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

SERVICE TAX

CHAPTER-1
INTRODUCTION

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.
Value Added Tax (VAT), stamp duty, state excise, land revenue and profession tax are levied by
the State Governments.
Local bodies are empowered to levy tax on properties, octroi and for utilities like water supply,
drainage etc.
Indian taxation system has undergone tremendous reforms during the last decade. The tax rates
have been rationalized and tax laws have been simplified resulting in better compliance, ease of
tax payment and better enforcement. The process of rationalization of tax administration is
ongoing in India.
Direct Taxes
In case of direct taxes (income tax, wealth tax, etc.), the burden directly falls on the taxpayer.
Income tax
According to Income Tax Act 1961, 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 Finance Act. Such income tax shall be paid on the total income of the previous
year in the relevant assessment year.
Assessee means a person by whom (any tax) or any other sum of money is payable under the
Income Tax Act, and includes (a) Every person in respect of whom any proceeding under the Income Tax Act has been taken
for the assessment of his income (or assessment of fringe benefits) or of the income of any other
person in respect of which he is assessable, or of the loss sustained by him or by such other
person, or of the amount of refund due to him or to such other person;
(b) Every person who is deemed to be an assessee under any provisions of the Income Tax Act;
(c) Every person who is deemed to be an assessee in default under any provision of the Income
Tax Act.

Where a person includes:

Individual

Hindu Undivided Family (HUF)

Association of persons (AOP)

Body of individuals (BOI)

Company

Firm

A local authority and,

Every artificial judicial person not falling within any of the preceding categories.
Income tax is an annual tax imposed separately for each assessment year (also called the tax
year). Assessment year commences from 1st April and ends on the next 31st March.
The total income of an individual is determined on the basis of his residential status in India. For
tax purposes, an individual may be resident, non-resident or not ordinarily resident.
Resident
An individual is treated as resident in a year if present in India:
1. For 182 days during the year or
2. For 60 days during the year and 365 days during the preceding four years. Individuals
fulfilling neither of these conditions are non-residents. (The rules are slightly more liberal for
Indian citizens residing abroad or leaving India for employment abroad.)
Resident but not Ordinarily Resident
A resident who was not present in India for 730 days during the preceding seven years or who
was non-resident in nine out of ten preceding years is treated as not ordinarily resident.
Non-Residents
Non-residents are taxed only on income that is received in India or arises or is deemed to arise in
India. A person not ordinarily resident is taxed like a non-resident but is also liable to tax on
income accruing abroad if it is from a business controlled in or a profession set up in India.
Non-resident Indians (NRIs) are not required to file a tax return if their income consists of only
interest and dividends, provided taxes due on such income are deducted at source. It is possible
for non-resident Indians to avail of these special provisions even after becoming residents by
following certain procedures laid down by the Income Tax act.
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Status

Indian Income

Foreign Income

Resident and ordinarily resident

Taxable

Taxable

Resident but not ordinary resident

Taxable

Not taxable

Non-Resident

Taxable

Not taxable

Personal Income Tax

Personal income tax is levied by Central Government and is administered by Central Board of
Direct taxes under Ministry of Finance in accordance with the provisions of the Income Tax Act.
Definition of a company
A company has been defined as a juristic person having an independent and separate legal entity
from its shareholders. Income of the company is computed and assessed separately in the hands
of the company. However the income of the company, which is distributed to its shareholders as
dividend, is assessed in their individual hands. Such distribution of income is not treated as
expenditure in the hands of company; the income so distributed is an appropriation of the profits
of the company.
Residence of a company

A company is said to be a resident in India during the relevant previous year if:

It is an Indian company

If it is not an Indian company but, the control and the management of its affairs is
situated wholly in India

A company is said to be non-resident in India if it is not an Indian company and some

part of the control and management of its affairs is situated outside India.
Corporate sector tax
The taxability of a company's income depends on its domicile. Indian companies are taxable in
India on their worldwide income. Foreign companies are taxable on income that arises out of
their Indian operations, or, in certain cases, income that is deemed to arise in India. Royalty,
interest, gains from sale of capital assets located in India (including gains from sale of shares in
an Indian company), dividends from Indian companies and fees for technical services are all
treated as income arising in India. Current rates of corporate tax.
Different kinds of taxes relating to a company
Minimum Alternative Tax (MAT)
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Normally, a company is liable to pay tax on the income computed in accordance with the
provisions of the income tax Act, but the profit and loss account of the company is prepared as
per provisions of the Companies Act. There were large number of companies who had book
profits as per their profit and loss account but were not paying any tax because income computed
as per provisions of the income tax act was either nil or negative or insignificant. In such case,
although the companies were showing book profits and declaring dividends to the shareholders,
they were not paying any income tax. These companies are popularly known as Zero Tax
companies. In order to bring such companies under the income tax act net, section 115JA was
introduced w.e.f assessment year 1997-98.
A new tax credit scheme is introduced by which MAT paid can be carried forward for set-off
against regular tax payable during the subsequent five year period subject to certain conditions,
as under:

When a company pays tax under MAT, the tax credit earned by it shall be an amount,
which is the difference between the amount payable under MAT and the regular tax. Regular tax
in this case means the tax payable on the basis of normal computation of total income of the
company.

MAT credit will be allowed carry forward facility for a period of five assessment years
immediately succeeding the assessment year in which MAT is paid. Unabsorbed MAT credit will
be allowed to be accumulated subject to the five-year carry forward limit.

In the assessment year when regular tax becomes payable, the difference between the
regular tax and the tax computed under MAT for that year will be set off against the MAT credit
available.

The credit allowed will not bear any interest

Fringe Benefit Tax (FBT)
The Finance Act, 2005 introduced a new levy, namely Fringe Benefit Tax (FBT) contained in
Chapter XIIH (Sections 115W to 115WL) of the Income Tax Act, 1961.
Fringe Benefit Tax (FBT) is an additional income tax payable by the employers on value of
fringe benefits provided or deemed to have been provided to the employees. The FBT is payable
by an employer who is a company; a firm; an association of persons excluding trusts/a body of
individuals; a local authority; a sole trader, or an artificial juridical person. This tax is payable
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even where employer does not otherwise have taxable income. Fringe Benefits are defined as
any privilege, service, facility or amenity directly or indirectly provided by an employer to his
employees (including former employees) by reason of their employment and includes expenses
or payments on certain specified heads.
The benefit does not have to be provided directly in order to attract FBT. It may still be applied if
the benefit is provided by a third party or an associate of employer or by under an agreement
with the employer.
The value of fringe benefits is computed as per provisions under Section 115WC. FBT is payable
at prescribed percentage on the taxable value of fringe benefits. Besides, surcharge in case of
both domestic and foreign companies shall be leviable on the amount of FBT. On these amounts,
education cess shall also be payable.
Every company shall file return of fringe benefits to the Assessing Officer in the prescribed form
by 31st October of the assessment year as per provisions of Section 115WD. If the employer fails
to file return within specified time limit specified under the said section, he will have to bear
penalty as per Section 271FB.
The scope of Fringe Benefit Tax is being widened by including the employees stock option as
fringe benefit liable for tax. The fair market value of the share on the date of the vesting of the
option by the employee as reduced by the amount actually paid by him or recovered from him
shall be considered to be the fringe benefit. The fair market value shall be determined in
accordance with the method to be prescribed by the CBDT.
Dividend Distribution Tax (DDT)
Under Section 115-O of the Income Tax Act, any amount declared, distributed or paid by a
domestic company by way of dividend shall be chargeable to dividend tax. Only a domestic
company (not a foreign company) is liable for the tax. Tax on distributed profit is in addition to
income tax chargeable in respect of total income. It is applicable whether the dividend is interim
or otherwise. Also, it is applicable whether such dividend is paid out of current profits or
accumulated profits.
The tax shall be deposited within 14 days from the date of declaration, distribution or payment of
dividend, whichever is earliest. Failing to this deposition will require payment of stipulated
interest for every month of delay under Section115-P of the Act.

Rate of dividend distribution tax to be raised from 12.5 per cent to 15 per cent on dividends
distributed by companies; and to 25 per cent on dividends paid by money market mutual funds
and liquid mutual funds to all investors.
Banking Cash Transaction Tax (BCTT)
The Finance Act 2005 introduced the Banking Cash Transaction Tax (BCTT) w.e.f. June 1, 2005
and applies to the whole of India except in the state of Jammu and Kashmir.BCTT continues to
be an extremely useful tool to track unaccounted monies and trace their source and destination. It
has led the Income Tax Department to many money laundering and hawala transactions.
BCTT is levied at the rate of 0.1 per cent of the value of following "taxable banking
transactions" entered with any scheduled bank on any single day:

Withdrawal of cash from any bank account other than a saving bank account; and

Receipt of cash on encashment of term deposit(s).

However,Banking Cash Transaction Tax (BCTT) has been withdrawn with effect from April 1,
2009.
Securities Transaction Tax (STT)
Securities Transaction Tax or turnover tax, as is generally known, is a tax that is leviable on
taxable securities transaction. STT is leviable on the taxable securities transactions with effect
from 1st October, 2004 as per the notification issued by the Central Government. The surcharge
is not leviable on the STT.
Wealth Tax
Wealth tax, in India, is levied under Wealth-tax Act, 1957. Wealth tax is a tax on the benefits
derived from property ownership. The tax is to be paid year after year on the same property on its
market value, whether or not such property yields any income.
Under the Act, the tax is charged in respect of the wealth held during the assessment year by the
following persons: -

Individual

Hindu Undivided Family (HUF)

Company
Chargeability to tax also depends upon the residential status of the assessee same as the
residential status for the purpose of the Income Tax Act.

Wealth tax is not levied on productive assets, hence investments in shares, debentures, UTI,
mutual funds, etc are exempt from it. The assets chargeable to wealth tax are Guest house,
residential house, commercial building, Motor car, Jewellery, bullion, utensils of gold, silver,
Yachts, boats and aircrafts, Urban land and Cash in hand (in excess of Rs 50,000 for Individual
& HUF only).
The following will not be included in Assets:

Assets held as Stock in trade.

A house held for business or profession.

Any property in nature of commercial complex.

