Free Essay

Outsourcing Payroll and Tax Services

In: Business and Management

Submitted By jss1
Words 1830
Pages 8
Pro Staffing Research for Outsourcing Payroll and Tax Services


Table of Contents Project Scope 4 Requirements 4 Procurement Advantages 5 Savings Analysis 5 Procurement Disadvantages 6 Risks 6 Scoring Matrix for Procurement Proposals 8 Contractual Analysis 12 Considerations 12 Proposal Information 12 Legal Compliance Subjects 12 Proposal Questionnaire 12 Instructions to Proposers 13

Project Scope

Pro Staffing research of outsourcing payroll and tax responsibilities versus in-house or new software package to evaluate which process will better meet the needs of corporation in both cost and quality of services.
The analysis shows the cost savings for the procurement average 31% less than in-house management either by current processes or new software. Risk/ liability for Federal Tax withholding and reports is moved to the vendor.
The solution needs to provide minimal 1. Direct deposit or mail for employees and contractual workers regular payroll, bonus pay, and expense checks 2. Handle workers compensation payment 3. Payroll withholding 4. Payroll tax management 5. Knowledge of international payments to employees or contractors 6. Online payroll management by Pro Staffing 7. Web access with required registration access for previous W2 and payroll check information for up to five years 8. Documents should be printable or delivery by mail 9. Strict documented protocol for access to personnel information either by web or mail 10. Provide a help support line 11. IRS form 941 filing (Quarterly Federal Tax Return) Testing plan 12. Transition plan

Procurement Advantages

* Outsourcing saves you time * Taxes and other deductions can be calculated accurately * Professional services include best practices regarding compliance with payroll laws * Cheaper than the cost of an in-house payroll specialist * Direct deposit of paychecks * Time-clock features to calculate the hours each employee worked during each pay period * Refocus current employees on other tasks and projects * Access to experts in taxes and other employee payroll deductions changes * Ensure that taxes will be paid on time

Savings Analysis

The study is based on data collected from large organizations (each respondent having 1,000 or more employees) utilizing ADP’s HR BPO services. 29% were “all-service” ADP clients, meaning they outsourced payroll, time and attendance, workforce administration, and health and welfare benefits administration.

* 67% utilized ADP time and attendance services; * 42% used an ADP-hosted system as their HR system of record; and * 38% outsourced their benefits administration to ADP

The size of the client companies that participated in the study are as follows: * 10,000+ employees (25%) * 5,000 to 9,999 employees (37%) * 2,500 to 4,999 employees (17%) * 1,000 to 2,499 employees (21%).

Data from businesses perform payroll internally, “nearly one in four report spending more than six hours per month on payroll. That's at least 72 hours per year—nearly two full workweeks. If we use 2012 data from the Bureau of Labor Statistics to assume the hourly cost for internal payroll staff to be $36, these 72 hours translate into $2,592 per year.” (Jones, Marshall, 2013).
Procurement Disadvantages

* Less control including but not limited to late employee disbursements * Security threats (see risks below for more detail) * Some data may be less accessible


Risk of government reporting and employee withholding taxes are move to the vendor.

Major security risk by having another company having access to information such as employee social security numbers and bank account numbers associated with them as well as those associated with the business. It is very important to investigate how this information is protected.

The company may consider other business areas for procurement in the future. There are risks to outsourcing which can include but not limited to lower levels of service, inferior quality outputs loss of control and adversely affecting deadlines, cultural misalignment and exposure to other economic and environmental factors. (Carlos Sanchez, 2010).

Starting outsourcing with an American company for payroll and tax services which has been one of oldest and most outsourced functions by companies will allow an introduce to create protocols and gain experience in what is becoming a popular alternative to in-house responsibilities. Companies have taken over an estimated 40% or more of companies both large and small in managing company’s payroll and tax services. (Marshall, Jones, 2013).

