Opening :

Good Morning to you all and welcome to this presentation. My presentation today is
on Goods & Services Tax.

slide no. 1 :

Normally Question & Answer sessions are at the end. But for a change, we will
start with a few questions and their answers. Incidentally these questions do not
require any prior knowledge about Taxation.

1st question : If fine is a penalty for doing something wrong, then what is
Tax ?

The answer to this is : Tax is a penalty for doing something Right

I think most of us will readily agree on this definition of Tax.

Next Question : Why India is a Land of equal opportunity ?

The Answer : Because every one here has an equal opportunity to pay tax. Off
course, some Businessmen do not believe in this equal opportunity thing. They do
not pay any taxes at all.

Next question, How Dharmaraj of Mahabharata managed not telling a lie all his
life ?

The answer is, he never had to file a Tax Return.

Whereas in todays age, many people are forced to be economical with truth.

And the last question , Why Tax deducted at source, such as TDS on your FD, is
a fraction of the actual tax ?

This is because the Govt does not want you to become mad all at once.

And in any case the remaining tax will be payable at the end of the year.

Jokes apart, over and above income tax , which is a direct tax, each one of us also
pays a variety of indirect taxes like excise, VAT, octroi etc. Together with income
tax of about 30%, we end up paying something like 60 to 70 % of our income on
Taxes.

Slide no. 2

Coming to the main presentation on Goods and Services Tax , it will be covered in 4
parts.

The background,

the present international scenario,

 proposed GST system in India

and lastly the benefits and challenges.

Slide no. 3

Goods and services Tax or GST will be a single tax to replace all indirect taxes on
goods and services. It will be a value added tax, like present state VAT. As most of
us know, in a VAT system , taxes are paid on the value addition at each stage in
the supply chain. This avoids cascading effect of multi point taxation.

In India, both Centre and states have power to legislate taxes. The present
main central indirect taxes are Excise and Service Tax . At state level , we have
VAT . At local municipal level, we have taxes like octroi and cess.

Slide no. 4

What are the taxes which will be replaced by single GST ? Actually the proposal at
this stage is quite radical . This is the present list of taxes which will be replaced by
GST.

It includes excise, service tax, state level Vat and range of other taxes. You may
notice that there is component in customs duty appropriately named as SAD by
some smart bureaucrat . It stands for special additional duty.

Slide no. 5

We will now have a look at the present international scenario.

More than 140 countries have already implemented GST . Most of them have
a single rate of tax. This single rate ranges between 17.5% to 21% in European
Union

In Australia it is lowest at 10% , New Zealand has 12.5% tax and China 17%

In India, the rate proposed at present is 16 %.

But there is catch. Like India believes in equal opportunity to all individuals, it is
also concerned about the loss of employment opportunities. If the things become so
simple, then a lot of people handling tax matters will loose their jobs. So unlike a
single GST in other countries, the Indian GST will have 2 components, Central
GST of 8 % and state GST of 8% . This is like present system of charging excise and
VAT on the same product. Still this will greatly simplify the matters as all
businesses have to file a common return. And also they will not have to deal with
present multiple no. of taxes.

Slide no. 6

There will be several benefits of a GST system.

It will be a greatly simplify the tax structure with combined tariffs for goods and
services

Uniform rates will apply the entire supply chain and nobody needs to spend time
trying to figure out taxes applicable in different states.

Transaction cost will reduce due to simplified and reduced tax return procedures.

The tax collections are expected to improve with wider tax base and better
compliance.

And all this will improve the global cost competitiveness of Indian Goods and
services.

Slide no. 7

Such a radical proposal will also involve some issues and challenges.

It is touted as the single most important tax reform since independence.

Getting the states the states to agree to abolish multiple taxes is Herculean
task, if we go by the experience of implementing state VAT.

The system is proposed to be implemented by April 2010. But ideally, the entire
scheme should be firmed up atleast 12 months before implementation.

Since that has not happened, the dead line of April 2010 looks difficult.

Slide no. 8

I will conclude my presentation by quoting George Harrison, the guitarist and song
writer of the 60s pop group Beatles.

He wrote the song Taxman when he realized that most of the groups earning
were actually being taken away in taxes.

In this song , the taxman says

If you drive a car, I will tax the street,

If you try to sit, I will tax your seat !
If you get too cold, I will tax the heat,
If you take a walk, I will tax your feet !
With the introduction of GST in India, more and more services will be included in the
tax net. We all hope that it will not lead to the scenarios in the song in which
intangibles like heat can also get taxed.
Thank you ! and time now for real Question and Answers session