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Submitted To- Ms

Deepika Vijeshwar
By- Snehil Tarafdar

Introduction on GST
The GST (Goods and Services Tax) is basically an indirect tax that brings most of
the taxes imposed on most goods and services, on manufacture, sale and
consumption of goods and services, under a single domain at the national level.
In the present system, taxes are levied separately on goods and services. It will
be levied at every stage of the production distribution chain by giving the benefit
of Input Tax Credit (ITC) of the tax remitted at previous stages. The GST is a
consolidated tax based on a uniform rate of tax fixed for both goods and services
and it is payable at the final point of consumption. At each stage of sale or
purchase in the supply chain, this tax is collected on value-added goods and
services, through a tax credit mechanism.

The Goods and Services Tax (GST), which will replace the State VAT, Central
Excise, Service Tax and a few other indirect taxes. GST is based on a destinationbased taxation system. It is expected to broaden the tax base, foster a common
market across the country, reduce compliance costs, and promote exports. The
GST demands a well-designed and robust IT system for realizing its potential in
reforming indirect taxation . The IT system for GST would be a unique system,
which will integrate the Central and State tax administrations.
While India is still to see its share of development around implementation of GST,
one should be wary of lessons learnt in countries that have implemented a
similar tax regime.
All around the world, GST has the same concept. In some countries, VAT is the
substitute for GST, but conceptually it is a destination based tax on consumption
of goods and services. But perhaps the most contentious issue that still needs to
be resolved among the different governance in the world is the GST rate. Some
are still struggling to rationalize an adopted rate structure.

Another aspect encountered and accepted by most of the GST countries lies in
the statistic that GST will be inflationary, especially if the effective tax rate is
higher than what prevailed before. For instance, Singapore saw a spike in
inflation in 1994 when it introduced the GST. That makes it all the more
important for administrators to keep tabs on how prices move after imposition of
the tax. Malaysia, to an extent, was able to mitigate this risk as price control on
account of the GST was administered by the Ministry of Domestic Trade and
Consumer Affairs.
In all, 160 countries around the globe have implemented GST (or VAT, as it is also
known by). The GST/VAT rate can vary globally for example, Australia has a
10% rate, while Germany has a VAT rate of 19%, and the UK, 20%.

The Goods and Services Tax Bill or GST Bill, officially known as The Constitution
(One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a
national Value added Tax to be implemented in India from 1 April 2017. Goods
and Services Tax would be levied and collected at each stage of sale or purchase
of goods or services based on the input tax credit method. This method allows
GST-registered businesses to claim tax credit to the value of GST they paid on
purchase of goods or services as part of their normal commercial activity.
Taxable goods and services are not distinguished from one another and are
taxed at a single rate in a supply chain till the goods or services reach the
consumer. Administrative responsibility would generally rest with a single
authority to levy tax on goods and services. Exports would be zero-rated and
imports would be levied the same taxes as domestic goods and services
adhering to the destination principle.
GST will be a game changing reform for Indian economy by developing a
common Indian market and reducing the cascading effect of tax on the cost of
goods and services. It will impact the Tax Structure, Tax Incidence, Tax
Computation, Tax Payment, Compliance, Credit Utilization and Reporting leading
to a complete overhaul of the current indirect tax system.
GST will have a far reaching impact on almost all the aspects of the business
operations in the country, for instance, pricing of products and services, supply
chain optimization, IT, accounting, and tax compliance systems.
Amalgamating several Central and State taxes into a single tax would mitigate
cascading or double taxation, facilitating a common national market. The
simplicity of the tax should lead to easier administration and enforcement.
A dual GST system is planned to be implemented in India as proposed by the
Empowered Committee under which the GST will be divided into two parts:
a) State Goods and Services Tax (SGST)
b) Central Goods and Services Tax (CGST)

Both SGST and CGST will be levied on the taxable value of a transaction. All
goods and services, leaving aside a few, will be brought into the GST and there
will be no difference between goods and services. The GST system will combine
Central excise duty, additional excise duty, services tax, State VAT entertainment
tax etc. under one banner.The following is the Impactsf GST:

How will the GST benefit India?