A house let out for more than 300 days in a year.

Gold deposit bond.

A residential house allotted by a Company to an employee, or an Officer, or a Whole

Time Director (Gross salary i.e. excluding perquisites and before Standard Deduction of such
Employee, Officer, Director should be less than Rs 5,00,000).
The assets exempt from Wealth tax are "Property held under a trust", Interest of the assessee in
the coparcenaries property of a HUF of which he is a member, "Residential building of a former
ruler", "Assets belonging to Indian repatriates", one house or a part of house or a plot of land not
exceeding 500sq.mts(for individual & HUF assessee)
Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date where Net
wealth is all assets less loans taken to acquire those assets and valuation date is 31st March of
immediately preceding the assessment year. In other words, the value of the taxable assets on the
valuation date is clubbed together and is reduced by the amount of debt owed by the assessee.
The net wealth so arrived at is charged to tax at the specified rates. Wealth tax is charged @ 1 per
cent of the amount by which the net wealth exceeds Rs 15 Lakhs.
Tax Rebates for Corporate Tax
The classical system of corporate taxation is followed in India

Domestic companies are permitted to deduct dividends received from other domestic
companies in certain cases.

Inter Company transactions are honored if negotiated at arm's length.

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Special provisions apply to venture funds and venture capital companies.

Long-term capital gains have lower tax incidence.

There is no concept of thin capitalization.

Liberal deductions are allowed for exports and the setting up on new industrial
undertakings under certain circumstances.

There are liberal deductions for setting up enterprises engaged in developing, maintaining
and operating new infrastructure facilities and power-generating units.

Business losses can be carried forward for eight years, and unabsorbed depreciation can
be carried indefinitely. No carry back is allowed.

Dividends, interest and long-term capital gain income earned by an infrastructure fund or
company from investments in shares or long-term finance in enterprises carrying on the business
of developing, monitoring and operating specified infrastructure facilities or in units of mutual
funds involved with the infrastructure of power sector is proposed to be tax exempt.
Capital Gains Tax
A capital gain is income derived from the sale of an investment. A capital investment can be a
home, a farm, a ranch, a family business, work of art etc. In most years slightly less than half of
taxable capital gains are realized on the sale of corporate stock. The capital gain is the difference
between the money received from selling the asset and the price paid for it.
Capital gain also includes gain that arises on "transfer" (includes sale, exchange) of a capital
asset and is categorized into short-term gains and long-term gains.
The capital gains tax is different from almost all other forms of taxation in that it is a voluntary
tax. Since the tax is paid only when an asset is sold, taxpayers can legally avoid payment by
holding on to their assets--a phenomenon known as the "lock-in effect."
The scope of capital asset is being widened by including certain items held as personal effects
such as archaeological collections, drawings, paintings, sculptures or any work of art. Presently
no capital gain tax is payable in respect of transfer of personal effects as it does not fall in the
definition of the capital asset. To restrict the misuse of this provision, the definition of capital
asset is being widened to include those personal effects such as archaeological collections,
drawings, paintings, sculptures or any work of art. Transfer of above items shall now attract
capital gain tax the way jewellery attracts despite being personal effect as on date.
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Short Term and Long Term capital Gains

Gains arising on transfer of a capital asset held for not more than 36 months (12 months in the
case of a share held in a company or other security listed on recognised stock exchange in India
or a unit of a mutual fund) prior to its transfer are "short-term". Capital gains arising on transfer
of capital asset held for a period exceeding the aforesaid period are "long-term".
Section 112 of the Income-Tax Act, provides for the tax on long-term capital gains, at 20 per cent
of the gain computed with the benefit of indexation and 10 per cent of the gain computed (in case
of listed securities or units) without the benefit of indexation.
Double Taxation Relief
Double Taxation means taxation of the same income of a person in more than one country. This
results due to countries following different rules for income taxation. There are two main rules of
income taxation i.e. (a) Source of income rule and (b) residence rule.
As per source of income rule, the income may be subject to tax in the country where the source
of such income exists (i.e. where the business establishment is situated or where the asset /
property is located) whether the income earner is a resident in that country or not.
On the other hand, the income earner may be taxed on the basis of the residential status in that
country. For example, if a person is resident of a country, he may have to pay tax on any income
earned outside that country as well.
Further,some countries may follow a mixture of the above two rules. Thus, problem of double
taxation arises if a person is taxed in respect of any income on the basis of source of income rule
in one country and on the basis of residence in another country or on the basis of mixture of
above two rules.
In India, the liability under the Income Tax Act arises on the basis of the residential status of 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. The
position in many other countries being also broadly similar, it frequently happens that a person
may be found to be a resident in more than one country or that the same item of 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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Relief against such hardship can be provided mainly in two ways: (a) Bilateral relief, (b)
Unilateral relief.
Bilateral Relief
The Governments of two countries can enter into Double Taxation Avoidance Agreement
(DTAA) to provide relief against such Double Taxation, worked out on the basis of mutual
agreement between the two concerned sovereign states. This may be called a scheme of 'bilateral
relief' as both concerned powers agree as to the basis of the relief to be granted by either of them.
Unilateral relief
The above procedure for granting relief will not be sufficient to meet all cases. No country will
be in a position to arrive at such agreement with all the countries of the world for all time. The
hardship of the taxpayer however is a crippling one in all such cases. Some relief can be
provided even in such cases by home country irrespective of whether the other country
concerned has any agreement with India or has otherwise provided for any relief at all in respect
of such double taxation. This relief is known as unilateral relief.
Double Taxation Avoidance Agreement (DTAA)
List of countries with which India has signed Double Taxation Avoidance Agreement :

DTAA Comprehensive Agreements - (With respect to taxes on income)

DTAA Limited Agreements With respect to income of airlines/ merchant shipping

Limited Multilateral Agreement

DTAA Other Agreements/Double Taxation Relief Rules

Specified Associations Agreement

Tax Information Exchange Agreement (TIEA)

Indirect Taxation
Sales tax
Central Sales Tax (CST)
Central Sales tax is generally payable on the sale of all goods by a dealer in the course of interstate trade or commerce or, outside a state or, in the course of import into or, export from India.
The ceiling rate on central sales tax (CST), a tax on inter-state sale of goods, has been reduced
from 4 per cent to 3 per cent in the current year.
Value Added Tax (VAT)
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VAT is a multi-stage tax on goods that is levied across various stages of production and supply
with credit given for tax paid at each stage of Value addition. Introduction of state level VAT is
the most significant tax reform measure at state level. The state level VAT has replaced the
existing State Sales Tax. The decision to implement State level VAT was taken in the meeting of
the Empowered Committee (EC) of State Finance Ministers held on June 18, 2004, where a
broad consensus was arrived at to introduce VAT from April 1, 2005. Accordingly, all states/UTs
have implemented VAT.
The Empowered Committee, through its deliberations over the years, finalized a design of VAT
to be adopted by the States, which seeks to retain the essential features of VAT, while at the same
time, providing a measure of flexibility to the States, to enable them to meet their local
requirements. Some salient features of the VAT design finalized by the Empowered Committee
are as follows:

The rates of VAT on various commodities shall be uniform for all the States/UTs. There
are 2 basic rates of 4 per cent and 12.5 per cent, besides an exempt category and a special rate of
1 per cent for a few selected items. The items of basic necessities have been put in the zero rate
bracket or the exempted schedule. Gold, silver and precious stones have been put in the 1 per
cent schedule. There is also a category with 20 per cent floor rate of tax, but the commodities
listed in this schedule are not eligible for input tax rebate/set off. This category covers items like
motor spirit (petrol), diesel, aviation turbine fuel, and liquor.

There is provision for eliminating the multiplicity of taxes. In fact, all the State taxes on
purchase or sale of goods (excluding Entry Tax in lieu of Octroi) are required to be subsumed in
VAT or made VATable.

Provision has been made for allowing "Input Tax Credit (ITC)", which is the basic feature
of VAT. However, since the VAT being implemented is intra-State VAT only and does not cover
inter-State sale transactions, ITC will not be available on inter-State purchases.

Exports will be zero-rated, with credit given for all taxes on inputs/ purchases related to
such exports.

There are provisions to make the system more business-friendly. For instance, there is
provision for self-assessment by the dealers. Similarly, there is provision of a threshold limit for
registration of dealers in terms of annual turnover of Rs 5 lakh. Dealers with turnover lower than
this threshold limit are not required to obtain registration under VAT and are exempt from
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payment of VAT. There is also provision for composition of tax liability up to annual turnover
limit of Rs. 50 lakh.

Regarding the industrial incentives, the States have been allowed to continue with the
existing incentives, without breaking the VAT chain. However, no fresh sales tax/VAT based
incentives are permitted.
Roadmap towards GST
The Empowered Committee of State Finance Ministers has been entrusted with the task of
preparing a roadmap for the introduction of national level goods and services tax with effect
from 01 April 2007.The move is towards the reduction of CST to 2 per cent in 2008, 1 per cent in
2009 and 0 per cent in 2010 to pave way for the introduction of GST (Goods and Services Tax).
Excise Duty
Central Excise duty is an indirect tax levied on goods manufactured in India. Excisable goods
have been defined as those, which have been specified in the Central Excise Tariff Act as being
subjected to the duty of excise.
There are three types of Central Excise duties collected in India namely
Basic Excise Duty
This is the duty charged under section 3 of the Central Excises and Salt Act,1944 on all excisable
goods other than salt which are produced or manufactured in India at the rates set forth in the
schedule to the Central Excise tariff Act,1985.
Additional Duty of Excise
Section 3 of the Additional duties of Excise (goods of special importance) Act, 1957 authorizes
the levy and collection in respect of the goods described in the Schedule to this Act. This is
levied in lieu of sales Tax and shared between Central and State Governments. These are levied
under different enactments like medicinal and toilet preparations, sugar etc. and other industries
development etc.
Special Excise Duty
As per the Section 37 of the Finance Act,1978 Special excise Duty was attracted on all excisable
goods on which there is a levy of Basic excise Duty under the Central Excises and Salt
Act,1944.Since then each year the relevant provisions of the Finance Act specifies that the
Special Excise Duty shall be or shall not be levied and collected during the relevant financial
year.
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Customs Duty
Custom or import duties are levied by the Central Government of India on the goods imported
into India. The rate at which customs duty is leviable on the goods depends on the classification
of the goods determined under the Customs Tariff. The Customs Tariff is generally aligned with
the Harmonised System of Nomenclature (HSL).
In line with aligning the customs duty and bringing it at par with the ASEAN level, government
has reduced the peak customs duty from 12.5 per cent to 10 per cent for all goods other than
agriculture products. However, the Central Government has the power to generally exempt goods
of any specified description from the whole or any part of duties of customs leviable thereon. In
addition, preferential/concessional rates of duty are also available under the various Trade
Agreements.
Service Tax
Service tax was introduced in India way back in 1994 and started with mere 3 basic services viz.
general insurance, stock broking and telephone. Today the counter services subject to tax have
reached over 100. There has been a steady increase in the rate of service tax. From a mere 5 per
cent, service tax is now levied on specified taxable services at the rate of 12 per cent of the gross
value of taxable services. However, on account of the imposition of education cess of 3 per cent,
the effective rate of service tax is at 12.36 per cent.
Tax Proposal
Direct Taxes:

According to the Finance Minister,there is a little room to give away tax revenues or raise
tax rates in a constrained economy.

