the C1>".

Di3ie$ Di#ri+i%$ T!" 4DDT5

nder Section ''9-/ o# the Income "ax !ct, any amount declared, distributed or paid by a

domestic company by way o# dividend shall be chargeable to dividend tax. /nly a domestic

company (not a #oreign company) is liable #or the tax. "ax on distributed pro#it is in addition to

income tax chargeable in respect o# total income. It is applicable whether the dividend is interim

or otherwise. !lso, it is applicable whether such dividend is paid out o# current pro#its or

accumulated pro#its.

"he tax shall be deposited within 'E days #rom the date o# declaration, distribution or payment o#

dividend, whichever is earliest. *ailing to this deposition will re=uire payment o# stipulated

interest #or every month o# delay under Section''9-0 o# the !ct.

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Bealth tax is not levied on productive assets, hence investments in shares, debentures, "I,

mutual #unds, etc are exempt #rom it. "he assets chargeable to wealth tax are Guest house,

residential house, commercial building, 4otor car, Aewellery, bullion, utensils o# gold, silver,

Hachts, boats and aircra#ts, rban land and Cash in hand (in excess o# irector (Gross salary i.e. excluding per=uisites and be#ore Standard >eduction o# such

+mployee, /##icer, >irector should be less than


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S(%r Ter !$ 6%$0 Ter c!)i!* G!i$#

Gains arising on trans#er o# a capital asset held #or not more than 3 months ('7 months in the

case o# a share held in a company or other security listed on recognised stoc% exchange in India

or a unit o# a mutual #und) prior to its trans#er are short-term. Capital gains arising on trans#er

o# capital asset held #or a period exceeding the a#oresaid period are long-term.

Section ''7 o# the Income-"ax !ct, provides #or the tax on long-term capital gains, at 78 per cent

o# the gain computed with the bene#it o# indexation and '8 per cent o# the gain computed (in case

o# listed securities or units) without the bene#it o# indexation.

D%+*e T!"!i%$ Re*ie

>ouble "axation means taxation o# the same income o# a person in more than one country. "his

results due to countries #ollowing di##erent rules #or income taxation. "here are two main rules o#

income taxation i.e. (a) Source o# income rule and (b) residence rule.

!s per source o# income rule, the income may be sub2ect to tax in the country where the source

o# such income exists (i.e. where the business establishment is situated or where the asset D

property is located) whether the income earner is a resident in that country or not.

/n the other hand, the income earner may be taxed on the basis o# the residential status in that

country. *or example, i# a person is resident o# a country, he may have to pay tax on any income

earned outside that country as well.

*urther,some countries may #ollow a mixture o# the above two rules. "hus, problem o# double

taxation arises i# a person is taxed in respect o# any income on the basis o# source o# income rule

in one country and on the basis o# residence in another country or on the basis o# mixture o#

above two rules.

In India, the liability under the Income "ax !ct arises on the basis o# the residential status o# the

assessee during the previous year. In case the assessee is resident in India, he also has to pay tax

on the income, which accrues or arises outside India, and also received outside India. "he

position in many other countries being also broadly similar, it #re=uently happens that a person

may be #ound to be a resident in more than one country or that the same item o# his income may

be treated as accruing, arising or received in more than one country with the result that the same

item becomes liable to tax in more than one country.

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"!!) to provide relie# against such >ouble "axation, wor%ed out on the basis o# mutual

agreement between the two concerned sovereign states. "his may be called a scheme o# ?bilateral

relie#? as both concerned powers agree as to the basis o# the relie# to be granted by either o# them.

U$i*!er!* re*ie

"he above procedure #or granting relie# will not be su##icient to meet all cases. ;o country will

be in a position to arrive at such agreement with all the countries o# the world #or all time. "he

hardship o# the taxpayer however is a crippling one in all such cases. Some relie# can be

provided even in such cases by home country irrespective o# whether the other country

concerned has any agreement with India or has otherwise provided #or any relie# at all in respect

o# such double taxation. "his relie# is %nown as unilateral relie#.

D%+*e T!"!i%$ A3%i!$ce A0reee$ 4DTAA5

$ist o# countries with which India has signed >ouble "axation !voidance !greement 5

>"!! Comprehensive !greements - (Bith respect to taxes on income)

>"!! $imited !greements L Bith respect to income o# airlinesD merchant shipping

$imited 4ultilateral !greement

>"!! /ther !greementsD>ouble "axation


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!" is a multi-stage tax on goods that is levied across various stages o# production and supply

with credit given #or tax paid at each stage o# alue addition. Introduction o# state level !" is

the most signi#icant tax re#orm measure at state level. "he state level !" has replaced the

existing State Sales "ax. "he decision to implement State level !" was ta%en in the meeting o#

the +mpowered Committee (+C) o# State *inance 4inisters held on Aune '6, 788E, where a

broad consensus was arrived at to introduce !" #rom !pril ', 7889. !ccordingly, all statesD"s

have implemented !".

"he +mpowered Committee, through its deliberations over the years, #inali&ed a design o# !"

to be adopted by the States, which see%s to retain the essential #eatures o# !", while at the same

time, providing a measure o# #lexibility to the States, to enable them to meet their local

re=uirements. Some salient #eatures o# the !" design #inali&ed by the +mpowered Committee

are as #ollows5

"he rates o# !" on various commodities shall be uni#orm #or all the StatesD"s. "here

are 7 basic rates o# E per cent and '7.9 per cent, besides an exempt category and a special rate o#

' per cent #or a #ew selected items. "he items o# basic necessities have been put in the &ero rate

brac%et or the exempted schedule. Gold, silver and precious stones have been put in the ' per

cent schedule. "here is also a category with 78 per cent #loor rate o# tax, but the commodities

listed in this schedule are not eligible #or input tax rebateDset o##. "his category covers items li%e

motor spirit (petrol), diesel, aviation turbine #uel, and li=uor. "here is provision #or eliminating the multiplicity o# taxes. In #act, all the State taxes on

purchase or sale o# goods (excluding +ntry "ax in lieu o# /ctroi) are re=uired to be subsumed in

!" or made !"able.