Introduction of a GST is very much essential in the emerging environment of the

Indian economy.

There is no doubt that in production and distribution of goods, services are

increasingly used or consumed and vice versa. Separate taxes for goods and
services, which is the present taxation system, requires division of transaction
values into value of goods and services for taxation, leading to greater
complications, administration, including compliances costs. In the GST system,
when all the taxes are integrated, it would make possible the taxation burden
to be split equitably between manufacturing and services.

GST will be levied only at the final destination of consumption based on

VAT principle and not at various points (from manufacturing to retail outlets).
This will help in removing economic distortions and bring about development
of a common national market.

It will also help to build a transparent and corruption-free tax

administration. Presently, a tax is levied on when a finished product moves out
from a factory, which is paid by the manufacturer, and it is again levied at the
retail outlet when sold.
For the Centre and the States
According to experts, by implementing the GST, India will gain $15 billion a year.
This is because, it will promote more exports, create more employment

opportunities and boost growth. It will divide the burden of tax between
manufacturing and services.
For individuals and companies
In the GST system, taxes for both Centre and State will be collected at the point
of sale. Both will be charged on the manufacturing cost. Individuals will be
benefited by this as prices are likely to come down and lower prices mean more
consumption, and more consumption means more production, thereby helping in
the growth of the companies.
From the consumer point of view, the biggest advantage would be in terms of a
reduction in the overall tax burden on goods, which is currently estimated at
25%-30%,free movement of goods from one state to another without stopping at
state borders for hours for payment of state tax or entry tax and reduction in
paperwork to a large extent.
GST will not be a cost to registered retailers therefore there will be no hidden
taxes and the cost of doing business will be lower. This in turn will help Export
being more competitive.
Items not under GST
Alcohol, tobacco, petroleum products


Critics say that GST would impact negatively on the real estate market. It would
add up to 8 percent to the cost of new homes and reduce demand by about 12
Some Economist says that CGST, SGST and IGST are nothing but new names for
Central Excise/Service Tax, VAT and CST and hence GST brings nothing new for
which we should cheer.



The goods and services tax (GST) is a multi-level value added tax introduced
in Canada on January 1, 1991, by then-Prime Minister Brian Mulroney and his
finance minister Michael Wilson.The GST replaced a hidden 13.5%
manufacturers' sales tax (MST); Mulroney claimed the GST was implemented
because the MST was hindering the manufacturing sector's ability
to export competitively. The introduction of the GST was very controversial. The
GST rate is 5%, effective January 1, 2008.
The goods and services tax is defined in law at Part IX of the Excise Tax Act. GST
is levied on supplies of goods or services purchased in Canada and includes most
products, except certain politically sensitive essentials such as groceries,
residential rent, and medical services, and services such as financial services.
Businesses that purchase goods and services that are consumed, used or
supplied in the course of their "commercial activities" can claim "input tax
credits" subject to prescribed documentation requirements (i.e., when they remit
to the Canada Revenue Agency the GST they have collected in any given period
of time, they are allowed to deduct the amount of GST they paid during that
This avoids "cascading" (i.e., the application of the GST on the same good or
service several times as it passes from business to business on its way to the
final consumer). In this way, the tax is essentially borne by the final consumer.
This system is not completely effective, as shown by criminals who defrauded
the system by claiming GST input credits for non-existent sales by a fictional
company.[3] Exported goods are exempt ("zero-rated"), while individuals with low
incomes can receive a GST rebate calculated in conjunction with their income
The tax is a 5% tax imposed on the supply of goods and services that are
purchased in Canada, except certain items that are either "exempt" or "zerorated":
a) For tax-free i.e., "zero-rated" sales, GST is charged by suppliers at a
rate of 0% so effectively there is no GST collected. However, when a
supplier makes a zero-rated supply, it is eligible to recover any GST paid
on purchases used in producing the particular supply or service. This
effectively removes the cascading tax from these particular goods and
b) Common zero-rated items include basic groceries, prescription drugs,
inward/outbound transportation and medical devices (GST/HST

Memoranda Series ME-04-02-9801-E 4.2 Medical and Assistive Devices).