Scoring Matrix for Procurement Proposals

Criteria | Criteria Weight Percentage | Standards | Standard Weight Percentage | Measurement | Basic Requirements | | Mandatory reasons for exclusion | N/A | Pass/Fail | | | Discretionary reasons for exclusion | N/A | Pass/Fail | | | Insurance | N/A | Pass/Fail | Quality and Capability with existing systems | 40% | Delivery of Corporate Objectives | 5% | Quality | | | Completeness, robustness and systems interfacing approach | 5% | Quality | | | Compatibility with existing environment | 10% | Quality | | | Overall assessment | 10% | Quality | | | Assessment of data protection and security | 10% | Quality | Delivery | 20% | Quality, thoroughness and timeliness of implantation plan | 5% | Quality | | | Quality and comprehensiveness of acceptance schedule | 5% | Quality | | | Quality and comprehensiveness of training schedule | 5% | Quality | | | Assessment of short and long term risked associated with delivery | 5% | Quality | Lifetime Costs | | Cost associated with ownership including enhancements, upgrades and support | 40% | Price | Total | 100% | | 100% | |

Scoring Definitions | Pass/Fail | If the RFP fails to qualify corporate criteria the bid is eliminated. | Quality | The scoring will be in relevance to the specified criteria evaluation using a 0 to 5 scheme. | Price | The scoring will be based on price with the lowest bid be given 40% the rest will be in direct proportion of the price range of bids being evaluated. |

| The 0 - 5 Scoring Scheme | 0 | Either no response was given or it was not relevant | 1 | The response significantly fails to meet the standard requirement | 2 | The response fails to meet the standard requirement in a number of identifiable | 3 | The response meets the standard requirement but has some irregularities | 4 | The response meets the standard requirement but is lacking in some minor respects | 5 | The response meets the requirements and has a high probability to deliver the desired output and outcome. |

Contractual Analysis
* Fixed monthly cost * Cost per employee * Cost per transaction * Length of time period of the contract * Each party's renewal rights (Halvey) * What type of notice is required for renewal (Halvey)

Proposal Information
Bidders need to address the questions below along with any additional information that may be relevant and include a cover in submitting a Proposal.
Automatic Data Processing (ADP), Paychex, and Ceridian are being considered for procurement companies.

Legal Compliance Subjects 1. List which countries the vendor bidder has worked with 2. Identify governmental requirements for transactions and due dates 3. Identify licenses or legal documents require and who will be responsible for the costs 4. Identify how varying currency are handled 5. Auditing requirements 6. Proposal Questionnaire

1. Cover letter of introduction.
2. Firm/professional history including how long you have been in business
3. Professional qualifications and certifications 4. Strong customer portfolio 5. Financially stability
6. Technical Proposal in detail including the Proposer’s proposed method of accomplishing tasks
7. Cost proposal
8. Detail documentation of how and where Pro Staff data is held and the type of encryption used
9. Customer portfolio with client references with similar projects
10. Exceptions to Terms and Condition
11. Additional comments or final summary
12. Signed Proposal Certification
13. Pilot period

Instructions to Proposers

Proposals shall deliver a copy in Word and addressed and delivered electronically to:

Pro Staffing
123 Anywhere Drive
Somewhere, US 76242

1. Proposals received after the time for closing shall be returned to the Proposer unopened.

2. Proposals shall be submitted in one hard copy produced using Word and one electronic copy clearly labeled with the vendors name to

3. Proposer may withdraw Proposals at any time during this process.

4. Pro Staffing will reserve the right to conduct discussions including negotiations with vendors. Pro Staffing shall not disclose any information including discussions from other vendors with other bidders.

5. Proposers submitting Proposals may be requested to give an oral presentation by the selection committee.

6. Proposals shall need to response to all items in the questionnaire and signed or they may be rejected.

7. Pro Staffing reserves the right to reject any or all Proposals or any part thereof, or to accept any Proposal, and to waive or decline to waive irregularities in any Proposal. Pro Staffing also reserves the right to hold all Proposals for a period of ninety (90) days after the opening date.

8. The successful Proposer shall be expected to enter into a standard form of contract approved by both parties. 9. Prospective Proposers may submit requests for any changes to Pro Staffing terms and conditions. 10. However, if Pro Staffing chooses not to accept the alternate terms and conditions, GII may reject such Proposals as non-responsive.