0rovision has been made #or allowing Input "ax Credit (I"C), which is the basic #eature

o# !". owever, since the !" being implemented is intra-State !" only and does not cover

inter-State sale transactions, I"C will not be available on inter-State purchases.

+xports will be &ero-rated, with credit given #or all taxes on inputsD purchases related to

such exports.

"here are provisions to ma%e the system more business-#riendly. *or instance, there is

provision #or sel#-assessment by the dealers. Similarly, there is provision o# a threshold limit #or

registration o# dealers in terms o# annual turnover o# ealers with turnover lower than

this threshold limit are not re=uired to obtain registration under !" and are exempt #rom

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payment o# !". "here is also provision #or composition o# tax liability up to annual turnover

limit o#


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C+#%# D+

Custom or import duties are levied by the Central Government o# India on the goods imported

into India. "he rate at which customs duty is leviable on the goods depends on the classi#ication

o# the goods determined under the Customs "ari##. "he Customs "ari## is generally aligned with

the armonised System o# ;omenclature (S$).

In line with aligning the customs duty and bringing it at par with the !S+!; level, government

has reduced the pea% customs duty #rom '7.9 per cent to '8 per cent #or all goods other than

agriculture products. owever, the Central Government has the power to generally exempt goods

o# any speci#ied description #rom the whole or any part o# duties o# customs leviable thereon. In

addition, pre#erentialDconcessional rates o# duty are also available under the various "rade

!greements.

Ser3ice T!"

Service tax was introduced in India way bac% in 'E and started with mere 3 basic services vi&.

general insurance, stoc% bro%ing and telephone. "oday the counter services sub2ect to tax have

reached over '88. "here has been a steady increase in the rate o# service tax. *rom a mere 9 per

cent, service tax is now levied on speci#ied taxable services at the rate o# '7 per cent o# the gross

value o# taxable services. owever, on account o# the imposition o# education cess o# 3 per cent,

the e##ective rate o# service tax is at '7.3 per cent.

T!" Pr%)%#!*

Direc T!"e#:

!ccording to the *inance 4inister,there is a little room to give away tax revenues or raise

tax rates in a constrained economy.

;o case to revise either the slabs or the rates o# 0ersonal Income "ax. +ven a moderate

increase in the threshold exemption will put hundreds o# thousands o# "ax 0ayers outside "ax

;et.

owever, relie# #or "ax 0ayers in the #irst brac%et o# S> 8.88E million to S> 8.88

million. ! tax credit o# S> 3.:6 to every person with total income upto S> 8.88 million.

Surcharge o# '8 percent on persons (other than companies) whose taxable income exceed

S> 8.'6 million to augment revenues.

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Increase surcharge #rom 9 to '8 percent on domestic companies whose taxable income

exceed S> '.6E million.

In case o# #oreign companies who pay a higher rate o# corporate tax, surcharge to increase

#rom 7 to 9 percent, i# the taxabale income exceeds S> '.6E million.

In all other cases such as dividend distribution tax or tax on distributed income, current

surcharge increased #rom 9 to '8 percent.

!dditional surcharges to be in #orce #or only one year.

+ducation cess to continue at 3 percent.

0ermissible premium rate increased #rom '8 percent to '9 percent o# the sum assured by

relaxing eligibility conditions o# li#e insurance policies #or persons su##ering #rom disability and

certain ailments. Contributions made to schemes o# Central and State Governments similar to Central

Government ealth Scheme, eligible #or section 68> o# the Income tax !ct.

>onations made to ;ational Children *und eligible #or '88 percent deduction.

Investment allowance at the rate o# '9 percent to manu#acturing companies that invest

more than S> '.6E million in plant and machinery during the period 'st !pril 78'3 to 3'st

4arch 78'9.

M+ligible dateJ #or pro2ects in the power sector to avail bene#it under Section 68- I!

extended #rom 3'st 4arch 78'3 to 3'st 4arch 78'E.

Concessional rate o# tax o# '9 percent on dividend received by an Indian company #rom

its #oreign subsidiary proposed to continue #or one more year.

Securitisation "rust to be exempted #rom Income "ax. "ax to be levied at speci#ied rates

only at the time o# distribution o# income #or companies, individual or * etc. ;o #urther tax

on income received by investors #rom the "rust.

Investor 0rotection *und o# depositories exempt #rom Income-tax in some cases.

0arity in taxation between I>*-4utual *und and I>*-;1*C.

! Category I !I* set up as enture capital #und allowed pass through status under

Income-tax !ct.

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">S at the rate o# ' percent on the value o# the trans#er o# immovable properties where

consideration exceeds S> 8.87 million. !gricultural land to be exempted.

! #inal withholding tax at the rate o# 78 percent on pro#its distributed by unlisted

companies to shareholders through buybac% o# shares.

0roposal to increase the rate o# tax on payments by way o# royalty and #ees #or technical

services to non-residents #rom '8 percent to 79 percent.

uty on speci#ied machinery #or manu#acture o# leather and leather goods including

#ootwear reduced #rom :.9 to 9 percent.

>uty on pre-#orms precious and semi-precious stones reduced #rom '8 to 7 percent.

+xport duty on de-oiled rice bran oil ca%e withdrawn.

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>uty o# '8 percent on export o# unprocessed limonite and 9 percent on export on

ungraded limonite.

Concessions to air cra#t maintenance, repair and overhaul (4uty on Set "op 1oxes increased #rom 9 to'8 percent. >uty on raw sil% increased #rom 9 to '9 percent.

>uties on Steam Coal and 1ituminous Coal e=ualised and 7 percent custom duty and 7

percent C> levied on both %inds coal.

>uty on imported luxury goods such as high end motor vehicles, motor cycles, yachts

and similar vessels increased.

>uty #ree gold limit increased to S> '6.6 in case o# male passenger and S>

',63:.E: in case o# a #emale passenger sub2ect to conditions.E"ci#e +

8.99 per s=uare meter to S> '.'8 per

s=uare meter.

0roposals to levy E percent excise duty on silver manu#actured #rom smelting &inc or

lead.

>uty on mobile phones priced at more than S> 3.:6 raised to percent.