Certain exports of goods and services are also zero-rated.
c) For tax-exempt supplies, the supply is not subject to GST and suppliers do
not charge tax on their exempt supplies. Furthermore, suppliers that make
exempt supplies are not entitled to recover GST paid on inputs acquired
for the purposes of making the exempt good or service. Tax-exempt items
include long term residential rents, health and dental care, educational
services, day-care services, music lessons, legal aid services, and financial
In 1989, the Progressive Conservative government of Prime Minister Brian
Mulroney proposed the creation of a national sales tax of 9%. At that time, every
province in Canada except Alberta already had its own provincial sales tax
imposed at the retail level.
The purpose of the national sales tax was to replace the 13.5% Manufacturers'
Sales Tax (MST) that the federal government imposed at the wholesale level on
manufactured goods. Manufacturers were concerned that the tax hurt their
international competitiveness. The GST also replaced the Federal
Telecommunications Tax of 11%.
Although the GST was promoted as revenue-neutral in relation to the MST, a
large proportion of the Canadian population disapproved of the tax. The other
parties in Parliament also attacked the idea as did three Progressive
Conservative Members of Parliament, David Kilgour, Pat Nowlan, and Alex Kindy,
who ended up leaving the Progressive Conservative caucus as a result.
Despite the tax being lowered to 7% by the time it became enacted, it remained
controversial. What the tax covered also caused anger. The Government
defended the tax as a replacement for a tax unseen by consumers because it
was placed on manufacturers, and in the long run it was posited that removing
the MST would make Canada more competitive. Once the MST was replaced with
the GST prices did not initially fall by the level some thought appropriate
immediately; however, proponents have argued that in Canada's market
economy the MST's replacement could only be expected to influence prices over
time and not on a stroke.
Despite the opposition, the tax came into force on January 1, 1991.On July 1,
2006, the Government of Canada reduced the tax by 1 percentage point (to 6%),
as promised by the Conservative Party in the 2006 election campaign. They
again lowered it to 5%, effective January 1, 2008.This reduction was included in
the Final 2007 Budget Implementation Bill (Bill C-28),which received Royal Assent
on December 14, 2007. This change has been estimated to have decreased
government revenues by approximately $6 billion.Opponents of these tax
decreases cited that sales taxes target those who spend more and therefore such
reductions disproportionately benefit Canadians giving those who have the most
and spend the most the largest tax decrease.
Much of the reason for the notoriety of the GST in Canada is for reasons of an
obscure Constitutional provision. Other countries with a Value Added Tax legislate
that posted prices include the tax; thus, consumers are vaguely aware of it but
"what they see is what they pay". Canada cannot do this because jurisdiction

over most advertising and price-posting is in the domain of the provinces under
the Constitution Act, 1867.The provinces have chosen not to require prices to
include the GST, similar to their provincial sales taxes. As a result, virtually all
prices (except for fuel pump prices, taxi meters and a few other things) are
shown "pre-GST", with the tax (or taxes) listed separately.
GST: Goods and Services Tax. This applies to the supply of goods and services in
PST: Provincial Sales Tax. This is applied on sales & purchase of taxable goods
and service in a province where PST is supported.
HST: Harmonized Sales Tax. This is applied in provinces who have harmonized
both PST and GST into a single tax.In some provinces in Canada, only a GST is
collected. i.e: Alberta (5% GST).
There are provinces where tax is collected as a group tax, GST + PST. i.e: British
Columbia (7% PST + 5% GST = 12%).
In provinces usually referred as Participating Provinces, HST is applied. In these
provinces they only have to pay a single tax. i.e: Nova Scotia (15%
HST).Provinces in which HST is applied:

New Brunswick

Nova Scotia

Newfoundland and Labrador


Prince Edward Island.


