Tax layers under proposed GST Model with Examples

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Tax layers under proposed GST Model with Examples, Tax Structure of New GST Model, It is a Dual-GST structure proposal wherein the Central Government and State Government will simultaneously charge GST on the same economic supply. Recently we provide complete details for GST Current Tax Structure and proposed GST Regime. Now you can scroll down below and check more details for “Tax layers under proposed GST Model”

Section 132 of GST Act 2017

Tax layers under proposed GST Model

Inter-state transactions or supplies to be charged an Integrated GST (IGST) which is a combination of Central-GST (CGST) and State-GST (SGST) rates

Unique input tax credit mechanism; as illustrated below:

Tax layers under proposed GST Model

Comparative Analysis (Intra-State Trade)
(Assumed Rates for Excise Duty, CGST & SGST @12%, VAT @12.5%)

Transaction Current Scenario (Rs.) GST Scenario (Rs.)
Cost of Raw Materials to Input Manufacturer 100 100
Profit Margin @ 25% 25 25
Assessable Value 125 125
Add: Excise Duty @12%   |   CGST @ 12% 15 15
Add: VAT@12.5%    |    SGST@12% 18 15
    Invoice Value (Input Manufacturer to Output Manufacturer) 158 155
Cost of Goods to Output Manufacturer (Net of ITC) 100 100
Add: Value Addition @ 40% on Cost (incl. of Profit Margin) 40 40
Assessable Value (Manufacturer to Wholesaler) 140 140
Add: Excise Duty @12%  |  CGST @ 12% 16.80 16.80
Add: VAT@12.5%   |     SGST@12% 19.60 16.80
Invoice Value (Manufacturer to Wholesaler) 176.40 173.60
Cost of Goods to Wholesaler (Net of ITC) 156.80 140.00
Add: Profit Margin of Wholesaler @10% 15.68 14.00
Add: Excise Duty @12%   |  CGST @ 12% 0.00 18.48
Add: VAT@12.5%   |     SGST@12% 21.56 18.48
Invoice Value (Wholesaler to Retailer) 194.04 190.96
Cost of Goods to Retailer (Net of ITC) 172.48 154.00
Add: Profit Margin of Retailer @10% 17.25 15.40
Add: Excise Duty @12%   |  CGST @ 12% 0.00 20.33
Add: VAT@12.5%   |    SGST@12% 23.72 20.33
Final Price to be paid by Consumer 213.44 210.06
Cost Saving to Consumer 3.39

Comparative Analysis (Inter-State Trade)
(Assumed Rates for Excise Duty, CGST & SGST @12%, CST @ 2% each)

Transaction Current Scenario (Rs) GST Scenario(Rs)
Cost of Raw Materials to Input Manufacturer 90 90
Profit Margin Rs.10 10 10
Assessable Value 100 100
Add: Excise Duty @12%  I   CGST @ 12% 12 12
Add: Vat 12.5%   I     SGST@12% 14 12
Invoice Value (Input to Output Manufacturer) 126.00 124
Cost of Goods to Output Manufacturer (Net of ITC) 100 100
Add: Value Addition @ 40% on Cost (incl. of Profit Margin) 40 40
Assessable Value (Manufacturer to Wholesaler) 140 140
Add: Excise Duty @12%  I   CGST @ 12% 16.80 0
Add: CST@2%  I      IGST@24% 3.14 33.60
Add: Additional Tax @1% 0 1.40
Invoice Value (Manufacturer to Wholesaler) 159.94 175.00
Cost of Goods to Wholesaler (Net of Input Credit) 159.94 141.4
Add: Profit Margin of Retailer @10% 15.99 14.14
Add: Excise Duty @12% I   CGST @ 12% 0 18.66
Add:  VAT@12.5%    I     SGST@12% 21.99 18.66
Invoice Value (Wholesaler to Retailer) 181.93 178.73
Cost of Goods to Retailer (Net of Input Credit) 175.93 155.54
Add: Profit Margin of Retailer @10% 17.59 15.55
Add: Excise Duty @12% I   CGST @ 12% 0 20.53
Add: VAT@12.5%  I     SGST@12% 24.19 20.53
Final Price to be paid by Consumer 217.71 212.16
Cost Saving to Consumer 5.56