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4aintain stability in tax regime.

ocational courses o##ered by institutes a##iliated to the State Council o# ocational

"raining and testing activities in relation to agricultural produce also included in the negative list

#or service tax.

+xemption o# Service "ax on copyright on cinematography limited to #ilms exhibited in

cinema halls.

0roposals to levy Service "ax on all air conditioned restaurant.

*or homes and #lats with a carpet area o# 7,888 s=.#t. or more or o# a value o# S> 8.'6

million or more, which are high-end constructions, where the component o# services is greater,

rate o# abatement reduced #rom #rom :9 to :8 percent.

/ut o# nearly '.: million registered assesses under Service "ax only 8.: million #ile

returns regularly. ;eed to motivate them to #ile returns and pay tax dues. ! onetime scheme

called Moluntary Compliance +ncouragement SchemeJ proposed to be introduced. >e#aulter

may avail o# the scheme on condition that he #iles truth#ul declaration o# Service "ax dues since

'st /ctober 788:.

"ax proposals on >irect "axes side estimated to yield to S> 7,EEE.37 million and on the

Indirect "ax side S> 63.6 million.

G%% !$ Ser3ice# T!"

! sum o# S> ',93.:6 million towards the #irst instalment o# the balance o# CS"

compensation provided in the budget.

Bor% on dra#t GS" Constitutional amendment bill and GS" law expected to be ta%en

#orward.

1.8 TAX DEDUCTED ON SOURCE 4TDS5:

">S is the tax amount paid by individuals on di##erent types o# income they get. !s the name

indicates, it is the collection o# amount at the source o# income itsel#.">S is the most power#ul

mechanism to trac% #inancial transactions. /nce the transaction is recorded, the seller is #orced to

declare it while #iling returns and pay capital gains, i# any !lso, the government gets some part

o# the tax money immediately rather than at end o# the year. "he ">S rates are issued by the

government, di##erent rates are imposed on di##erent revenues.

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1.9 CENTRA6 SA6ES TAX:

CS" which plays a ma2or role in taxation. alue added tax has two components5 /ne is !" and

another is CS". CS" plays a ma2or role in taxation. at is the tax imposed by the states in which

buyer and seller are in the same state and the value is '3.9 N(max), 9 N(min) in most o# the

states. Central sales tax is the tax imposed when buyer and the seller are in the di##erent states.

*or example !" will be come in to play whenever business deals are between 4ysore

and 1angalore and whenever you were dealing with 1angalore and >elhi CS" will come

in to play.

ealers have to issue declarations in these #orms

printed and supplied by the Sales "ax authorities. *orm > is to be issued by government

organi&ation departments ma%ing purchases. "hese #orms are to be prepared in triplicate.

/%rC:

C-#orm is the #orm issued by the central sales department to the buyer o# the goods and

the buyer issues it to the supplier o# the goods when the transaction happens on CS"

basis. ere the buyer and the seller should be the registered sales tax payers. Sale tax will

be collected and deposited to the government by the buyer. "his #orm is issued when the

purchase o# the goods is #rom outside the state. I# the C-#orm is issued then buyer can

only bear the central sales tax o# only 7N and the local tax is not counted. I# the C-#orm is

not issued then the buyer has to pay *$$ CS" to the issuer.

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C-*orm has to collect on "otal Invoice alue. I# we #ail to submit the certi#icate

government may charge '8N on total sale as a 0enalty. It is our responsibility to collect

#rom the customer the original c #orm and submit to the govt.

/%r D:

Sale to government is taxable K EN or applicable sales tax rate #or sale within the State

whichever is lower. "his concession on CS" is applicable i# *orm > is issued by the

government department which purchases the goods.

/%r E1:

"his #orm is issued by the dealer who ma%es the #irst inter-state sale during movement o#

goods #rom one State to another. "his enables the purchaser to claim exemption #rom

CS" on the second inter-state sale during the movement o# goods by trans#er o#

documents o# title.

/%r E8:

"his #orm is issued by the second or the subse=uent seller when the goods move #rom one

state to another in a series o# inter-state sales by trans#er o# documents o# title. "his #orm

enables the purchaser to claim exemption #orm CS" on subse=uent sale o# goods.

/%r /:

"his #orm is issued when goods are dispatched to another state as a consignment or to the

branch o# a dealer in another State. "he CS" is not payable i# there is only inter-state

stoc% trans#er and there is no sale. "o claim inter-state movement o# goods as Onot a saleP,

the dealer has to produce a declaration in *orm M*J received #rom Consignment !gent or

1ranch /##ice in another State. /ne *orm * covering receipts during one calendar month

has to be issued.

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/%r H:

"his #orm is issued by an exporter #or purchase o# goods. "he purchase o# goods is #or an

export order or in pursuance o# an export order. "hese goods are then sold in export and

the #orm enables seller o# the goods to the exporter to claim deduction on the goods sold

#or export.

/%r I:

"his #orm is issued by a dealer located in a Special +conomic @one (S+@). ;o CS" is

levied when sales is made to a dealer located in S+@.

1.; ORDER AND GROSS MARGIN BOOKING:

/rderDContract is a contact signed between a seller and a buyer to supply a product or set o#

products andDor provide a service or a set o# services to a customer within a speci#ied time, and

under speci#ied =uality, price and #unding conditions.

Service that we are doing is 0ost Barranty Services that is when the 0roduct has been delivered

we in Grid unit have to do the a#ter maintaining services.

!s a part o# /rdersDContract we do #our activities5

!lstom supply Spares.

!lstom to the site and do the


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;etwor% Consultancy in which we give some speci#ic support to the customer. ere

we guide the customer whether they have to go *ield Service or

responsibility o# leading unit, participating unit in the contract process are studied and how to

report /rder cancellations, /rder ad2ustments in the boo%s o# accounts.

1.< GOODS AND SERVICE TAX5

It is said that all the taxes are going to subsumed in to single tax called GS". So, the basic rules

o# the "ax Games were that the Centre would tax manu#acturing and the states would tax retail

sales.Some #ound out that manu#acturing was such a small and low-growth sector in India that

ma%ing a living by taxing manu#acturing would get them nowhere. In addition, they also realised

that the value added in manu#acturing was small compared to the value added in the sales and

a#ter sales activity o# the product. So, they too% the #irst step in capturing some o# the action in

sales activity by introducing a central sales tax. "he tax bureaucrats loo%ed around in desperation

and discovered that the real action in the Indian economywas in services and not manu#acturing.