The Goods and Services Tax (GST) is a value added tax in Malaysia. GST is levied
on most transactions in the production process, but is refunded with exception of
Blocked Input Tax, to all parties in the chain of production other than the final
The existing standard rate for GST effective from 1 April 2015 is 6%.

GST was scheduled to be implemented by the government during the third

quarter of 2011, but the implementation was delayed until 1 April 2015. Its
purpose is to replace the sales and service tax which has been used in the
country for several decades. The government is seeking additional revenue to
offset its budget deficit and reduce its dependence on revenue from Petronas,
Malaysia's state-owned oil company. The 6% tax will replace a sales-and-service
tax of between 515%.

The Goods and Services Tax Bill 2009 was tabled for its first reading at
the Dewan Rakyat (the lower house of the Malaysian parliament) on 16
December 2009. It was delayed amid mounting criticism.The government
responded by asserting that the tax on oil income will not be sustainable in the
future. National Consumer Complaints Centre head Muhammad Shaani Abdullah
has said, The government should create more awareness on what the GST is.
The public cannot be blamed for their lack of understanding, and thus, their
fears. Shaani says that the GST will improve accounting, reduce tax fraud, and
facilitate enforcement of the upcoming Anti-Profiteering Act.

Muslim Consumer Association of Malaysia leader Datuk Dr. Maamor Osman said
the GST could help end dishonest business practices, but expressed concern
about how the tax would be applied to medical products and services. A group
leading the campaign against the GST, Protes (which objects to the GST because
of concerns about its effects on low-income Malaysians), cancelled a planned
protest but has stated that they will continue to agitate against the legislation.

During the government reading of the 2014 budget, Malaysian Prime

Minister Najib Razak announced a GST tax of 6% starting on 1 April 2015. This
will replace the Sales and Services Tax. Implementing GST tax will be a part of
the Governments tax reform program to enhance the capability, effectiveness
and transparency of tax administration and management. The GST was
implemented on 1 April 2015.

During the unveiling of the national budget, it was announced that the following
goods and services would be exempted from GST.
1. Agricultural products paddy, fresh or chilled vegetables, certain
provisionally preserved vegetables
2. Essential foodstuff oils, salt, flour, etc.
3. Livestocks and livestock supplies or poultry live animals and
unprocessed meat
4. Eggs
5. Fish live, fresh, frozen and dried
6. First 300 kwh of electricity for domestic use
7. Water for domestic users
8. Goods supplied to designated areas from Malaysia Labuan, Langkawi &
9. Exported goods
10.Exported services such as architecture services in connection with land
outside Malaysia
11.Selected services in Malaysia such as pilotage, salvage or towage
12.International services such as transport of passengers or goods from a
place in Malaysia to a place outside Malaysia
13.RON95 petrol, diesel and LPG
14.Sale of Residential Property

15.Services provided by Government which are not considered commercial

services, such as permits, licences etc. Services considered commercial
are TV advertisement, rental of equipments, rental of multifunction halls



Toyota Canada Inc. (TCI) is the exclusive distributor

of Toyota, Lexus and Scion cars, SUVs and trucks in Canada. Founded in 1964,
Toyota has sold more than 4 million vehicles in Canada through a national
network of 285 Toyota, Lexus and Scion dealerships. TCIs head office is located
in Toronto, Ontario, with regional offices
in Vancouver, Calgary, Montreal and Halifax and parts distribution centres
in Toronto and Vancouver. In January 2013, TCI became a subsidiary of Toyota
Motor Corporation (TMC) with 51% ownership share and Mitsui & Co. Ltd. as
minority 49% shareholder.
The current CEO and president of Toyota Canada is Seiji Ichii who replaced Yoichi
Tomihara on January 1, 2012. In October 1990, TCI expanded its operations to
begin selling luxury vehicles to Canadians through the Lexus brand. Twenty years
later, in October 2010, TCI further expanded its sales operations to begin