11. Confidential information may include, but is not limited to, trade secrets, business plans, copyrights, logos, trademarks, financial and operational information and membership lists. Both parties expressly agree not to use or disclose such information in any manner or for any purpose at any time during or after the effective term of this Agreement, except as required by law or as required during the course of the other’s work, unless authorized in writing by the other.

12. Contractor represents and warrants that it has no business, professional, personal or other interest, including but not limited to the representation of other clients, that would conflict in any manner with the performance of its obligations under this Agreement.

13. Either party may terminate this Agreement, with or without cause, upon thirty (30) days written notice to the other. Pro Staffing shall pay the Contractor a pro rata share for services rendered up to the period at which termination occurs but Pro Staffing not be obligated to make any additional payment. Upon termination, the Contractor shall return all unearned prepayments or deposits and deliver to Pro Staffing all Pro Staffing information or materials that is in the Contractor’s possession or control.

14. In addition, if the Contractor is convicted of any crime or offense, fails or refuses to comply with the written terms of this Agreement, and/or the policies or reasonable directive(s) of Pro Staffing, is guilty of serious misconduct in connection with performance hereunder, or materially breaches provisions of this Agreement, GII at any time may terminate the engagement of the Contractor immediately and without prior written notice to the Contractor.

15. During the term of this Agreement neither party will use or disclose any confidential information.

Sourcing Analytics Inc. (2103) “The Hidden Benefits of Human Resource Business Process Outsourcing”
Retrieved from:

Sanchez, Carlos. (June 2010) “The Benefits and Risks of Knowledge Process Outsourcing”. Strategy
Retrieved from:

Jones, Marshall (June 10, 2013). “Should You Keep Your Payroll In-house or Outsource It”. The New Talent Times
Retrieved from:
Halvey, John K. Business Process Outsourcing: Process, Strategies and Contracts, (2nd Ed). (p. 164) John Wiley & Sons P&T.…...

Similar Documents

Premium Essay

Customer Defection of Liberty Tax Services

...A CUSTOMER DEFECTION ANALYSIS FOR: LIBERTY TAX SERVICE Prepared By Alexandra Burge Teale Hocker Anna Schoonover Andy Ward Presented to Dr. James Walker for Strategic Marketing February 27, 2013 TABLE OF CONTENTS TABLE OF CONTENTS i EXECUTIVE SUMMARY ii INTRODUCTION 1 Background Information 1 Literature Review 2 METHOD 3 RESULTS 4 RECCOMENDATIONS 5 CONCLUSION 7 ACKNOWLEDGEMENTS 8 WORKS CITED 9 APPENDIX A 10 APPENDIX B 11 EXECUTIVE SUMMARY A customer defection analysis was carried out for Liberty Tax Service, referred to as Liberty Tax, to determine why customers had defected and provide recommendations on how to retain current and future customers. The analysis was based upon a survey performed on 20 of the 280 customers who had Liberty Tax perform their tax services in 2012 but did not return in 2013. The results of the analysis were divided into controllable, and uncontrollable reasons that customers defect. Controllable reasons found included poor customer service (10%), speed of service (30%) and opting for an online or do-it-yourself tax service (35%). An uncontrollable reason was that customers were moving from the area (25%). The analysis showed that if Liberty Tax retained all the customers who defected in the last year for controllable reasons they would increase revenues by $50,400.00. Finally, four recommendations to help improve retention and capture the lost revenues are given. It is recommended that employees receive more...

Words: 2429 - Pages: 10

Premium Essay

On the Mark Accounting and Tax Services

...[pic] Consumer Behavior Outline for Exotic Smokes Cigarette Company The IMC Plan Project for On the Mark Accounting and Tax Service, LLC means starting at zero with the IMC campaign planning. The CEO of the company knows that acquiring and retaining clients is an ongoing process, and now is the time to complete an analysis to determine what, if any, changes need to be made to the marketing communication efforts. There are many reasons a formal campaign plan should be created: it will provide the CEO a sensible process to identify the most important exchange issues on which the company should focus; it notifies everyone involved with MC, what is expected of them; it will assist in guaranteeing the MC effort is incorporated and concentrated on the most important message issues; these plans inform top management personnel how and why the funding will be spent and what the company will gain in return; and the plan will provide the CEO and marketing management a criterion against which development and final results can be measured (Duncan, 2005, pp. 170-171). Executive SUMMARY to: Mike Yesner FROM: REBECCA BRYSON SUBJECT: IMC PLAN PROJECT DATE: 6/11/2013 CC: Purpose and Scope of Document The purpose of this document is to introduce an IMC Campaign Plan to the board of directors at On the Mark Accounting and Tax Service, LLC. First, marketing managers must identify target audiences; second, the CEO and management team must analyze the SWOTs of......