!nd the revenue #rom a manu#actured ob2ect (#or example, air-conditioners) could be less #rom

outright sales o# these ob2ects than #rom services such as the leasing out these ob2ects. So, theCentre started taxing services.

"oday, goods, services, and other types o# supplies are pac%aged as composite bundles (to

continue our air-conditioner example5 air-conditioners on lease with three years maintenance #ree

thrown in) and o##ered #or sale to consumers through a bewildering assortment o# wholesalers,

retailers and others, so that it was no longer clear what part o# the invoice was #or a good and

what part #or a service and thus who had the power to collect a tax on it, the central

government or the state government.

Some states, out o# desperation #or revenues and not being able to persuade the party in power in

>elhi to help them with revenue grants, started stopping goods entering their borders and

charging a tax. "his meant that goods that should have ta%en two to three days to go #rom a

manu#acturing point (or importing point) to the end consumer would end up ta%ing two to three

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wee%s lying at state border chec%-posts. "his has started o## the next round o# "ax Games, the

GS"


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CHAPTER 8

COMPANY PRO/I6E

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Deliver state-of-the-art technology while increasing arket share in India

>e#ine, >evelop, 4ar%et, Sell, >esign, 4anu#acture and build to Customer Satis#action5

Competitive, reliable and sustainable components, systems and solutions #or S"G

pac%ages

State-o#-the-art manu#acturing #acility with highest =uality and sa#ety standards 4anu#acture state-o#-the-art products

+xecute pro2ects on time with optimal =uality and in budget with /ptimi&ed pro2ect

gross margin and cash #low

Compliance to the contract speci#ications, terms and conditions

Borld-class +nvironment, ealth Sa#ety (+S) standard

Borld class Ruality and +thical Standards.

8.


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!lstom has two listed entities in India with business interests in 0ower Generations and

transport-!lstom India !lstom ">("ransmission and >istribution)."he *rench

0arent owns a 6.9N sta%e in !lstom India and :9N sta%e in !lstom "> India.

!lstom "> is a 0ower "ransmission and >istribution e=uipment ma%er./ver the past

'88 years, !lstom has continuously invested, locali&ed and introduced the latest

"echnologies in India. ItJs recent milestone is that it has completed countryJs #irst 688%v

>C convertor trans#ormer #rom its adodara 0lant and demonstrate once again

!lstomJs manu#acturing and technological prowess.

!lstom "> India has awarded a contract worth approximately 7,7 million by 0ower

Grid Corp o# India $td to supply G!S Insulated Substations(GIS) in 4adhya 0radesh

and Gu2arat.1oth substations will be completely manu#actured in India,ma%ing this

0ower grids #irst O4a%e In IndiaP E88 %vGIS.


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solutions such as alternating current and direct current substations #or medium up to ultrahigh

voltages.!lstoms solutions enble the e##icient transmission o# electricity and support the

development o# smart grids and super grids. Grid has the wor% #orce o# ':,888 and boo%ed

orders o# 3.9 euro billion .

A*#% r!$#)%r continuously develops supplies and maintains railway systems that run

smoothly and e##iciently to meet the new challenges o# smarter mobility .It proposes complete

solutions #or trains, signaling,in#rastructure and services adapted to each railway systems. It o##er

its customers the most e##icient technologies and materials in order to reduce environmental

#ootprint through out the li#ecycle o# the product, #rom manu#acturing to recycling. "ransport has

a wor%#orce o# 76,388 and boo%ed orders o# .Ebillion +uros.

8. KEY STATISTICS:

1#in Grid mar%et since 7886.

@ manu#acturing units .

1; sales o##ices across India.

9,9== +mployees.

9


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2010-11 2011-12 2012-13 2013-14 2014-15

0

500

1000

1500

2000

2500

3000

3500

4000

Operating Proft(MINR)

2010-11 2011-12 2012-13 2013-14 2014-15

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Operating Proft(%)

31


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2010-11 2011-12 2012-13 2013-14 2014-15

0

10000

20000

30000

40000

50000

60000

70000

Order Backlog

2010-11 2011-12 2012-13 2013-14 2014-15

0

500

1000

1500

2000

2500

PAT(MINR)

32


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8.@ MAOR P6AYER IN THE INDUSTRY

Falapataru 0ower,Fec Intl,1S $imited are ma2or player in the industry.

C%)!ri#%$ 7i( i# )eer#:

!lstom

">

!lstom India Falapataru

0ower

Fec Intl 1S $imited

"otal Share

capital

9'.7' :.73 38. 9'.E7 E3.

+=uity share

capital

9'.7' :.73 38. 9'.E7 E3.

Share

!pplication

4oney

8 8 8 8 8

0re#erence Share

Capital

8 8 8 8 8

epreciation

979.6 E:9. 3E9.6 73:.E 3.9E

;et 1loc% 6.:7 3.36 9:3.: :7E.3 7':.93Capital wor% in

0rogress

:8.': E.: '6.8E '7.E7 7.9'

Investments 8.8' 8 363.99 .9: 9'.8

Inventories 3.7 E.9 9E3.:: 3:'. '9.7E

Sundry >ebtors 7,'E:.68 E. '9E'.9 377.9: 39.E

Cash and 1an% 6'.9' :'.67 E.: '7.'3 6.8

34


35/69

1alance

"otal current

!ssets

777.9' ':3'.8: 7'98.'7 3:7E. ''.7:

$oans and

!dvances

6'7. 66.9 'E'.8 '::.3: '6.E

*ixed >eposits 8 8 8 8 8

"otal Current

!ssets $oans and

!dvances

3:39.E: 778.9: 3E'.:7 9E87.8 '36.7'

>e##ered Credit 8 8 8 8 8

Current

$iabilities

7:3:.:: '6'.9E ':3.88 3E97..3' 966.67

0rovisions 77.77 7:'.6E ':'.7 '7'.E E.77

"otal Current

$iabilities and

0rovisions

73. 7866.36 'E.78 39:3.:' 39.8E

;et Current

!ssets

::'.E6 937.' '::.97 '676.39 :33.':

4iscellaneous

+xpenses

8 8 8 8 8

"otal !ssets '976.36 :6.9E 797.8 79:'.:3 '88E.38

Contingent

$iabilities

'6.E6 9E. 7'.E '78. 933.E

1oo% value 9'.7' 'E9.89 '7:.3E E3.7' ''.87

8.= /++re % A*#% I$i!