selling Scion branded vehicles in Canada. As of July 2014, there are 247 Toyota,
38 Lexus, and 92 Scion franchises in Canada.
In 2014 half (50.0%) of all Toyota vehicles sold in Canada were built at Toyota
Motor Manufacturing Canada, Inc. (TMMC) while 83.0% of all Toyota vehicles sold
in Canada were produced at one of Toyota's 14 plants throughout North America.
By comparison, in 2001 only 32.1% of Toyota vehicles sold in Canada were
produced in Canada and only 45.1% were produced in North America.
The auto industry has its differences when it comes to the GST bill, it holds
different pros and cons to different people and for the car customers its mostly
good news but the manufacturers themselves seem to be divided on the
contents of the bill.
For cars, the GST consists of four categories, Small passenger cars below four
meters in length and under 1,200cc, mid-size passenger cars, between 1,2001,500cc, luxury cars, over 1,500cc and SUVs over 1,500cc and over four meters.
Currently we pay 12.5 percent excise duty on small cars, 24 percent on mid-size
cars, 27 percent on luxury cars and 30 percent on SUVs. Then there is the NCCD
of 1.1 percent 14 percent VAT on all of the above. If the GST bill is passed, the
total tax on small cars will come down by 10 percent, the tax on mid-size cars
will be lower by no less than thirty percent whereas the luxury cars and SUVs will
see a tax exemption of 2.1 and 5.0 percent.

It still remains to be seen if the small cars would indeed be grouped under
standard good and services category. If the standard tax rate of 17-18 percent is
accepted, the small cars as well as the big cars would get benefitted with GST
implementation since the overall difference is in favour of the Industry and
overall rates are expected to decrease.
If the governments agrees to recommendations made by the panel, and put
small cars (except luxury cars) in the standard goods and services category, the
prices of small cars may reduce by as much as 10 percent, while the prices for
luxury sedans as well as SUVs may see a drop of about 2-5 percent.
The trend among the auto industry is to pass the benefits to the customers. This
is largely due to the absence of any cartels and the high cost associated with
holding the inventory. For this reason, its believed that the proposed GST rate of
even 18-20% would reduce small car prices by about 8-10%. This is an

assumption made considering that cost factor i.e. price of input materials like
steel, plastic parts, batteries etc. would not change much.
The GST bill at the time of introduction was aimed to increase the effective tax
base by comprehensively covering all sorts of businesses. It was
therefore expected that virtually all goods and services including used car
businesses would be covered under it. If the used car businesses would have
been brought under GST framework, it would have been done with a token levy
of 1% tax, which would made used vehicle trade more organized and used cars
slightly expensive. However, the government has scrapped the idea and the
additional levy of 1 per cent proposed earlier would not be applicable.

Toyota operates two vehicle manufacturing facilities in Canada at Toyota Motor

Manufacturing Canada, Inc. (TMMC) which build
popularToyota and Lexus vehicles for the North American market. The Toyota
Corolla, Lexus RX 350 and Lexus RX 450h Hybrid are manufactured at TMMCs
North and South plant in Cambridge, Ontario. The Toyota RAV4 is manufactured
at TMMCs Woodstock, Ontario plant which was opened in 2007. The Toyota
Matrix built at TMMC's Cambridge plant from 2002 ceased production in June
2014 while the Toyota RAV4 EV (electric vehicle for the North American market)
built at TMMC's Woodstock plant from 2012 ceased production in August 2014.
Since opening in 1988, TMMC has built more than 6 million vehicles for Canadian
and U.S. consumers with the vast majority (approximately 4.6 million) being
exported to the United States. In September 2003, TMMC's Cambridge facility
was expanded and became the first Toyota plant outside Japan to manufacture a
luxury vehicle Lexus RX). Production was further expanded in 2014 to also
produce the (Lexus RX 450h. It is expected to continue to be the
only Lexus manufacturer outside Japan until Fall 2015 when Lexus ES 350
production is expected to commence at Toyota Motor Manufacturing Kentucky,
Inc. (TMMK).