Words: 440 - Pages: 2

Premium Essay

Service Tax

...Assistant professor, Faculty of engineering Ubon Ratchathani University, Thailand ABSTRACT The competition in Thailand sweet corn industry relatively high: Bargaining power of suppliers: supplier concentration, availability of substitute input, importance of suppliers’ input to buyer and importance of industry to supplier; Intensity of Rivalry of rivalry among existing competitors: number of competitors, augmented capacity in large increments, value of fixed costs and exit barriers; Threat of entrants or potential competitors: economical scale; Determinant of buyer power: product differentiation, switching costs to use other products, switching costs to use other products and buyers’ use of multiple sources, threat of substitute products or services relatively low. Keywords: Environment analysis, Competitive Forces, Competitiveness Porter’s Five Forces, Sweet Corn, Agribusiness 1. Introduction Sweet corn is a major economic agronomy in Thailand. There are large amounts of consumption and utilization of sweet corn each day. The sweet corn is a perennial plant providing greater values to fresh markets and industrial factories. Recently, sweet corn is one of the most popular crops; the 2011 Thai Food Processors’ Association report revealed that there were 29 factories of sweet corn manufacturers, and 64,000 hectares of plantation areas, and more than 35,000 farmers involved. Producing 544,000 tons of sweet corn, Thailand ranks third worldwide, with a 190 million USD increase......

Words: 7394 - Pages: 30

Free Essay

Government Service Tax

...discussion on one very specific aspect. • Texts that consider some isolated perspectives of your research. 2. Making Conceptual Framework State your research question and map out your literature domains.Try to focus on the overlaps between the domains, and be clear about the areas of the domains which are not relevant to your question [recognise that your maps will change over time]. The problem statements may be summarised as: | | |We propose to investigate the level of awareness of Malaysian consumers on Goods and Services Tax (GST). We would also like to study | |the effects of GST towards Malaysian consumers and look into the probability of implementation of the GST in Malaysian tax system. | Draw a figure to represent the domain area seen as relevant to your study. As shown below: [pic] 3. Scoping LR process Answer ALL of the following questions, refering to the topic and content of your research.. • Why is it an important topic? • What is the research need and purpose of the review? • What is the size of the literature? • What are the origins and definitions of the topic? • Are there any cross-disciplinary perspectives that need to be taken into account? • What are the major issues and debates about the topic? • What are the key sources? Who are the key authors? • What are......

Words: 834 - Pages: 4

Premium Essay

Goods and Services Tax

.......... 2 Urgency .................................................................................................................................................... 2 Desirable features of Goods & Service Tax Network (GSTN)........................................... 3 Stakeholders .......................................................................................................................................... 4 Workflows ............................................................................................................................................... 5 A common GST portal ....................................................................................................................... 6 Basic solution architecture ............................................................................................................. 7 Information Flow .................................................................................................................................. 8 Funds flow .............................................................................................................................................. 9 Tax computation and accounting .............................................................................................. 10 Tax booster.......................................................................................................................................... 11 2. An IT infrastructure for GST ..............