G+ will ac=uire !lstomJs energy assets globally #or '.: bn, while !lstom will retain its rail

transport business.

!lstom has two listed entities in India with business interests in power generation and transport -

!lstom India and !lstom "> (transmission and distribution). "he *rench parent owns a 6.9

per cent sta%e in !lstom India and :9 per cent in !lstom ">.

In 4ay, G+ proposed a


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"he 1oard o# >irectors o# !lstom on Aune 7', 78'E has given its nod to the o##er #rom General

+lectric (G+) to ac=uire the power and grid businesses o# !lstom, ignoring the 2oint revised

proposal #rom Siemens and 4itsubishi eavy Industries. O"he ad hoc committee o# independent

directors appointed by the 1oard on !pril 7, 78'E and led by Aean-4artin *ol&, thoroughly

reviewed, on multiple occasions, the proposed transactions. 1ased on the wor%s o# the committee

and #inancial and legal advisors, the 1oard o# >irectors has unanimously decided to issue a

positive recommendation o# the o##er #rom G+,P said !lstom in a press release

In addition, !lstom and G+ would create a 98598 Global ;uclear and *rench Steam alliance,

which would include the production and servicing o# the !rabelle steam turbine e=uipment #or

nuclear power plants, as well as !lstomJs steam turbine e=uipment and servicing #or applications

in *rance. In addition, the *rench State would hold a pre#erred share giving it veto and other

governance rights over issues relating to security and nuclear plant technology in *rance.

CHAPTER 9

RESEARCH METHODO6OGY

36


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9.1 TAX DEDUCTED AT SOURCE 4TDS5:

"he study #ocuses on extensive study o# 0rimary data collected #rom !$S"/4 4+SS+;G+S is the tax amount paid by individuals on di##erent types o# income they get. !s the name

indicates, it is the collection o# amount at the source o# income itsel#.">S is the most power#ul

mechanism to trac% #inancial transactions. /nce the transaction is recorded, the seller is #orced to

declare it while #iling returns and pay capital gains, i# any !lso, the government gets some part

o# the tax money immediately rather than at end o# the year.

"he ">S rates are issued by the government, di##erent rates are imposed on di##erent revenues.

"he types o# income which include ">Sare5

Salary paid to employees.

Interest on ban% deposits and bonds.

Interest on Securities.

>ividends. *ees #or pro#essional or technical services.

0ayments to contractors and sub-contractors.

>eductor who deducts the amount will give a ">S certi#icate to the >eductee. "his certi#icate

will be use#ul when #iling the returns. ">S certi#icate displays the entire details about the tax cut.

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"he responsibility o# deducting tax at source and depositing it with the government lies with the

>eductor. "he ">S should be deposited within a wee% o# the end o# the month in which the

deduction is made.

9.1.1 PROCEDURE /OR TDS /I6ING:

!lstom provide the #ollowing two services to its customerJs #or which ">S is deducted. "hey are

*ees #or pro#essional or technical services ('EA).

0ayments to contractors and Sub-contractors ('EC).

ere the >+>C"/< will be the customer and the >+>C"++ will be !$S"/4 ">.

"he tax rate #or 'EC is 7N and "ax rate #or 'EA is '8N.

*orm '! contains the latest transaction reported by the >eductor in the ">SD"CS

statement. I# the seller is the S is 78N irrespective o# the sale value. I# the seller has to pay long term capital gains tax, ">S will be ad2usted. "he buyer has to

give #orm '! to the seller as proo# o# tax deducted. "hrough +S certi#icate amount

0ro2ect Code(9E7:pu----)

0eriod is issuance o# ">S certi#icate according to the =uarterly basis that is #rom 'st !pril

78'3 to 38th Aune 78'3(It is the rule given by Income "ax >epartment). In the summary o# 0ayment you can see amount paid by the customer to the !lstom #or

the Service he got on respective dates. ;ature o# payments indicates the type o# service he got #rom !lstom.'E-C indicates

payments to Contractors and Sub-Contractors.

"ax rate #or 'E-C type o# payment is 7N. So, the tax deducted in respect o# the deductee will be 7N o# the total amount and that

amount will be remitted in respect o# deductee that is !lstom.

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9.1.8 NATURE O/ PAYMENTS O/ TDS:

"he *ollowing $ist provided the nature o# payments #or di##erent ">S #illing.

Seci%$ N% De#cri)i%$

'3 Interest on Securities

'E >ividends

'E! Interests other than O Interest on SecuritiesP

'E1 Binning #rom lottery or cross word pu&&le

'E11 Binning #rom orse Insurance Commission

'E+ 0ayments to ;on-resident Sportsmen or sport associations

'E++ 0ayments in respect o# deposits under ;ational Savings Scheme

'E* 0ayments on account o# repurchase o# units by 4utual #und

'EG Commission ,price, etc.on sale o# lottery tic%ets

'E Commission on 1ro%erage

'EI ebt #und

'9 /ther Sums 0ayable to a ;on-


40/69

Seci%$ N% De#cri)i%$

78CGCollection at Source #rom Contractors or $icense or lease relating to "oll

0lan

*or the issuance o# the ">S certi#icate #or the customer !lstom had a practice o# sending

invoice copy, Bor% order copy and letter #or the re=uest o# issuance o# ">S certi#icate. pon our calculation we #ound that a certain amount has been pending due to non-issuance

o# ">S Certi#icate by our customers. I# we receive the ">S document #rom the customer we place all details in the !lstom

internal tool wor%ed on +


41/69

. "he GS" Council is to consist o# the union #inance minister as chairman, the union minister o#

state o# #inance and the #inance minister o# each state.