UMW Toyota Motor Sdn. Bhd. (UMWT) is the appointed Toyota distributor,
assembler and exporter of Toyota vehicles in Malaysia. The company was
founded in October 1982 as Sejati Motor, a joint venture between Toyota
Tsusho and Malaysia-based United Motor Works (UMW). Sejati Motor was
renamed UMW Toyota Motor in October 1987.
UMW Toyota Motor has also been the official distributor of Lexus vehicles in
Malaysia since 2006.
Toyota vehicles were first imported into Malaysia in August 1956, with the first
completely built-up (CBU) unit being a Land Cruiser. Toyota signed distributor
agreements with various Malaysian partners prior to UMW Toyota Motor, namely
Car Motor (September 1960February 1974), Emastorin Motor (September 1979
April 1984) and Sarin Motor (January 1979February 1983). Additionally, several
companies had also been appointed as importers and assemblers of
Toyota's completely knocked-down (CKD) kits, with the most prominent CKD
assembler being Champion Motor (CM). Other CKD assemblers include Borneo
Motors (September 1967 September 1982) and Sarawak Motor Industries (SMI).
In the 1970s, Malaysia experienced an economic boom as a result of increased
industrialisation. Japanese companies heavily invested in Malaysia during this
period. Assembly of the Toyota Corolla and Toyota Corona began in February
1968 at Champion Motor's factory in Shah Alam. Champion Motor was an
independent company that had previously assembled non-Toyota models,
including those from the likes of Chevrolet, MercedesBenz, Vauxhall and Volkswagen. Champion Motors was later renamed Assembly
Services Sdn. Bhd. (ASSB) in April 1975.
Prior to the 1960s, Malaysian market Toyota models were only imported as
completely built up (CBU) units. By the 1960s, the Malaysian government began
to emphasise industrialisation, then viewed as a more dependable economic
sector for employment and economic growth.In May 1964, the Malaysian
government enacted a policy to encourage the local assembly of vehicles and

manufacturing of automotive components, as per the recommendation of

experts from the Colombo Plan.
The new policy made completely built up (CBU) cars more expensive through
the addition of import duties, and licenses were issued to various car companies
who were interested in setting up local assembly plants. Cars that were locally
assembled with Malaysian manufactured components, then limited to low-value
parts like tyres, lights and batteries would be granted a reduction in import duty,
making them cheaper and more competitive as a result.

There is no doubt that the implementation of GST will have a significant effect on
the Malaysian automotive landscape, with particular emphasis on the market and
its economics. Each carmaker works on different business models, different
distribution margins, different principal requirements the disparities are
endless .
Since the 6% GST will supersede the existing 10% sales tax imposed on new
vehicles, its easy to assume that car prices will drop by 4%.

At present, all new cars are subject to a 10% sales tax. This tax is imposed on
the cars Government Approved Selling Price that is, the cars open market
value (if CKD) or Cost, Insurance and Freight (if CBU) price, plus associated
import and excise duties. It is paid only once at manufacturer (if CKD) or
importer (if CBU) level, before the car is sold to the distributor. Thereafter, the
car may be sold to a dealer who sells it to the consumer, with no further taxes
incurred. This sales tax regime will be abolished, and a GST of 6% will take its
place. In its simplest form, GST is a value-added tax, that is, a tax paid on the
value added to a product or service. It is applied at each stage of the business
transaction, through distribution, retail and finally to the consumer.
It is important to note that it wont be a 6% GST added on top of each and every
business transaction, thereby increasing the price of the car at an exponential
rate. GST is indeed imposed on the selling price, margins included, each time the
car changes hands down the supply chain, but at each stage except for the final
consumer, input tax can be claimed. In the end, it is the consumer who pays the
full GST rate.