Words: 2956 - Pages: 12

Premium Essay

Goods and Service Tax in India

...What is GST? The Goods and service tax is an initiative towards a reform in which this tax will replace all the indirect taxes in the Centre as well as the State, which can be levied in case of a sale being made or a service being provided. It is especially necessary in the current scenario, due to the degrading effects of the present tax system of CENVAT and State Vat system and the other complexities that prevail in the tax system of India. Some of the taxes that will be replaced under the central taxes are Service Tax, Surcharges, Central Excise Duty, Customs Duties and other Excise Duties. Some of the taxes that will be replaced under the state taxes are Luxury Tax, Entertainment Taxes, Tax on gambling and betting, Lottery Taxes, surcharges etc., as long as they are related to entry tax and the supply of goods and services. Due to reasons, which are social, environment related as well as those related to import dependence, certain products like high-speed diesel, alcohol (human consumption) is not included. Also, the direct taxes will be exempted from the GST, including capital gains, corporate and income tax. To better understand GST, consider the following: There exists a manufacturer, retailer and dealer (wholesaler). Goods and Service Tax is 10%. Now assume that the manufacturer buys the raw materials worth Rs 100 for Rs 140. Therefore, the total GST he will pay is Rs 4 by getting a tax credit of Rs 10 on the raw materials he had purchased. Now,......

Words: 2236 - Pages: 9

Premium Essay


...document.] | Contents 1. Definition of outsourcing 3 2. Functions outsourced by HR 3 3. Advantages of outsourcing HR Functions 4 3.1 Managing and minimising risk 5 3.2 Cost Savings 5 3.3 Efficiency and economies of scale 5 3.4 Professional Expertise 5 3.5 Improved Employee Morale 6 4. Disadvantage 6 4.1 Poor Performance and decline in quality 6 4.2 Distance and lowering moral 6 4.3 Recruitment Problems 6 4.4 Leak of important internal information 6 4.5 Perceived loss of power and control 7 4.6 Increased Direct Costs 7 5. e-HRM 7 5.1 Objective of e-HRM 7 5.2 Advantages of e-HRM 8 5.3 Disadvantages of e-HRM 8 6. Conclusion and Advice to the Client 8 1. Definition of outsourcing The Human Resource department is considered to be one of the highly accredited departments of the organization; these are the people who provide the working resource to the company and keeping the company afloat even in the worst economic downtime. The best way in which the HR can be managed is decided by the HRD. The ways in which the human resource management is done has changed considerably in the recent years. The HR activities and functions can now be delivered, not only by the specialised Human Resource professionals, but also through outsourcing (Ulrich 1996; Tremblay, Party and Lanoi 2008). The HR outsourcing can be defined as the purchasing of the HR functions and services from a third party supplier. HR outsourcing can also be defined as the......

Words: 3934 - Pages: 16

Premium Essay

Gross and Services Tax

...GROSS AND SERVICES TAX GST is an assumption tax charged on a wide range of domestic and international products, good and services. It’s a board-based of tax imposed on every level of a product from raw materials all the way to finished good. The implement of the GST is to substitute the sales and services tax the country of several decade. However, there are some goods and services will be exempt from GST which is a basic food items (rice, sugar, salt, flour, cooking oil, spices, salted fish, cencalok, pickled, shrimp paste), water supply pipes and 200 the first units of electricity per month for consumers, the services provided by the government (issuance of passports, health services, learning in schools), transportation services (bus, rail, LRT, taxi, ferry, boat, highway tolls), sale and rental of residential and some selected financial services. In my opinion, I think GST can educate consumers to become more prudent. If the user does not want to pay more GST then limit expenditure or buy only things that they really need only. GST is based on consumption tax where the more you wear or buy the more you pay. People are likely to be used more. So this can contribute to the national income that could eventually give benefit to all people. In addition, GST rate is lower (6%) compared to sales and service tax (SST) at the rate of 10% and 6%. SST is a double tax, but GST is a tax system on goods and services. Under the SST users had to pay a higher price because......

Words: 399 - Pages: 2

Premium Essay

Transaction Services Tax - Pwc

...Transaction Services • • TS Insights List bullet List bullet Sub bullet evaluation of the other two sources of taxable income ― Vol. 3 Heading 2 Financial reporting in an uncertain economy A closer look at income tax valuation allowances October 2009 Additional text goes here. Heading 3 Additional text goes here. Notwithstanding early signs that the global recession may be waning, the uncertain economic future continues to constrict corporate America. As companies continue to incur losses, focus has heightened on income tax valuation allowance assessments by companies and their auditors, as well as the Securities and Exchange Commission staff, through the issuance of comment letters. Specifically, much of this focus is on whether deferred tax assets reflected on corporate balance sheets will ultimately be realized. When a deferred tax asset is not fully realizable, a valuation allowance must be established against the deferred tax asset to reduce it to a net amount that is realizable. The related expense is generally reflected in the income statement as an income tax expense. A clear understanding of the judgmental nature of valuation allowance accounting models is critical in addressing this issue. The need for judgment The accounting requirements for deferred tax assets are set out in ASC 740, "Income Taxes," which establishes a "more likely than not" threshold for recognizing deferred tax assets. The interpretation of this criteria has historically...