@. "he bill proposes an additional tax not exceeding 'N on inter-state trade in goods, to be levied

and collected by the Centre to compensate the states #or two years, or as recommended by the

GS" Council, #or losses resulting #rom implementing the GS".

9.9 ORDER AND GROSS MARGIN BOOKING:

"he study #ocuses on primary data collected #rom the !$S"/4 "> guiding manual.




Gross margin is net sales less the cost o# goods sold. "he gross margin reveals the amount that

an entity earns #rom the sale o# its products and services, be#ore the deduction o# any selling and

administrative expenses. "he #igure can vary dramatically by industry. *or example, a company

that sells electronic downloads through a website may have an extremely high gross margin,

since it does not sell any physical goods to which a cost might be assigned. Conversely, the sale

o# a physical product, such as an automobile, will result in a much lower gross margin.

"he amount o# gross margin earned by a business dictates the level o# #unding le#t with which to

pay #or selling and administrative activities and #inancing costs, as well as to generate a pro#it. It

is a %ey concern in the derivation o# a budget, since it drives the amount o# expenditures that can

be made in these additional expense classi#ications.

41


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CHAPTER ;:

PROECT PRO/I6E

42


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OBECTIVE -1 : TO STUDY ABOUT TDS /I6ING IN A6STOM MESSENGER:

PROCEDURE /OR TDS /I6ING IN A6STOM MESSENGER:

In the !lstom internal tool called !lstom 4essenger, #or example ">S certi#icate posting against

>elhi International !irport .So in the !lstom internal 4essenger tool Be put Customer code (this

code will be identi#ied by the customer), ">S certi#icate posting G$ code (standard G$ code #or

!lstom), 0ro2ect code (9E7:-----), ">S certi#icate amount, >ocument ;umber (System

generated number i.e. ">S certi#icate amount which is collected #rom the customer accounting

through this document number)

"here will be another team called *SSC (*I;!;C+ S!ebit, Credit "ransaction

Clearing "ransaction

>> ma%ing "ransaction

">S C-*orm

!ny issue regarding these transactions, we raise a call through our !lstom Internal "ool

O4+SS+;G+

S it

goes to another validator etc.., ">S documents #iled using O4essengerP and *SSC team will be reviewing all those

documents and prepare the #inal document (edited) and we will chec% those customers

who has not issued ">S Certi#icate . "he #inance team will be sending the B/S certi#icate. I# Customer issue ">S

certi#icate the #inance team will put all the details in 4essenger and that will be reviewed

by our *!SC team to prepare the #inal document and send bac% to us.

43


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ere the document consistso# 1uyers !ddress which indicates ead /##ice !ddress and

the Consignee !ddress indicates the place where the actual wor% too% place. In the description column we can see the actual wor% too% place in the site, #or example

Inspection o# E88%v S* 1rea%er, model5 G$3' 1rea%er Sl.;o. '87'K'877.*or

this service, Customer paid irect "axes. Service tax was '7N

and +ducation cess was at 3N o# the basic tax #or a total o# '7.3N.

Diere$ce e7ee$ /%r-1? !$ /%r-1?A:

"here is lot o# di##erence between *orm-' and *orm-'!."hough there are lot o# similarities

between these two not only on name but in the origin too. 1ecause both #orms are #or ">S

certi#icate. It is only #or +mployer and +mployer basis i.e.., tax deducted at source #rom income that

comes under the category named OS!$!


45/69

*ees #or pro#essional or technical services

0ayments in regard to the deposits made under ;ational Savings Scheme

Income o# #oreign companies

Income #rom rent, selling o# lottery tic%ets etc.

0ayments in regards to the repurchase o# units #rom 4utual *unds or "I.

!ccording to the latest news I"< (income tax returns) #orms are expected to get uploaded on the

income tax e-#iling website as provided below.

/i0+re 1: 7e-Sie % I$c%e-T!" De)!re$ %r E-i**i$0

In case o# !lstom, *orm -'! is a certi#icate issued to a service provider by the service

ta%er. It can be implicated to employer, employee also. +mployer has to issue the #orm to

employee. *or example i# a person is salaried individual,*orm-' is essential while #iling tax

returns .ere the service ta%er has to issue certi#icate to service provider by 3' st4ay. I# they

delay they can be penali&ed. It is the #orm which provides in#ormation on "! >+>C"+> !" S/


46/69

It contains two sections, in which one section contains details such as name, address,

permanent account number(0!;)o# Service ta%er and service provider., "ax deduction

account number("!;) and assessment year, i.e.., the year in which your tax liability is

calculated #or the income earned in the previous year are also incorporated.

*urther to these details it has summary o# periodic ">S on income, on which it includes details

on the amount o# ">S, when it was cut, on what income and when it was deposited with the

I;C/4+ "! >+0!S certi#icate is shown below. "his data is collected

#rom the *inance Share Service "eam. *or these customers we have to send Invoice copy, /rder copy and S certi#icate #rom

the Customer.

I)!c % G%%# !$ Ser3ice T!" 4GST5

GS" will be in existence #rom ' st!pril, 78'.Curretly Service "ax is currently levied at 'EN,

will be subsumed into GS". !ccording to latest news GS" rate will be pegged around 79-

7N.So,in the GS" regime ,both the Centre and the States would levy tax on the supply o#

Services and the combined rate would be somewhat more than the present rate.

46


47/69

OB!"TI#! $& TO ST'D ABO'T DO"'M!NTATION ON ORD!R AND

ROSS MARIN BOO*IN




Service that we are doing is 0ost Barranty Services that is when the 0roduct has been delivered

we in Grid unit have to do the a#ter maintaining services.

!s a part o# /rdersDContract we do #our activities5

Be supply Spares.

Be go to the site and do the


48/69

Hear. "his next year is called !ssessment Hear because in this year only the income is

assessed to tax.

"hey are reported as O/rders received (gross)P In "+in the !lstom


49/69

6EADING UNIT:

"he responsibility o# the leading unit is to lead the pro2ect at tender phase. "ender phase is

nothing but a pre-construction stage o# a pro2ect where a contractors services are purchased by a

client to carry out the path construction wor%, and to plan ,manage ,monitor, coordinate control

health and sa#ety on site during the construction phase.