No case to revise either the slabs or the rates of Personal Income Tax. Even a moderate
increase in the threshold exemption will put hundreds of thousands of Tax Payers outside Tax
Net.

However, relief for Tax Payers in the first bracket of USD 0.004 million to USD 0.009
million. A tax credit of USD 36.78 to every person with total income upto USD 0.009 million.

Surcharge of 10 percent on persons (other than companies) whose taxable income exceed
USD 0.18 million to augment revenues.

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Increase surcharge from 5 to 10 percent on domestic companies whose taxable income

exceed USD 1.84 million.

In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase
from 2 to 5 percent, if the taxabale income exceeds USD 1.84 million.

In all other cases such as dividend distribution tax or tax on distributed income, current
surcharge increased from 5 to 10 percent.

Additional surcharges to be in force for only one year.

Education cess to continue at 3 percent.

Permissible premium rate increased from 10 percent to 15 percent of the sum assured by
relaxing eligibility conditions of life insurance policies for persons suffering from disability and
certain ailments.

Contributions made to schemes of Central and State Governments similar to Central

Government Health Scheme, eligible for section 80D of the Income tax Act.

Donations made to National Children Fund eligible for 100 percent deduction.

Investment allowance at the rate of 15 percent to manufacturing companies that invest

more than USD 1.84 million in plant and machinery during the period 1st April 2013 to 31st
March 2015.

Eligible date for projects in the power sector to avail benefit under Section 80- IA
extended from 31st March 2013 to 31st March 2014.

Concessional rate of tax of 15 percent on dividend received by an Indian company from

its foreign subsidiary proposed to continue for one more year.

Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates
only at the time of distribution of income for companies, individual or HUF etc. No further tax
on income received by investors from the Trust.

Investor Protection Fund of depositories exempt from Income-tax in some cases.

Parity in taxation between IDF-Mutual Fund and IDF-NBFC.

A Category I AIF set up as Venture capital fund allowed pass through status under
Income-tax Act.

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TDS at the rate of 1 percent on the value of the transfer of immovable properties where
consideration exceeds USD 0.092 million. Agricultural land to be exempted.

A final withholding tax at the rate of 20 percent on profits distributed by unlisted

companies to shareholders through buyback of shares.

Proposal to increase the rate of tax on payments by way of royalty and fees for technical
services to non-residents from 10 percent to 25 percent.

Reductions made in rates of Securities Transaction Tax in respect of certain transaction.

Proposal to introduce Commodity Transaction Tax (CTT) in limited way.Agricultural

commodities will be exempted.

Modified provisions of GAAR will come into effect from 1st April 2016.

Rules on Safe Harbour will be issued after examing the reports of the Rangachary
Committee appointed to look into tax matters relating to Development Centres & IT Sector and
Safe Harbour rules for a number of sectors.

Fifth large tax payer unit to open at Kolkata shortly.

A number of administrative measures such as extension of refund banker system to

refund more than USD 918.86, technology based processing, extension of e-payment through
more banks and expansion in the scope of annual information returns by Income-tax Department.
Indirect Taxes

No change in the normal rates of 12 percent for excise duty and service tax.

No change in the peak rate of basic customs duty of 10 percent for non-agricultural
products.
Customs

Period of concession available for specified part of electric and hybrid vehicles extended
upto 31 March 2015.

Duty on specified machinery for manufacture of leather and leather goods including
footwear reduced from 7.5 to 5 percent.

Duty on pre-forms precious and semi-precious stones reduced from 10 to 2 percent.

Export duty on de-oiled rice bran oil cake withdrawn.

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Duty of 10 percent on export of unprocessed limonite and 5 percent on export on

ungraded limonite.

Concessions to air craft maintenance, repair and overhaul (MRO) industry.

Duty on Set Top Boxes increased from 5 to10 percent.

Duty on raw silk increased from 5 to 15 percent.

Duties on Steam Coal and Bituminous Coal equalised and 2 percent custom duty and 2
percent CVD levied on both kinds coal.

Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts
and similar vessels increased.

Duty free gold limit increased to USD 918.86 in case of male passenger and USD
1,837.47 in case of a female passenger subject to conditions.
Excise duty

Relief to readymade garment industry. In case of cotton, zero excise duty at fibre stage
also. In case of spun yarn made of man made fibre, duty of 12 percent at the fibre stage.

Handmade carpets and textile floor coverings of coir and jute totally exempted from
excise duty.

To provide relief to ship building industry, ships and vessels exempted from excise duty.
No CVD on imported ships and vessels.

Specific excise duty on cigarettes increased by about 18 percent. Similar increase on

cigars, cheroots and cigarillos.

Excise duty on SUVs increased from 27 to 30 percent. Not applicable for SUVs
registered as taxies.

Excise duty on marble increased from USD 0.55 per square meter to USD 1.10 per
square meter.

Proposals to levy 4 percent excise duty on silver manufactured from smelting zinc or
lead.

Duty on mobile phones priced at more than USD 36.78 raised to 6 percent.

MRP based assessment in respect of branded medicaments of Ayurveda, Unani,Siddha,

Homeopathy and bio-chemic systems of medicine to reduce valuation disputes.
Service Tax
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Maintain stability in tax regime.

Vocational courses offered by institutes affiliated to the State Council of Vocational

Training and testing activities in relation to agricultural produce also included in the negative list
for service tax.

Exemption of Service Tax on copyright on cinematography limited to films exhibited in

cinema halls.

Proposals to levy Service Tax on all air conditioned restaurant.

For homes and flats with a carpet area of 2,000 sq.ft. or more or of a value of USD 0.18
million or more, which are high-end constructions, where the component of services is greater,
rate of abatement reduced from from 75 to 70 percent.

Out of nearly 1.7 million registered assesses under Service Tax only 0.7 million file
returns regularly. Need to motivate them to file returns and pay tax dues. A onetime scheme
called Voluntary Compliance Encouragement Scheme proposed to be introduced. Defaulter
may avail of the scheme on condition that he files truthful declaration of Service Tax dues since
1st October 2007.

Tax proposals on Direct Taxes side estimated to yield to USD 2,444.32 million and on the
Indirect Tax side USD 863.68 million.
Good and Services Tax

A sum of USD 1,653.78 million towards the first instalment of the balance of CST
compensation provided in the budget.

Work on draft GST Constitutional amendment bill and GST law expected to be taken
forward.
1.2 TAX DEDUCTED ON SOURCE (TDS):
TDS is the tax amount paid by individuals on different types of income they get. As the name
indicates, it is the collection of amount at the source of income itself.TDS is the most powerful
mechanism to track financial transactions. Once the transaction is recorded, the seller is forced to
declare it while filing returns and pay capital gains, if any Also, the government gets some part
of the tax money immediately rather than at end of the year. The TDS rates are issued by the
government, different rates are imposed on different revenues.
19

1.3 CENTRAL SALES TAX:

CST which plays a major role in taxation. Value added tax has two components: One is VAT and
another is CST. CST plays a major role in taxation. Vat is the tax imposed by the states in which
buyer and seller are in the same state and the value is 13.5 %(max), 5 %(min) in most of the
states. Central sales tax is the tax imposed when buyer and the seller are in the different states.

For example VAT will be come in to play whenever business deals are between Mysore
and Bangalore and whenever you were dealing with Bangalore and Delhi CST will come
in to play.

Recently, CST was cut from 4% to 2% on April1st.Central sales tax is levied on the state
where the actual transaction i.e.., where the goods are sold and movement commence.
This tax goes in to the treasury of State. It is controlled by the sales tax

Forms which come under CST:

Buyers have to issue certain forms to sellers so that they can reduce their tax percentage..
The type of forms are C, D, E1, E2, F, Hand I. Forms C, E1, E2, F and H are printed and
supplied by Sales Tax authorities. Dealers have to issue declarations in these forms
printed and supplied by the Sales Tax authorities. Form D is to be issued by government
organization departments making purchases. These forms are to be prepared in triplicate.

FormC:

C-form is the form issued by the central sales department to the buyer of the goods and
the buyer issues it to the supplier of the goods when the transaction happens on CST
basis. Here 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. This form is issued when the
purchase of the goods is from outside the state. If the C-form is issued then buyer can
only bear the central sales tax of only 2% and the local tax is not counted. If the C-form is
not issued then the buyer has to pay FULL CST to the issuer.
20

C-Form has to collect on Total Invoice Value. If we fail to submit the certificate
government may charge 10% on total sale as a Penalty. It is our responsibility to collect
from the customer the original c form and submit to the govt.

Form D:

Sale to government is taxable @ 4% or applicable sales tax rate for sale within the State
whichever is lower. This concession on CST is applicable if Form D is issued by the
government department which purchases the goods.

Form E1:

This form is issued by the dealer who makes the first inter-state sale during movement of
goods from one State to another. This enables the purchaser to claim exemption from
CST on the second inter-state sale during the movement of goods by transfer of
documents of title.