Must Read – GST Definition, Objective, Framework, Action Plan & Scope

Current Scenario – Tax Implications against Sales and Stock Transfers by an MNC
(Assumed Rates for Excise Duty @12%, VAT@12.5%, CST @ 2% each)

Particulars Basis Amt. (in Rs.)
Purchase of Raw & Packing Materials 20000 Kgs. @ Rs.50 1000000
18000 Kgs. (Intra-state) A 900000
2000 Kgs.  (Inter-State) B 100000
 
Input Credit of Excise on Intra-State Purchase @ 12% C=A x 12% 108000
Input Credit of VAT on Intra-State Purchase @ 12.5% D=A x 12.5% 126000
Input Credit of Excise on Interstate Purchase @ 12% E=B x 12% 12000
Input Credit of CST on Inter-state Purchase 2% F=B x 12% 2240
 
FG sold within State-A (200 Kgs. @ Rs.75 ) G 15000
Excise Duty Payable @ 12% H=G x 12% 1800
VAT Payable @ 12.5% I =G x 12.5% 2100
 
FG Stock Transfer to State -B (17000 Kgs. @ Rs.65 (TDR)) J 1105000
Excise Duty Payable @ 12% K=J x 12% 132600
VAT Payable @ 12.5% on Local Sales by Depot L=J x 12.5% 159375
Reversal of ITC of VAT (ITC x 3/12.5) M= D x 3/12.5 30240
 
FG Inter-State Sales to State -C (2800 Kgs. @ Rs.75 ) N 210000
Excise Duty Payable @ 12% O=N x 12% 25200
CST @ 2% P=N x 2% 4704
 
Net Excise Duty Payable after Cenvat Credit Q=(H+K+O-C) 39600
Net VAT Payable after Vat Input Credit R=(I+L+M-D) 65715
Net CST Payable after CST Input Credit S=(P-F) 2464
Net Liability of Duties & Taxes T=(Q+R+S) 107779

Must Read – Introduction, Meaning and Purpose of GST

GST Scenario – Tax Implications against Sales and Stock Transfers by an MNC
(Assumed Rates for SGST & CGST @12%, IGST @ 24%, Add. Tax @ 1%)

Particulars Basis Amt. (in Rs.)
Purchase of Raw & Packing Materials 20000 Kgs. @ Rs.50 1000000
18000 Kgs. (Intra-state) A 900000
2000 Kgs. (Inter-State) B 100000
Input Credit of CGST on Intra-State Purchase @ 12% C = A x 12% 108000
Input Credit of SGST on Intra-State Purchase @ 12% D=A x 12% 108000
Input Credit of IGST on Inter-State Purchase@ 24% E = B x 24% 24000
Additional Tax @1% on Inter-State Purchase F = B x 1% 1000
Total Credit of GST Available to Unit-A G = (C+D+E) 240000
 
FG sold within State-A (200 Kgs. @ Rs.75 )  H 15000
CGST Payable @ 12% I=(H x 12%) 1800
SGST Payable @ 12% J=(H x 12%) 1800
FG Stock Transfer to State -B (17000 Kgs. @ Rs.65 (TDR)) K 1105000
IGST Payable @ 24% L =K x 24% 265200
Additional Tax@1% M= K x 1% 11050
FG Inter-State Sales to State -C (2800 Kgs. @ Rs.75 ) N 210000
IGST Payable @ 24% O=N x 24% 50400
Additional Tax@1% P=N x 1% 2100
 
Balance of CGST Input Credit to be  adjusted against IGST Payable Q= C – I 106200
Balance of SGST Input Credit to be  adjusted against IGST Payable R= D – J 106200
 
Net IGST Payable against  Stock transfers and Interstate Trade S=(I+J+L+O-G) 79200
Non-Vatable Add. Tax to be retained by respective State Governments T 14150
Total of Duties and Taxes Payable U=S+T 93350
Savings in Net Tax Payable (1,07,779-93,350) 14,429

 

 

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