/i0+re 8: /*%7 C(!r %r e$er )r%ce##

"his 0hase includes5

a) 0reparation o# "ender (contract) documentsb) Selection and ac=uisition o# a competent contractorc) 4anagement o# the tender process.

!nother responsibility o# the $eading nit is it has to coordinate the implementation o# the

edge when needed.

edging in power contracts is nothing but Oa type o# contract used to establish a predetermined

price that will be paid #or given amount o# contract regardless o# what the actual mar%et value o#

that Contract might be at that time.

"his hedging strategy should be coordinated with the *inancial Controller or 0ro2ect Controller

belonging to the $eading unit.

49


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ORDERS ADUSTMENTS:

/rder ad2ustments in !lstom /perating system are split in to E categories5

!5 Price 3!ri!i%$ %rer# !$ )er%r!$ce %$+#e#:

"here might be price ad2ustments in the contract value without any change in scope o# wor% and

there is a chance o# issuing bonuses to the wor%ers which are accepted by the customer.

5 C%$r!c )rice !+#e$#:

Contract price ad2ustments represent the e##ects o# contractual escalation clauses upon contract

revenue between noti#ication to proceed and closing date.

c5 /%rei0$ C+rre$c 3!ri!i%$ I)!c#:

"here are currency #luctuations which are a natural outcome o# #loating exchange rate system

that is the norm #or most ma2or economies. "he exchange rate might get in#luenced by many

#actors ."here might be in#lation, mar%et #luctuation, interest rate etc. So, there might be e##ect o#

#oreign currency variation upon the revenues o# contract denominated in #oreign currency that

are not hedged.

!s the groupJs policy is to hedge all exposures above the e=uivalent o# '88% +uro signi#icant

impact should arise #rom the measurement o# contracts not hedged.

5 Pe$!*ie# !$ 6i+i!e !!0e#:

Bhen the payment o# penalties to the customer or the deduction o# penalties #rom the customers

payments are considered as probable, the order value has to be decreased by the expected amount

o# 0enalties and the $> amount boo%ed in


52/69

OBECTIVE 9 : TO STUDY ABOUT GST4 GOODS AND SERVICE TAX5:

GST AROUND THE G6OBE:

"he #irst country to adopt GS" is *rance in '9E

"here are two types o# GS" systems. "hey are >ual and ni#ied. $arge number o#

countries are #ollowing ni#ied GS" System. Canada and 1ra&il #ollow a >ual System

where GS" is levied by both ,nion and State 1odies

"here are more than '8 Countries around the world that are #ollowing GS"D!"

;ew Country that is entering in to GS" regime is 4alaysia(last month)

52


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"he rates costs very high in +urope and Some parts in !#rica .Generally in Countries

around !sia L0aci#ic have low GS". *or +xample in ungary it is 7:N,Gambia it is

E8N."he average rates in !sia 0aci#ic Countries is around '8N.

Countries Implementing GS" 5

;

o

amendments that need to be passed in the parliament and 98N o# state assemblies as well.

GS"5

It simpli#ies the tax system

GS" tries to widen the tax base

In the process o# doing above things it automatically brings tax rates down

"hree things GS" is going to do5

It is going to tax every economic activity at every stage o# production at the same rate .*or

example you are the producer o# steel and I produce spoons using that steel.*or example you

produce '88 D- worth o# steel and I will convert that steel in to spoon.So, I pay '88 to the

53


54/69

producer o# steel and additional '8rs as tax(say #or example) so a total o# ''8 was paid to you

and I add another '88 rs value to ''8 rswoth so total it was 7'8 and again it was taxed '8N

I..e..,7' rs we have to remember one point that I added a value o# converting that steel in to

spoon only '88 rs worth but the tax I ended up paying 7' rs

So gst tries to do eliminate this di##erent taxation at di##erent stages o# production .i get the ''8 rs

worth but what happens is I have rebatted the tax that I pay to you .so the net cost o# steel is

'88rs because that '8 rs which ill pay to you will be rebatted to me,wn I sbmitt my taxation.i

added '88 rs worth o# value #or which 7'rs tax I have paid but in that '8N is going to be

rebatted.it is not only simpli#ication but also e##ieciency improvement.

"rue #lawless GS" would actually bring in all goods and all services rebating at every stage ,and

every stage o# production and get taxed at the same rate.

95 GST ORNEY:

I; 78865-

*+1 78865onJble *inance 4inister announced introduction o# GS" #rom ' st!pril 78'8

!0


55/69

>+C 7885 "as% #orce constituted by +C released its report

I; 78'85

*+178'85 4entioned inn the speech o# the *inance 4inister GS" to be introduced in !pril 78''

I; 78''5

4arch 78''5"he constitution ''9th!mendment 1ill introduced in $/FS!1! #or levy o# GS"

on all goods and services accept #or the speci#ied goods.ere constitution amendment is re=uired

because in India *ederal system o# tax operates where as central government and state

government has to levy taxes.Centre has no right to levy tax on sale o# goods and State has no

right to levy tax on services.

I; 78'75

4!


56/69

"! Cascading5

>i##erent Governments levy taxes which are not set up against each other and the tax base o# the

tax levied earlier is en=uired in the value #or charging the by the next level.

ncertainty in determining the nature o# transaction5

In many case especially So#tware industry we can #ind in law that vendors charging both at and

Service tax on the sale o# so#tware

$ac% o# uni#ormity in provisions and in rates5

7 states have 7 di##erent !" laws."hey have no harmoni&ed schedule o# commodities and

rates .!#ter 7889 rates have been narrowed down but still their aroused a situation where same

commodity is taxed at di##erent rate at di##erent states

Ine##iciencies in tax administration and higher compliance costs5

1ecause o# the multiple taxation which were levied by centre and state there is ine##iciency in tax

administration which leads inevitably increase in the compliance costs.


57/69

$ays rest to the need #or the distinction o# goods and services

0 by '.EN.