Form E2:

This form is issued by the second or the subsequent seller when the goods move from one
state to another in a series of inter-state sales by transfer of documents of title. This form
enables the purchaser to claim exemption form CST on subsequent sale of goods.

Form F:

This form is issued when goods are dispatched to another state as a consignment or to the
branch of a dealer in another State. The CST is not payable if there is only inter-state
stock transfer and there is no sale. To claim inter-state movement of goods as not a sale,
the dealer has to produce a declaration in Form F received from Consignment Agent or
Branch Office in another State. One Form F covering receipts during one calendar month
has to be issued.

21

Form H:

This form is issued by an exporter for purchase of goods. The purchase of goods is for an
export order or in pursuance of an export order. These goods are then sold in export and
the form enables seller of the goods to the exporter to claim deduction on the goods sold
for export.

Form I:

This form is issued by a dealer located in a Special Economic Zone (SEZ). No CST is
levied when sales is made to a dealer located in SEZ.

1.4 ORDER AND GROSS MARGIN BOOKING:

Order/Contract is a contact signed between a seller and a buyer to supply a product or set of
products and/or provide a service or a set of services to a customer within a specified time, and
under specified quality, price and funding conditions.
Service that we are doing is Post Warranty Services that is when the Product has been delivered
we in Grid unit have to do the after maintaining services.
As a part of Orders/Contract we do four activities:
Alstom supply Spares.
Alstom to the site and do the Repair which is called Field Service.
Alstom there is some new thing is coming, the required guidance to the customer
for better performance and this activity is called RME(Renovation, Modernization
and Expansion)
22

 Network Consultancy in which we give some specific support to the customer. Here
we guide the customer whether they have to go Field Service or RME(Renovation,
Modernization and Expansion)
Order booking must be recorded in the OPERATION INFORMATION SYSTEM-ALT@IS and
in the Alstom Reporting system- TERENGA, in the month the contract comes into force. The
responsibility of leading unit, participating unit in the contract process are studied and how to
report Order cancellations, Order adjustments in the books of accounts.
1.5 GOODS AND SERVICE TAX:
It is said that all the taxes are going to subsumed in to single tax called GST. So, the basic rules
of the Tax Games were that the Centre would tax manufacturing and the states would tax retail
sales. Some found out that manufacturing was such a small and low-growth sector in India that
making a living by taxing manufacturing would get them nowhere. In addition, they also realised
that the value added in manufacturing was small compared to the value added in the sales and
after sales activity of the product. So, they took the first step in capturing some of the action in
sales activity by introducing a central sales tax. The tax bureaucrats looked around in desperation
and discovered that the real action in the Indian economy was in services and not manufacturing.
And the revenue from a manufactured object (for example, air-conditioners) could be less from
outright sales of these objects than from services such as the leasing out these objects. So, the
Centre started taxing services.
Today, goods, services, and other types of supplies are packaged as composite bundles (to
continue our air-conditioner example: air-conditioners on lease with three years maintenance free
thrown in) and offered for sale to consumers through a bewildering assortment of wholesalers,
retailers and others, so that it was no longer clear what part of the invoice was for a "good" and
what part for a "service" and thus who had the power to collect a tax on it, the central
government or the state government.
Some states, out of desperation for revenues and not being able to persuade the party in power in
Delhi to help them with revenue grants, started stopping goods entering their borders and
charging a tax. This meant that goods that should have taken two to three days to go from a
manufacturing point (or importing point) to the end consumer would end up taking two to three
23

weeks lying at state border check-posts. This has started off the next round of Tax Games, the
GST Reforms Game.
When implemented, in one fell sweep it will replace central exercise, service tax (charged by the
central government) and VAT, sales tax, entertainment tax and luxury tax (levied by state
governments). GST will be levied on and paid at the point of consumption and not at the point of
manufacture.

24

CHAPTER 2
COMPANY PROFILE

25

2.1 COMPANY HISTORY:

Alstom has been associated with Indias progress for a century and has a long-standing
reputation for providing highly innovative and sustainable solutions for meeting the countrys
energy and transport requirements. The company has full capabilities in engineering,
manufacturing, project management and supply of power generation, transmission and transport
sector requirements. Since its inception in the year 1911, the company has been at the forefront
of leading-edge technology at every level, serving these three infrastructure markets essential to
economic, social and environmental development of India.
The company works with a number of strategic partners in India to offer a wide range of
solutions for every sector Power, Transport & Grid.
With power transmission now included in the business portfolio, Alstom in India looks forward
to new synergies amongst its three core sectors and is well poised to offer end-to-end solutions to
its customers.
2.2 Alstom India Statistics

Around 9,000 employees in India

Three R & D Centres in Bengaluru (Power and Transport), Vadodara (Power) and Hosur
(Grid)

Two Engineering Centres for Power in Noida, Kolkata

Manufacturing Units

Power Vadodara, Durgapur, Shahabad, Sanand*

Transport Coimbatore, Sricity

Grid Padappai, Pallavaram, Hosur, Vadodara, Naini

Global Engineering & Software Centre for Railway & Metro in Bengaluru for TransportMetro &
Railway Signaling Engineering and Software Centre in Bengaluru.
1911: First factory built in Kolkata.
1950: Participated in setting up the first major manufacturing unit of BHEL, Bhopal
26

1959: Power Boilers facility established in Durgapur

1963: Boiler/Mill facility established in Shahabad
1992: Asea Brown Boveri Management Limited (ABBML) established in Bombay
1999: Asea Brown Boveri Management Limited (ABBML) became ABB ALSTOMPower India
Limited (ABBPL)
2000: ABB ALSTOM Power India Limited (ABBPL) became ALSTOM Power India Limited
2002: ALSTOM Power India Limited became ALSTOM Projects India Ltd.
2004: Hydro manufacturing facility established in Vadodara
2005: Strategic partnership with Infosys in the areas of Global R&D, Engineering and
Engineering services.
2008: Global Technological Centre (GTC) established in Vadodara
2009: Foundation stone laid of power equipment manufacturing plant at Mundra in Gujarat.
Three Green Field manufacturing units were setup in Hosur, Padappai and Vadodara
2012: Areva

T&D

became

Alstom

T&D

India

ALSTOM Projects India Limited became ALSTOM India Limited

2.3 OUR VISION

Be one of the Credible Private Sector Supplier of STG packages in India

Benefits from an upcoming state of the Art manufacturing facility

Be a recognized, Reliable, Safe and highest quality standard organization/supplier

Promote clean sustainable solutions for long term growth of India

2.4 OUR MISSION

27

Limited

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

Define, Develop, Market, Sell, Design, Manufacture and build to Customer Satisfaction:
Competitive, reliable and sustainable components, systems and solutions for STG

packages
State-of-the-art manufacturing facility with highest quality and safety standards
Manufacture state-of-the-art products
Execute projects on time with optimal quality and in budget with Optimized project

gross margin and cash flow

Compliance to the contract specifications, terms and conditions
World-class Environment, Health Safety (EHS) standard
World class Quality and Ethical Standards.

2.5GLOBAL SCENARIO AND INDIAN SCENARIO

Global Scenario
Alstom is

French multinational

company which

holds

interests

in

the electricity

generation and rail transport markets. In 20122013 Alstom had annual sales of 20.3 billion
euros, and employed approximately 96,000 people in around 100 countries. Alstom's
headquarters are located in Levallois-Perret, west of Paris. Its CEO isPatrikKron.
Alstom is a global leader in the world of power generation, power transmission and rail
infrastructure and sets the benchmark for innovative and environmentally friendly
technologies..
Global Scenario :(key statistics)

Among the top 3 global players with 10% market share

Sales around 3.5 billion euros(out of 20.3 billion for the Alstoms group)
90% of the power utilities worldwide has been equipped by Alstom Grid
87 manufacturing and engineering sites
40 R&D competence centres and 5 technology centres in 12 countries world wide
17,000 employees (out of 93,000 for alstoms group)
4% of sales invested yearly in R&D from 2010
Over 130 years of experience

Indian Scenario
28

Alstom has two listed entities in India with business interests in Power Generations and
transport-Alstom India & Alstom T&D(Transmission and Distribution).The French

Parent owns a 68.56% stake in Alstom India and 75% stake in Alstom T&D India.
Alstom T&D is a Power Transmission and Distribution equipment maker.Over the past
100 years, Alstom has continuously invested, localized and introduced the latest
Technologies in India. Its recent milestone is that it has completed countrys first 800kv
HVDC convertor transformer from its Vadodara Plant and demonstrate once again

Alstoms manufacturing and technological prowess.

Alstom T&D India has awarded a contract worth approximately 2,266 million by Power
Grid Corp of India Ltd to supply GAS Insulated Substations(GIS) in Madhya Pradesh
and Gujarat.Both substations will be completely manufactured in India,making this

Power grids first Make In India 400 kvGIS.

Recently General Electric(GE) made an open offer to acquire 25% stake in the company
for Rs 1,672 crore.The offer price made by the GE was in accordance with the guidelines
of the Securities and Exchange Board of India(Sebi).

2.6 SERVICES OFFERED BY ALSTOM T&D:

Alstom thermal power sector designs ,manufactures,and delivers solutions which allow
customers to generate competitive ,eco-friendly,reliable and flexible power.It has the industrys
most wide-ranging portfolio of thermal technologies coal,gas,oil and nuclear and holds leading
position in turnkey power plants ,power generation equipment,air quality control systems and
service for the installed base.It is also pioneer in carbon capture technologies.Thermal power has
workforce of 36,500 and booked orders of 9euro billion.
Alstom renewable power offers most comprehensive range of renewable power generation
solutions for integrated power plants covering hydroelectricity,wind,geothermal,biomass,solar as
well as wave and tidal stream energies.In addition it provides individual components including
all types of generators,and has full range of services,including plant modernization ,maintenance
and operational support. Alstom renewable power has the workforce of 9,200 and booked orders
of 2.5 euro billion.
Alsto grid is the worlds leading manufacturer of engineered solutions for electrical grid
applications in utility and industry settings .It provides integrated and customized trunkey
29

solutions such as alternating current and direct current substations for medium up to ultrahigh
voltages.Alstoms solutions enble the efficient transmission of electricity and support the
development of smart grids and super grids. Grid has the work force of 17,000 and booked
orders of 3.5 euro billion .
Alstom transport continuously develops supplies and maintains railway systems that run
smoothly and efficiently to meet the new challenges of smarter mobility .It proposes complete
solutions for trains, signaling,infrastructure and services adapted to each railway systems. It offer
its customers the most efficient technologies and materials in order to reduce environmental
footprint through out the lifecycle of the product, from manufacturing to recycling. Transport has
a workforce of 28,300 and booked orders of 6.4billion Euros.
2.7 KEY STATISTICS:

1st in Grid market since 2008.