Words: 2082 - Pages: 9

Premium Essay


...Excel Payroll Program About the Program This is a DIY Excel payroll program. No payroll fees, no payroll charges, and no monthly fees! It is running in Microsoft Excel. It is easy, simple, accurate, and reliable! This Excel Payroll Program Includes EVERYTHING you need! This Excel Payroll Application does all for you: * Keeps payroll records and payroll registers * Prints payroll checks and generates payroll accounting entries * Generates accrual vacation and used vacation reports  940, 941, and DE-9, tax liabilities, payroll summary and detail reports * Prints W-2 Forms with W-3 information reports.  Worker’s compensation insurance premium calculation reports * Customized selection reports.  401K match and calculation; 125P, HSA or garnishment deductions * All reports in Excel format and are usable at your own will A special feature of this program is that you can cut a payroll check at any time. Unlike ADP or other payroll program that you have to select a pay period or to define a pay date before you can print a check, there is no payroll period or payroll date to select. You can enter any date as payroll date on the payroll check. Your payroll liabilities occur as the same dates as your payroll check dates. You may even reprint or redo your old payroll records in back years. For example, if today is November 19th, 2018 you may redo your payroll for January 2011 as if you were paying in 2011 for record keeping purpose. ...

Words: 1767 - Pages: 8

Premium Essay

Goods and Services Tax

...Main Features of Goods and Services Tax (GST) Our Prime Minister, Datuk Seri Najib Razak announced the introduction of the Goods and Services Tax (GST) in Budget 2014 on 25th October 2013. GST will be effective on April, 2015 and replace the current sales and services tax. GST also known as value-added concept, which is multi-stage tax. GST will be charged on all taxable supplies of goods and services trading in Malaysia by a taxable resident. GST is tax neutral to businesses. GST charged to all intermediaries in the production and distribution chain. Businesses which have registered for GST are allowed to claim input tax credit. GST also is a broad-based tax since all supplies of goods and services will involve GST. Exemption is given to zero-rated supplies and exempt supplies, or those fall within particular special schemes. Besides that, imported services will be subject to GST. Standard-rated Supplies Standard rate supply those goods and services that are charged GST at a fixed rate. GST is collected by the seller and paid back to government. They can recover back the difference between the input and output tax when their input tax is higher than their output tax. Zero-rated Supplies Businesses can claim input tax credit in purchasing these supplies. Customer will be charged at zero rate of GST. Most basic food items such as meats, fish, cooking oil, rice, sugar, salt, vegetables and first 200 units of electricity supply used monthly for domestic consumers...

Words: 371 - Pages: 2

Premium Essay

Malaysia Goods and Services Tax

...concerning the individuals and sole-proprietor business have been introduced in 2015 budget. The first issue is about individual tax. The first change is that the income tax rate is reduced by 1 to 3% for resident individuals depending on different levels of chargeable income since Year of Assessment (YA) 2015 (KPMG, 2014). This results in that tax payers with family and income of Rm4,000 per month will not have tax liability. Besides, the income tax rate for non-resident individuals is reduced by 1% from 26% to 25% (KPMG, 2014) Chargeable Income(RM) | Current Tax Rate (%) | Proposed Tax Rate (%) | Reduction(%) | 1—5,000 | 0 | 0 | - | 5,000—20,000 | 2 | 1 | 1 | 20,001—35,000 | 6 | 5 | 1 | 35,001—50,000 | 11 | 10 | 1 | 50,001—70,000 | 19 | 16 | 3 | 70,001—100,000 | 24 | 21 | 3 | 100,001—250,000 | 26 | 24 | 2 | 250,001—400,000 | 26 | 24.5 | 1.5 | Exceeding 400,000 | 26 | 25 | 1 | This tax brackets illustrates the chargeable income is raised from RM100,000 to RM400,000 and the rate for chargeable income band exceeding RM100,000 is structured into three bands with reduced rates of 24%, 24.5% and 25%, which results in existing taxpayers receiving a saving of at least 5.3% (Reuters, 2014). It is significant to note that the deduction in tax rates is expected to provide tax saving for individuals This significant change in income tax rate aims to increase the disposable income of individuals and in line with GST implementation. Secondly, Malaysian government......