In India, a similar %ind o# positive impact is expected ."his means that gains o# about '9

1illion >ollars annually. >iscounting these #lows to the modest 3N per annum, the

present value o# the GS" wor%s out to about hal# a trillion dollars

?5 I)r%3ee$# i$ T!" #r+c+re !$ !i$i#r!i%$:

/ver the past several years, signi#icant progress has been made to improve the indirect tax

structure, broaden the base and rationali&e the rates to pave way #or GS".

*irstly there was a replacement o# single point sales tax by !". "he single point sales

tax is levied on the #irst point o# sale o# goods or the last point o# sale. 1ut now it was

levied on each stage.

"he central sales tax which was levied when goods were sold #rom one state to another

was originally used to charge at EN but now it was brought down to 7N.Bhen GS" is

introduced it will be completely #ailed out

Substantial expansion o# service tax base by introduction o# negative list regime o#

service tax i.e..,all the services which are other than those in the negative list will be

liable to service tax

Introduction o# place o# provisions o# services ,rules 78'7

+lectronic registration, payment and #illing o# !" returns is prevailing now in not only

central taxes but state taxes also.

5 Sr+c+re % GST:

India is going to implement >ual GS" Structure that comprises o# Central GS" whichwill consume all taxes which were levied under Central indirect taxes and State GS"

that consumes all indirect taxes which were levied under State Indirect taxes.

/nce GS" gets implemented we will have simple tax system that every transaction o#

goods and services i# it happens with in a state #or example i# the transaction is '88D-

you would have over this '88D- two taxes one the central GS" assume the rate to be

57


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'8N and assume state GS" '8N we will have central GS" and state GS" applied on

the transaction value but in the current system state tax is levied on transaction value

and central tax

GS"-! destination based consumption tax on goods and services

1oth CGS" and SGS" to apply on supply on Goods andDor services CGS" payable to central and SGS" payable to state

Cross-utili&ation o# credits between CGS" and SGS" are not permitted

Inter-state transaction to be covered under integrated GS"(IGS")model

IGS" is nothing but sum o# central GS" and State GS" .In the above example 78N

tax is levied by the central and pass on the state share o# the consuming state.

GS" rate are not yet agreed by the centre and state governments ,while in 78'8 -''

the central government proposed a total GS" rate o# 78N to start with which would

come down to 'N over the period o# three years.


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;ote5

!lcoholic beverages #or human consumption are proposed to %eep out o# purview o# GS.

GS" on petroleum products would be levied #rom a noti#ied date recommended by the

GS" council.

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Include +xcise duty levied under 4edicinal and "oilet preparations (+xcise

duty)!ct,'99

=5 Se % e(%%*%0 !$ /%r+*!i%$:

Central GS" and State GS" are expected to be treated separately.

"he credit availed o# central GS" paid on Goods and Service received is expected to beutili&ed only against the payment o# central GS".

"he same principle is going to hold #or state GS" also.

Cross utili&ation o# input tax credit between the Central GS" and the State GS" would

not be allowed.

*ormulation o# GS" council5

"he president shall #orm the Goods and Service "ax council within 8 days #rom the date

o# commencement o# the constitution. +very decision o# the GS" council will be re=uired to be ta%en at a meeting, by a

ma2ority o# not less than V o# the weighted votes o# the members present and voting

"he vote o# central government shall have a weightage o# 'D3 o# total votes cast

"he votes o# all state governments ta%en together shall have a weightage o# 7D3 o# total

votes cast in that meeting

'8)


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GS";-S0 would provide common 0!;-based registration ,enable returns #iling and

payments processing #or all states on a shared plat#orm

+nsure integration o# common GS" portal with the existing tax administration systems o#

the centralDstate governments and other sta%e holders

1uild e##icient and convenient inter#aces with tax payers to increase tax compliance Carry out research ,study best practices and provide training to the sta%e holders

GS";-S0 would earn its revenue by levying user charges on tax payers and tax

authorities #or availing its services

0otential Implications on di##erent sectors5

4anu#acturing Sector5

Sr.;o Issue 0resent Scenario GS" scenario

' 0rocurement Inputs are purchased inter-state at a

concessional rate o# 7N (CS")

;o set-o## is available o# CS" paid

CS" becomes a cost

Set-o# o# IGS"

paid should be

available

7 4anu#acture +xcise duty is levied i# new commodity comes in

to existence

"he taxable event

would change

#rom manu#acture

to supply there by

eliminating the

separate

incidence o# tax.

3 >istribution 4anu#acturersDdealers align their supply chains

to tax considerations and establish multiple

stoc%ing points in distribution networ%

;o tax on stoc% trans#er expect retention o#

portion o# !" credit

IGS" to be paid

on stoc%

trans#er ,higher

wor%ing capital

needs

"he distribution

#ramewor% would

re=uire a revisit

-7NCS" s 'N

additional tax

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on goods traded in

in or that o#

countervailing

duties paid on

import,is

cumbersome

7 Bare housing "he location is determined

based on the pre#erred

location #or sale

+##iciencies in supply

chain Lcost to serve

levels to determine

the shoc%ing points

and levels.

P%# GST:

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Bhy states are opposed to this5

1iggest concern #or the states is revenues. /ne o# the things that people tal% about is Central

sales tax which are the ma2or source o# revenue #or the states. I# goods were sold on other states

than manu#acturing state can say that tax that can be collected is my tax, So o#ten when the

goods cross the border they will be chec%ed and tax collected. So once you go to the !" as it is

charged at destination and it is happening in the other state .So, some states may lose revenue

."he duty o# central government is to collect it and give bac% to you but state are saying that how

they can be assured that correct amount will be coming in to their treasury.

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CHAPTER S certi#icate. "he employer may issue a duplicate ceti#icate on a plain paper giving

the necessary details as contained in *orm ;o. ' (


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to be paid on stoc% trans#er ,higher wor%ing capital needs."he distribution

#ramewor% would re=uire a revisit -7NCS" s 'N additional tax

A6STOM T&D SERVICE:

;etwor% Consultancy in which we give some speci#ic support to the customer.

ere we guide the customer whether they have to go *ield Service or


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Documents

Venkat Project