8 manufacturing units .
14 sales offices across India.
3,399 Employees.
35,235 MINR sales .
Financial results

Net Sales
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2010

2011

2012-13

30

2013-14

2014-15

Operating Profit(MINR)
4000
3500
3000
2500
2000
1500
1000
500
0
2010-11

2011-12

2012-13

2013-14

2014-15

Operating Profit(%)
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2010-11

2011-12

2012-13

31

2013-14

2014-15

Order Backlog
70000
60000
50000
40000
30000
20000
10000
0
2010-11

2011-12

2012-13

2013-14

2014-15

2013-14

2014-15

PAT(MINR)
2500
2000
1500
1000
500
0
2010-11

2011-12

2012-13

32

Dividend(%)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2010-11

2011-12

2012-13

33

2013-14

2014-15

2.8 MAJOR PLAYER IN THE INDUSTRY

Kalapataru Power,Kec Intl,BS Limited are major player in the industry.
Comparison with its peers:
Alstom

Alstom India

Kalapataru

Kec Intl

BS Limited

Total

T&D
Share 51.21

67.23

Power
30.69

51.42

43.9

capital
Equity

share 51.21

67.23

30.69

51.42

43.9

Money
Preference Share 0

Capital
Reserves
Revaluation

1260.13
0.46

907.92
3.39

1923.48
0

1059.47
0

439.97
0

1311.80
0
216.58
216.58
1528.38
Alstom

978.54
0
0
0
978.54
Alstom India

1954.17
693.82
4.92
698.74
2652.91
Kalapataru

110.89
1460.83
0
1460.83
2571.72
Kec Intl

483.87
451.88
68.56
451.88
1004.31
BS Limited

capital
Share
Application

Reserves
Net worth
Secured Loans
Unsecured Loans
Total Debt
Total Liability

T&D
Application

Power

of

Funds:
Gross Block
Less:Accm-

1,212.61
525.89

872.34
475.96

919.65
345.86

961.88
237.49

311.07
93.54

Depreciation
Net Block
686.72
Capital work in 70.17

396.38
49.97

573.79
18.04

724.39
12.42

217.53
2.51

Progress
Investments
Inventories
Sundry Debtors
Cash and Bank

0
49.59
964.66
716.82

383.55
543.77
1541.65
64.7

6.57
371.99
3226.57
126.13

51.09
165.24
935.94
68.09

0.01
693.2
2,147.80
81.51

34

Balance
Total
current 2922.51

1731.07

2150.12

3724.69

1169.27

Assets
Loans

889.5

1491.60

1677.37

198.94

0
2620.57

0
3641.72

0
5402.06

0
1368.21

0
2737.77

0
1816.54

0
1793.00

0
3452..31

0
588.82

Liabilities
Provisions
226.22
Total
Current 2963.99

271.84
2088.38

171.2
1964.20

121.4
3573.71

46.22
635.04

Provisions
Net
Current 771.48

532.19

1677.52

1828.35

733.17

Assets
Miscellaneous

Expenses
Total Assets
Contingent

1528.38
168.48

978.54
54.69

2652.90
219.4

2571.73
1260.9

1004.30
533.49

Liabilities
Book value

51.21

145.05

127.34

43.21

11.02

and 812.96

Advances
Fixed Deposits
0
Total
Current 3735.47
Assets Loans and
Advances
Deffered Credit
Current

Liabilities

and

2.9 Future of Alstom India

GE will acquire Alstoms energy assets globally for $16.7 bn, while Alstom will retain its rail
transport business.
Alstom has two listed entities in India with business interests in power generation and transport Alstom India and Alstom T&D (transmission and distribution). The French parent owns a 68.56
per cent stake in Alstom India and 75 per cent in Alstom T&D.
In May, GE proposed aRs 2,340-crore open offer to acquire the publicly-held shares in Alstom's
two India units

35

The Board of Directors of Alstom on June 21, 2014 has given its nod to the offer from General
Electric (GE) to acquire the power and grid businesses of Alstom, ignoring the joint revised
proposal from Siemens and Mitsubishi Heavy Industries. The ad hoc committee of independent
directors appointed by the Board on April 29, 2014 and led by Jean-Martin Folz, thoroughly
reviewed, on multiple occasions, the proposed transactions. Based on the works of the committee
and financial and legal advisors, the Board of Directors has unanimously decided to issue a
positive recommendation of the offer from GE, said Alstom in a press release
In addition, Alstom and GE would create a 50:50 Global Nuclear and French Steam alliance,
which would include the production and servicing of the Arabelle steam turbine equipment for
nuclear power plants, as well as Alstoms steam turbine equipment and servicing for applications
in France. In addition, the French State would hold a preferred share giving it veto and other
governance rights over issues relating to security and nuclear plant technology in France.

CHAPTER 3
RESEARCH METHODOLOGY

36

3.1 TAX DEDUCTED AT SOURCE (TDS):

The study focuses on extensive study of Primary data collected from ALSTOM MESSENGER
that is been updated by FIANANCE AIR SERVICE TEAM residing in Chennai.
TDS is the tax amount paid by individuals on different types of income they get. As the name
indicates, it is the collection of amount at the source of income itself.TDS is the most powerful
mechanism to track financial transactions. Once the transaction is recorded, the seller is forced to
declare it while filing returns and pay capital gains, if any Also, the government gets some part
of the tax money immediately rather than at end of the year.
The TDS rates are issued by the government, different rates are imposed on different revenues.
The types of income which include TDSare:

Salary paid to employees.

Interest on bank deposits and bonds.
Interest on Securities.
Dividends.
Fees for professional or technical services.
Payments to contractors and sub-contractors.

Deductor who deducts the amount will give a TDS certificate to the Deductee. This certificate
will be useful when filing the returns. TDS certificate displays the entire details about the tax cut.

37

The responsibility of deducting tax at source and depositing it with the government lies with the
Deductor. The TDS should be deposited within a week of the end of the month in which the
deduction is made.
3.1.1 PROCEDURE FOR TDS FILING:
Alstom provide the following two services to its customers for which TDS is deducted. They are
Fees for professional or technical services (194J).
Payments to contractors and Sub-contractors (194C).
Here the DEDUCTOR will be the customer and the DEDUCTEE will be ALSTOM T&D.
The tax rate for 194C is 2% and Tax rate for 194J is 10%.
Form 16A contains the latest transaction reported by the Deductor in the TDS/TCS
statement.
If the seller is the Resident Indian the TDS is 1 % for the sale value of above 50 lakh and
if the seller is an NRI the TDS is 20% irrespective of the sale value.
If the seller has to pay long term capital gains tax, TDS will be adjusted. The buyer has to

give form 16A to the seller as proof of tax deducted.

Through ERP tool the process of TDS certificate is processed.
ERP is the Alstoms internal tool which is called MESSENGER.
There are different columns available in the tool
Customer code
TDS certificate standard gl code
TDS certificate amount
Project Code(5427pu----)
Period is issuance of TDS certificate according to the quarterly basis that is from 1st April

2013 to 30th June 2013(It is the rule given by Income Tax Department).
In the summary of Payment you can see amount paid by the customer to the Alstom for
the Service he got on respective dates.
Nature of payments indicates the type of service he got from Alstom.194-C indicates
payments to Contractors and Sub-Contractors.
Tax rate for 194-C type of payment is 2%.
So, the tax deducted in respect of the deductee will be 2% of the total amount and that
amount will be remitted in respect of deductee that is Alstom.

38

3.1.2 NATURE OF PAYMENTS OF TDS:

The Following List provided the nature of payments for different TDS filling.

Section No

Description

193

Interest on Securities

194

Dividends

194A

Interests other than Interest on Securities

194B

Winning from lottery or cross word puzzle

194BB

Winning from Horse Race

194C

Payments to Contractors and Sub-Contractors

194D

Insurance Commission

194E

Payments to Non-resident Sportsmen or sport associations

194EE

Payments in respect of deposits under National Savings Scheme

194F

Payments on account of repurchase of units by Mutual fund

194G

Commission ,price, etc.on sale of lottery tickets

194H

Commission on Brokerage

194I

Rent

194J

Fees for Professional or technical Services

194LA

Payments On Compensation on Acquisition of certain Immovable Property

!94LB

Income by the Way of Interest from Infrastructure Debt fund

195

Other Sums Payable to a Non-Resident

196A

Income with respect of units of Non-Residents

196B

Payments in respect of units to an Offshore fund

196D

Income of Foreign Institutional Investors from Securities

206CA

Collection at Source from Alcoholic liquor for human Consumption

206CB

Collection at Source from timber obtained under forest lease

206CE

Collection at source from any Scrap

206CH

Collection at Source from Contractors or licensee or lease on min Quarry

39

Section No
206CG

Description
Collection at Source from Contractors or License or lease relating to Toll
Plan

For the issuance of the TDS certificate for the customer Alstom had a practice of sending
invoice copy, Work order copy and letter for the request of issuance of TDS certificate.
Upon our calculation we found that a certain amount has been pending due to non-issuance
of TDS Certificate by our customers.
If we receive the TDS document from the customer we place all details in the Alstom
internal tool worked on ERP called Alstom messenger.
3.2 GOODS AND SERVICE TAX:
The study focuses on extensive study of secondary data collected from various books ,National
and International Journals ,government reports ,publications from various websites which
focuses on various aspects of Goods and service tax.
1.GST, or Goods and Services Tax, will subsume central indirect taxes like excise duty,
countervailing duty and service tax, as also state levies like value added tax, octroi and entry tax,
luxury tax.