Words: 2824 - Pages: 12

Free Essay

Goods and Service Tax India

...1.Introduction Billed as India’s biggest indirect tax reform since independence- Goods and Service Tax once introduced has the potential to boost economic growth and according to analyst add around 0.9%-1.5% to our GDP. GST has been implemented by over 150 countries owing to its transparency and revenue increasing capabilities. The idea of GST is almost a decade old and was first proposed by a committee chaired by tax expert Vijay Kelkar in March 2004 after much deliberations and delays P.Chidambaram and Pranab Mukherjee formally introduced the legislation in Lok Sabha in March 2011. Thereafter the Bill has been stuck up in a quagmire of political opportunism and delay. The law, if finally passed by both houses of parliament will come into force from April 2016. 2.Nuanced understanding of GST As opposed to a single comprehensive tax which is a global norm India has decided to adopt the dual GST model where there are two components- central GST (CGST) and a state GST (SGST) hence the Centre and state will legislate and administer the taxes concurrently. GST will subsume various disparate taxes viz. Central excise duty, VAT, Service tax and also other taxes like luxury tax, entry tax thereby reducing the compliance cost and at the same time simplifying the tax structure. GST is primarily a destination based tax and requires that the SGST accrues to the destination state this caused dissent among some predominantly manufacturing states like Maharashtra, Gujarat and......

Words: 1055 - Pages: 5

Premium Essay

Goods and Services Tax

...Goods and Services Tax-What it is! Folks! Goods and Services Taxes or simply put GST is believed to solve many issues when it comes to the taxation policy in India. Before we jump into the technicalities of GST, let me set some pretext for those who have little idea about this topic. Our country, India, is a land of Taxes! Currently, we have numerous taxes like Sales Tax, Value Added Tax, Service Tax, Income Tax, Central Excise, Customs, Countervailing Duty, Special Additional Duty and what not. As a manufacturer, one need to pay these many taxes to government and the total amount that goes into taxes is fairly large. The reason being, the manufactured goods has to go through several stages (intermediate parties) before it finally reaches to the customer. And, the taxes are levied on the goods at each stage. That means same tax is levied on the product more that once before it reaches to the end customer. We call this scenario-Tax on Tax. In 2004, the government came up with an idea of VAT where in this problem of tax on tax was taken care of. In VAT the dealer only adds the tax on the value added on goods by him and does not pay the taxes on the values added on the goods by previous customers. But, as you can figure it out, VAT deals with the taxes only on goods. What about tax on services? Further, the VAT was implemented on the state level. Centre continued to charge the central taxes on the goods and services. To solve this problem, government came up with the idea......

Words: 642 - Pages: 3

Premium Essay

Goods and Service Tax

...What is GST? Goods and Services Tax is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain .The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. What are the benefits of GST? 1. Credit Scheme: GST will be levied on supply of goods and services and the supplier will be allowed credit for the GST paid on purchases. The credit would be seamless except that the credit of CGST paid will not be allowed for set-off against SGST payable and vice versa. This will eliminate the he cascading effect and reduce the price. 2. Subsuming all Taxes: GST should subsume all major indirect taxes levied by the Central Government i.e. central excise, customs and service tax and majority of the taxes levied by the State Government i.e. VAT, luxury tax, entertainment tax, etc. In this regard, tax on petroleum products and alcohol are intended to be kept either outside or tax additionally under GST. 3. Export-oriented industries -internationally more competitive as entire taxes in supply chain would be refunded (zero-rating) 4. Import-substituting industries would also become competitive as prices of Indian ...

Words: 1057 - Pages: 5

Nocturne in E-Flat Major, Op. 9 No. 2 | Thomas Ian Nicholas | Stuttering Final