2. The final consumer will bear only the GST charged by the last dealer in the supply chain, with
set-off benefits at all the previous stages.
3. As a measure of support for the states, petroleum products, alcohol for human consumption
and tobacco have been kept out of the purview of the GST.
4. It will have two components - Central GST levied by the Centre and State GST levied by the
states.
5. However, only the Centre may levy and collect GST on supplies in the course of inter-state
trade or commerce. The tax collected would be divided between the Centre and the states in a
manner to be provided by parliament, on the recommendations of the GST Council.

40

7. The GST Council is to consist of the union finance minister as chairman, the union minister of
state of finance and the finance minister of each state.
8. The bill proposes an additional tax not exceeding 1% on inter-state trade in goods, to be levied
and collected by the Centre to compensate the states for two years, or as recommended by the
GST Council, for losses resulting from implementing the GST.
3.3 ORDER AND GROSS MARGIN BOOKING:
The study focuses on primary data collected from the ALSTOM T&D guiding manual.
Order/Contract is a contact signed between a seller and a buyer to supply a product or set of
products and/or provide a service or a set of services to a customer within a specified time, and
under specified quality, price and funding conditions.
Gross margin is net sales less the cost of goods sold. The gross margin reveals the amount that
an entity earns from the sale of its products and services, before the deduction of any selling and
administrative expenses. The figure can vary dramatically by industry. For 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
of a physical product, such as an automobile, will result in a much lower gross margin.
The amount of gross margin earned by a business dictates the level of funding left with which to
pay for selling and administrative activities and financing costs, as well as to generate a profit. It
is a key concern in the derivation of a budget, since it drives the amount of expenditures that can
be made in these additional expense classifications.

41

CHAPTER 4:
PROJECT PROFILE

42

OBJECTIVE -1 : TO STUDY ABOUT TDS FILING IN ALSTOM MESSENGER:

PROCEDURE FOR TDS FILING IN ALSTOM MESSENGER:
In the Alstom internal tool called Alstom Messenger, for example TDS certificate posting against
Delhi International Airport .So in the Alstom internal Messenger tool We put Customer code (this
code will be identified by the customer), TDS certificate posting GL code (standard GL code for
Alstom), Project code (5427-----), TDS certificate amount, Document Number (System
generated number i.e. TDS certificate amount which is collected from the customer accounting
through this document number)
There will be another team called FSSC (FINANCE SHARE SERVICE CENTRE) which is
centralized team for final posting. This is the for not only TDS certificate, but for C-Form,
Supplier Invoice, Collection etc.
FINANCE SHARE SERVICE TEAM:
Finance Share service team is the centralized team sitting in Chennai. They work on:

Supplier Invoice Booking

Debit, Credit Transaction
Clearing Transaction
DD making Transaction
TDS
C-Form
Any issue regarding these transactions, we raise a call through our Alstom Internal Tool
MESSENGER worked on ERP. This call directly goes to Validator. For different works
there will be different Validators. For Invoicing the call goes to one validator, for TDS it

goes to another validator etc..,

TDS documents filed using Messenger and FSSC team will be reviewing all those
documents and prepare the final document (edited) and we will check those customers
who has not issued TDS Certificate .
The finance team will be sending the WORK ORDER, INVOICE and REQUEST
LETTER for those customers for the issuance of TDS certificate. If Customer issue TDS
certificate the finance team will put all the details in Messenger and that will be reviewed
by our FASC team to prepare the final document and send back to us.

43

 Here the document consistsof Buyers Address which indicates Head Office Address and
the Consignee Address indicates the place where the actual work took place.
In the description column we can see the actual work took place in the site, for example
Inspection of 400kv SF6 Breaker, model: GL316 Breaker Sl.No. 160291@160292.For

this service, Customer paid Rs.Xamount and you can see different taxes levied on it.
Service tax: The Tax levied by the Government on Service Providers on certain Service
Transaction. But it is charged on customers by these Service Providers. It is charged to the
individual service providers on cash basis, and to companies on accrual basis. Service tax is
payable only when the value of service provided in a financial year is more than
10Lakh.This tax is not applicable in Jammu and Kashmir. Service tax before June 1 st was

12.36% but now at present it was 14% after June 1st.

Education cess: It is a tax levied additionally on Basic Tax Liability. It was imposed just for
meeting certain specific expenditures that is for providing sufficient schools and improving
facilities in those schools. The rate was 2% of tax for Education cess and 1% tax for Higher
Education cess. But this is now ineffective from June 1st because they would be subsumed in
the Service Tax of 14% noted by the Central Board of Direct Taxes. Service tax was 12%
and Education cess was at 3% of the basic tax for a total of 12.36%.

Difference between Form-16 and Form-16A:

There is lot of difference between Form-16 and Form-16A.Though there are lot of similarities
between these two not only on name but in the origin too. Because both forms are for TDS
certificate.
It is only for Employer and Employer basis i.e.., tax deducted at source from income that
comes under the category named SALARIES which is defined in FORM 16.
Form-16A is issued in TDS other than SALARIES. There are so many issues in which Form-16A
is issued.

There are Interest on dividends and securities and interest other than interest on
securities.

Winning prize money from lottery, horse race, cross-words etc.

Payments made to contractors and sub-contractors, non-resident sportsman or

association.

Insurance commission
44

Fees for professional or technical services

Payments in regard to the deposits made under National Savings Scheme

Income of foreign companies

Income from rent, selling of lottery tickets etc.

Payments in regards to the repurchase of units from Mutual Funds or UTI.

According to the latest news ITR (income tax returns) forms are expected to get uploaded on the
income tax e-filing website as provided below.

Figure 1: web-Site of Income-Tax Department for E-filling

In case of Alstom, Form -16A is a certificate issued to a service provider by the service
taker. It can be implicated to employer, employee also. Employer has to issue the form to
employee. For example if a person is salaried individual,Form-16 is essential while filing tax
returns .Here the service taker has to issue certificate to service provider by 31 stMay. If they
delay they can be penalized.
It is the form which provides information on TAX DEDUCTED AT SOURCE (TDS).
45

 It contains two sections, in which one section contains details such as name, address,
permanent account number(PAN)of Service taker and service provider., Tax deduction
account number(TAN) and assessment year, i.e.., the year in which your tax liability is
calculated for the income earned in the previous year are also incorporated.
Further to these details it has summary of periodic TDS on income, on which it includes details
on the amount of TDS, when it was cut, on what income and when it was deposited with the
INCOME TAX DEPARTMENT.
The Customers who had to give TDS certificate is shown below. This data is collected
from the Finance Share Service Team.
For these customers we have to send Invoice copy, Order copy and Request Letter.
This was the amount government will reimburse upon the issue of TDS certificate from
the Customer.
Impact of Goods and Service Tax (GST)
GST will be in existence from 1 st April, 2016.Curretly Service Tax is currently levied at 14%,
will be subsumed into GST. According to latest news GST rate will be pegged around 2526%.So,in the GST regime ,both the Centre and the States would levy tax on the supply of
Services and the combined rate would be somewhat more than the present rate.

46

OBJECTIVE -2: TO STUDY ABOUT DOCUMENTATION ON ORDER AND

GROSS MARGIN BOOKING
Order/Contract is a contact signed between a seller and a buyer to supply a product or set of
products and/or provide a service or a set of services to a customer within a specified time, and
under specified quality, price and funding conditions.
Service that we are doing is Post Warranty Services that is when the Product has been delivered
we in Grid unit have to do the after maintaining services.
As a part of Orders/Contract we do four activities:
We supply Spares.
We go to the site and do the Repair which is called Field Service.
When there is some new thing is coming, the required guidance to the customer for
better performance and this activity is called RME(Renovation, Modernaization and
Expansion)
Network Consultancy in which we give some specific support to the customer. Here
we guide the customer whether they have to go Field Service or RME(Renovation,
Modernaization and Expansion)
Example (Recent Contracts/Orders):

Alstom T&D India has orders worth more than RS. 10,000 crore for HVDC (High

voltage direct current) convertor transformers.

Alstom T&D India has secured a Rs. 161 crore contract from Power Grid for upgrading

transmission substations at 14 sites across five Indian states

So, here the customers are Power Grid Corporation OfIndia, State utilities and Private
Generating Companies etc..,

Orders received are the commercial activity of the Business during the reporting period. The
reporting period is nothing but the Financial Year.

Financial Year:
Balance sheet and Income statement of companies across the globe are prepared for a

period of one year .This period is different for different States.

In India It starts from 1st April and ends at 31st March. The Income Tax returns are filed
and taxes for a company are usually paid in the next year after the end of the Financial

47

Year. This next year is called Assessment Year because in this year only the income is
assessed to tax.
They are reported as Orders received (gross) In TERENGA KPI which is Alstom Reporting
System.
The items which come under ORDERS RECEIVED (GROSS) are:
a)
b)
c)
d)
e)
f)
g)

New Contracts
Confirmation Of Options
Scope Variation Orders Corresponding to:
The second phase of the project
Extension of the existing project
Significant additional needs of the customer
Variation of scope of work corresponding to a significant modification of the product
delivered or service rendered

BOOKING PROCESS:
Order booking must be recorded in the OPERATION INFORMATION SYSTEM-ALT@IS and
in the Alstom Reporting system- TERENGA, in the month the contract comes into force.
Alt@is: SAP Core Model Finance.
The Gross Margin associated to the order at booking stage is the Current as Sold margin. This
Current as old margin should be updated with the Forex impact at the coming in to force of the
Order
During the execution of contract it is updated with :

Price Variation orders and performance bonuses

Contract price adjustments
Foreign currency variation impacts
Penalties and liquidated damages.
Alstom Grid Unit performs many projects of similar kind in which simultaneous orders
booking entries in the different units are involved. So,clear and correct communication of

figures is key for effective & accurate accounting, forecasting and reporting.
The Leading Unit (LU) will be the Grid Unit that has led the Order Process
The Participating Unit (PU) will be the same Grid Unit that Participates in the execution
of the contract.

48

LEADING UNIT:
The responsibility of the leading unit is to lead the project at tender phase. Tender phase is
nothing but a pre-construction stage of a project where a contractors services are purchased by a
client to carry out the path construction work, and to plan ,manage ,monitor, coordinate control
health and safety on site during the construction phase.

Figure 2: Flow Chart for tender process

This Phase includes:

a) Preparation of Tender (contract) documents
b) Selection and acquisition of a competent contractor
c) Management of the tender process.
Another responsibility of the Leading Unit is it has to coordinate the implementation of the
Hedge when needed.
Hedging in power contracts is nothing but a type of contract used to establish a predetermined
price that will be paid for given amount of contract regardless of what the actual market value of
that Contract might be at that time.
This hedging strategy should be coordinated with the Financial Controller or Project Controller
belonging to the Leading unit.
49

Financial controller has to communicate to the all the units about theconfirmation of the coming
into force of the order
a)
b)
c)
d)
e)

Selling price of each partner(per unit and per currency) to which party (customer/partner)
The month it has to be booked
The Project Header
The country of destination
The validated Gross margin of each partner as per the tender

It is the responsibility of the Site Finance Controller/project Controller of Leading Unit to check
whether the booking process is done regularly or not by the Participating Unit. So, that there is
no need to rush on the last day of the month.
Site finance controller also has the responsibility to put in place the correct process to ensure that
all the versions of CURRENT FORECAST are properly updated in the system.
Current Forecast: It is the last forecast validated in the last Project Review.it is the basis to
recognize the Gross Margin on sales in the accounts.
PARTICIPATING UNIT:
After the instructions given by the Leading Unit, Participating unit has to book the order and the
associated margin in their books. To book Participating Unit should be given Purchase order and
it is the duty of Leading Unit to issue the Purchase Order promptly after coming in to force of the
project.
ORDERS CANCELLATION:

In Financial Statements, the amount reported as orders Cancellations is representative of

orders or parts of orders which have been recorded in a previous financial year, but

cancelled in the current financial year.

If they are recorded in the current financial year, the cancellation is netted with the initial
amount recognized as orders received gross.

50

ORDERS ADJUSTMENTS:
Order adjustments in Alstom Operating system are split in to 4 categories:
a) Price variation orders and performance bonuses:
There might be price adjustments in the contract value without any change in scope of work and
there is a chance of issuing bonuses to the workers which are accepted by the customer.
b) Contract price adjustments:
Contract price adjustments represent the effects of contractual escalation clauses upon contract
revenue between notification to proceed and closing date.
c) Foreign Currency variation Impacts:
There are currency fluctuations which are a natural outcome of floating exchange rate system
that is the norm for most major economies. The exchange rate might get influenced by many
factors .There might be inflation, market fluctuation, interest rate etc. So, there might be effect of
foreign currency variation upon the revenues of contract denominated in foreign currency that
are not hedged.
As the groups policy is to hedge all exposures above the equivalent of 100k Euro significant
impact should arise from the measurement of contracts not hedged.
d) Penalties and Liquidated damages:
When the payment of penalties to the customer or the deduction of penalties from the customers
payments are considered as probable, the order value has to be decreased by the expected amount
of Penalties and the LD amount booked in Risk Analysis impact must be released.
BUDGET ZERO:
It is the forecast validated at the handover of the contract from the sales team to Project Team.IT
must be validated by two teams and any deviation between as sold and Budget Zero must be
documented and explained.

51

OBJECTIVE 3 : TO STUDY ABOUT GST( GOODS AND SERVICE TAX):

GST AROUND THE GLOBE:

The first country to adopt GST is France in 1954

There are two types of GST systems. They are Dual and Unified. Large number of
countries are following Unified GST System. Canada and Brazil follow a Dual System

where GST is levied by both ,Union and State Bodies

There are more than 160 Countries around the world that are following GST/VAT
New Country that is entering in to GST regime is Malaysia(last month)

52

The rates costs very high in Europe and Some parts in Africa .Generally in Countries
around Asia Pacific have low GST. For Example in Hungary it is 27%,Gambia it is
40%.The average rates in Asia Pacific Countries is around 10%.

Countries Implementing GST :

N

Region

No.of

Countrie

1
2
3
4
5
6
7

s
7
19
53
7
44
11
19

ASEAN
ASIA
EUROPE
OCEANIA
AFRICA
SOUTH AMERICA
CARIBBEAN,CENT
RAL AND NORTH

AMERICA
2) GST IN INDIA:
For 14 years now we have been told by successive governments that goods and service tax will
be a Game changer that will transform the economy, boost the GDP growth like no other reform
has ever done .The long road to gst is already 4 years past the first dead line and much work
remains both on bringing all states together on revenue model as well as the constitutional
amendments that need to be passed in the parliament and 50% of state assemblies as well.
GST:

It simplifies the tax system

GST tries to widen the tax base
In the process of doing above things it automatically brings tax rates down

Three things GST is going to do:

It is going to tax every economic activity at every stage of production at the same rate .For
example you are the producer of steel and I produce spoons using that steel.For example you
produce 100 /- worth of steel and I will convert that steel in to spoon.So, I pay 100 to the

53

producer of steel and additional 10rs as tax(say for example) so a total of 110 was paid to you
and I add another 100 rs value to 110 rswoth so total it was 210 and again it was taxed 10%
I..e..,21 rs we have to remember one point that I added a value of converting that steel in to
spoon only 100 rs worth but the tax I ended up paying 21 rs
So gst tries to do eliminate this different taxation at different stages of production .i get the 110 rs
worth but what happens is I have rebatted the tax that I pay to you .so the net cost of steel is
100rs because that 10 rs which ill pay to you will be rebatted to me,wn I sbmitt my taxation.i
added 100 rs worth of value for which 21rs tax I have paid but in that 10% is going to be
rebatted.it is not only simplification but also effieciency improvement.
True flawless GST would actually bring in all goods and all services rebating at every stage ,and
every stage of production and get taxed at the same rate.

3) GST JORNEY:
IN 2008:FEB 2008:Honble Finance Minister announced introduction of GST from 1st April 2010
APRIL 2008: Empowered committee finalized reviews over GST and submitted report titled A
model and Road map for GST for India
IN2009:
JULY 2009: FM announced commitment to introduce GST from 1st April 2010
NOV 2009: First discussion paper released by Empowered Committee(EC)
54

DEC 2009: Task force constituted by EC released its report

IN 2010:
FEB2010: Mentioned inn the speech of the Finance Minister GST to be introduced in April 2011
IN 2011:
March 2011:The constitution 115th Amendment Bill introduced in LOKSABHA for levy of GST
on all goods and services accept for the specified goods.Here constitution amendment is required
because in India Federal system of tax operates where as central government and state
government has to levy taxes.Centre has no right to levy tax on sale of goods and State has no
right to levy tax on services.
IN 2012:
MARCH 2012:Drafting of model legislation for centre and state GST in concert with states
under progress
IN 2013:
Four committees constituted by Empowered Committee of state finance ministers to deal with
various aspects of work relating to the introduction of GST
IN 2014:
DEC 2014:
The constitution 122nd amendment bill tabled in Loksabha ;Bill Passed on 6th May 2015 in
Loksabha
IN 2016:
Proposed date for introduction of GST.
4) Existing Indirect taxes and Short comings:(Need For GST):
Firstly everyone believes that Indian Indirect Tax system is complex.

55

TAX Cascading:
Different Governments levy taxes which are not set up against each other and the tax base of the
tax levied earlier is enquired in the value for charging the by the next level.
Uncertainty in determining the nature of transaction:
In many case especially Software industry we can find in law that vendors charging both Vat and
Service tax on the sale of software

Lack of uniformity in provisions and in rates:

29 states have 29 different VAT laws.They have no harmonized schedule of commodities and
rates .After 2005 rates have been narrowed down but still their aroused a situation where same
commodity is taxed at different rate at different states
Inefficiencies in tax administration and higher compliance costs:
Because of the multiple taxation which were levied by centre and state there is inefficiency in tax
administration which leads inevitably increase in the compliance costs.

5)Advantages of GST:

Abolition of multiple types of taxes on goods and services

Reduces effective rates of taxes to one or two floor rates. If CGST (Central Goods and
service tax) and SGST(State Goods and Service Tax) the government will allow to levy
band of rates for example if SGST rate is fixed at 12.5% then there will be band of rates

between 12.5% and 14% that states will be allowed to charge.

Reduces compliance cost and increases voluntary compliance
Removes Cascading effect of taxation and also distortion in the economy .There will

competitive edge for the Indian Goods and Services

Enhances manufacturing and distribution efficiency, reduces cost of production of Goods

And Services ,Increase Demand, and production of Goods and Services.

Gives competitive edge in international market
56

Lays rest to the need for the distinction of goods and services
Reduces distortions by completely switching to the destination principle
Facilitates investments decisions being made on purely economic concerns, independent

of tax considerations
Expected to spur growth
The GST implementation increased the Canadian GDP by 1.4%.
In India, a similar kind of positive impact is expected .This means that gains of about 15
Billion Dollars annually. Discounting these flows to the modest 3% per annum, the
present value of the GST works out to about half a trillion dollars

6) Improvements in Tax structure and administration:

Over the past several years, significant progress has been made to improve the indirect tax
structure, broaden the base and rationalize the rates to pave way for GST.

Firstly there was a replacement of single point sales tax by VAT. The single point sales
tax is levied on the first point of sale of goods or the last point of sale. But now it was

levied on each stage.

The central sales tax which was levied when goods were sold from one state to another
was originally used to charge at 4% but now it was brought down to 2%.When GST is

introduced it will be completely failed out

Substantial expansion of service tax base by introduction of negative list regime of
service tax i.e..,all the services which are other than those in the negative list will be

liable to service tax

Introduction of place of provisions of services ,rules 2012
Electronic registration, payment and filling of VAT returns is prevailing now in not only
central taxes but state taxes also.

7) Structure of GST:

India is going to implement Dual GST Structure that comprises of Central GST which
will consume all taxes which were levied under Central indirect taxes and State GST

that consumes all indirect taxes which were levied under State Indirect taxes.
Once GST gets implemented we will have simple tax system that every transaction of
goods and services if it happens with in a state for example if the transaction is 100/you would have over this 100/- two taxes one the central GST assume the rate to be
57

10% and assume state GST 10% we will have central GST and state GST applied on
the transaction value but in the current system state tax is levied on transaction value

and central tax

GST-A destination based consumption tax on goods and services
Both CGST and SGST to apply on supply on Goods and/or services
CGST payable to central and SGST payable to state
Cross-utilization of credits between CGST and SGST are not permitted
Inter-state transaction to be covered under integrated GST(IGST)model
IGST is nothing but sum of central GST and State GST .In the above example 20%

tax is levied by the central and pass on the state share of the consuming state.
GST rate are not yet agreed by the centre and state governments ,while in 2010 -11
the central government proposed a total GST rate of 20% to start with which would

come down to 16% over the period of three years.

Recent survey by Finance Body stated the GST rate should be 27%.But it is not

agreed by the Finance Minister

The rate is going to be 20%+1%or2% .

8) Taxes to be submitted in GST

58

Note:

Alcoholic beverages for human consumption are proposed to keep out of purview of GS.
GST on petroleum products would be levied from a notified date recommended by the
GST council.
59

Include Excise duty levied under Medicinal

and Toilet preparations (Excise

duty)Act,1955

9) Set off methodology and Formulation:

Central GST and State GST are expected to be treated separately.

The credit availed of central GST paid on Goods and Service received is expected to be

utilized only against the payment of central GST.

The same principle is going to hold for state GST also.
Cross utilization of input tax credit between the Central GST and the State GST would
not be allowed.

Formulation of GST council:

The president shall form the Goods and Service Tax council within 60 days from the date

of commencement of the constitution.

Every decision of the GST council will be required to be taken at a meeting, by a

majority of not less than of the weighted votes of the members present and voting
The vote of central government shall have a weightage of 1/3 of total votes cast
The votes of all state governments taken together shall have a weightage of 2/3 of total

votes cast in that meeting

10) Roles and responsibilities of GST council:
The GST council shall make recommendations to the union and states on:
The taxes, cesses, and surcharge levied by the union ,the states and the local bodies which

may be subsumed in GST

The goods and services that may be subjected to, or exempted from GST
Model GST law, principles of levy, apportionment of IGST and the principle that govern

the place of supply

The threshold limit of turnover below which goods and services may be exempted from
GST.
60

The rate including floor rates with bands of GST.

Any special rate or rates for a specified period, to raise additional resources during any
natural calamity or DISASTER.
Special provision with respect to states of
o Arunachal Pradesh
o Assam
o Jammu and Kashmir
o Manipur
o Meghalaya
o Mizoram
o Nagaland
o Sikkim
o Tripura
o Uttarakhand
o Himachal Pradesh
Any other matter relating to GST as the council may decide.
Additional tax on interstate trade in goods:
To compensate origin or manufacturing states ,center would levy taxes an additional 1%
of tax over and above the IGST on supply of goods in the course of inter-state

transactions for a period of two years

The GST council may recommend to extend the above period of levy
The additional tax would be origin based ,and not destination based
As per finance ministry press note credit of this additional tax would not be available
Power to exempt goods from levy of such taxes shall be with Government of India
Principles to determine the place of origin from where supply of goods takes place in the

course of inter-state trade will be formulated by the Parliament

IT infrastructure Under GST:
Goods and Service tax Network Special purpose vehicle (GSTN-SPV) has been set up to

create enabling environment for smooth introduction of GST

GSTN-SPV will provide IT infrastructure and services to various stake holders including

the Centre and the States

Strategic control over GSTN-SPV has been ensured with the Government due to the
sensitivity of the role of GSTN-SPV and the information which would be available with

it
GSTN-SPV has been incorporated as a not-for-profit ,non-government ,private limited
company with 49%equity held by the Government and 51%equity held by the non-

government institutions.
Roles and Responsibilities:61

GSTN-SPV would provide common PAN-based registration ,enable returns filing and

payments processing for all states on a shared platform

Ensure integration of common GST portal with the existing tax administration systems of

the central/state governments and other stake holders

Build efficient and convenient interfaces with tax payers to increase tax compliance
Carry out research ,study best practices and provide training to the stake holders
GSTN-SPV would earn its revenue by levying user charges on tax payers and tax
authorities for availing its services

Potential Implications on different sectors:

Manufacturing Sector:
Sr.No Issue
1
Procurement

Present Scenario
GST scenario
Inputs are purchased inter-state at a Set-of of IGST

paid should be
concessional rate of 2% (CST)
No set-off is available of CST paid
available
CST becomes a cost
Excise duty is levied if new commodity comes in The taxable event

Manufacture

to existence

would

change

from manufacture
to supply there by
eliminating

the

separate
3

Distribution

incidence of tax.
Manufacturers/dealers align their supply chains IGST to be paid
to tax considerations and establish multiple on
stocking points in distribution network

stock

transfer

,higher

No tax on stock transfer expect retention of working

capital

portion of VAT credit

needs
The

distribution

framework would
require a revisit
-2%CST Vs 1%
additional tax
62

Service sector:
Sr.No
1

Issue
Goods
Service

Present Scenario
GST Scenario
Vs The distinction between Goods and Service Taxation is expected
becomes important as centre can tax only to

become

simpler

services and states can tax only sale of provided goods and
goods
2

Taxation Base

service

carry

same

rate of tax
In case of certain works contracts (AMC The taxation base is
contract)the aggregate of taxation base for expected to remain
the purpose of VAT and Service tax exceeds below or equal to

Tax on Tax

10%

100%of

Vat on Service tax ?

value
CGST and SGST are

-AMC software

levied only on the

supply

Tax Rate

value

of

goods/services
The tax rate has been stable at 12.36% now The combined

rate

proposed it to be increased to 14%/16%

Registration

transaction

CGST+SGST

is

expected

be

to

substantially higher
The service tax law provided for centralized Multiple registrations
registration

based on place of
supply may necessary

Traders:
Sr.no
1

Issue
Present Scenario
GST scenario
Recovery of taxes paid on goods
Traders are not able Ability to recover all
and services

to take credit of taxes paid on Goods

service

taxes

on and

additional tax at 1%
service Procured
Passing
on
of
Excise duties paid

63

services,barring

on goods traded in
in

or

that

of

countervailing
duties

paid

on

import,is
2

Ware housing

cumbersome
The location is determined Efficiencies in supply
based

on

the

preferred chain cost to serve

location for sale

levels to determine
the shocking points
and levels.

Post GST:

64

Why states are opposed to this:

Biggest concern for the states is revenues. One of the things that people talk about is Central
sales tax which are the major source of revenue for the states. If goods were sold on other states
than manufacturing state can say that tax that can be collected is my tax, So often when the
goods cross the border they will be checked and tax collected. So once you go to the VAT as it is
charged at destination and it is happening in the other state .So, some states may lose revenue
.The duty of central government is to collect it and give back to you but state are saying that how
they can be assured that correct amount will be coming in to their treasury.

65

CHAPTER 5
FINDINGS &
RECOMENDATION

TAXDEDUCTED AT SOURCE (TDS):

Where the original TDS certificate is lost, the employee can approach the employer for issue of a
duplicate TDS certificate. The employer may issue a duplicate cetificate on a plain paper giving
the necessary details as contained in Form No. 16 (Relevant Rule-31(4)). However such a
certificate has to be certified as duplicate by the deductor. Further the assessing officer before
giving credit of the tax on basis of duplicate certificate is required to get payment certified from
the assessing officer concerned and also obtain an indemnity bond from the assessee employee.
In case of excess deduction of tax at source, claim of refund of such excess TDS can be made by
the deductor. The excess amount is refundable as per procedure laid down for refund of TDS.

66

The difference between the actual payment made by the deductor and the tax deducted at source
or deductible, whichever is more will be treated as the excess payment made. This amount is to
be first adjusted against any existing tax liability under any of the Direct Tax Acts. After meeting
such liability, the balance amount is to be refunded.

GOODS AND SERVICE TAX:

For companies, the immediate challenge would be the integration of GST into their operations.
Companies must now assess the impact of GST on their operations and pricing strategies.
Although the mechanics of GST are relatively straightforward (that is output tax less than input
tax), the challenge is in the details as companies must also consider the capability of their IT
systems to cope with the demands of GST, the need to educate employees and customers as well
as the impact on employee benefits. The Board of Directors must also be extra careful to ensure
that pricing strategies are accurately modeled as a wrong decision could impact the company's
performance.

RECOMANDATIONS:
ALSTOM T&D is operating both services and manufacturing ,GST plays a major role in its
operation.
ALSTOM T&D MANUFACTURING:
In present scenario Inputs are purchased inter-state at a concessional rate of 2%
(CST),but when GST comes in to picture Integrated Goods and Service tax will
be coming in to existence
Presently Manufacturers(ALSTOM T&D) align their supply chains to tax
considerations and establish multiple stocking points in distribution network. No
tax on stock transfer expect retention of portion of VAT credit,but in GST- IGST
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to be paid on stock transfer ,higher working capital needs.The distribution

framework would require a revisit -2%CST Vs 1% additional tax
ALSTOM T&D SERVICE:
Network Consultancy in which we give some specific support to the customer.
Here we guide the customer whether they have to go Field Service or
RME(Renovation, Modernization and Expansion)
The distinction between Goods and Service becomes important as centre can tax
only services and states can tax only sale of goods but in GST Taxation is
expected to become simpler provided goods and service carry same rate of tax
In case of certain works contracts (AMC contract)the aggregate of taxation base
for the purpose of VAT and Service tax exceeds 10%,but in GST The taxation
base is expected to remain below or equal to 100%of transaction value.
The tax rate has been stable at 12.36% now proposed it to be increased to
14%/16% but in GST the combined rate CGST+SGST is expected to be
substantially higher

CONCLUSION:

So,GST being the gamechanger it is going to simplify tax system and it will widen the
tax base.In this process it is going to bring the tax rates down which will increase the
profitability of the company.A part from the company point of view In India, a similar
kind of positive impact is expected .This means that gains of about 15 Billion Dollars
annually. Discounting these flows to the modest 3% per annum, the present value of the
GST works out to about half a trillion dollars .

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