GST

GST is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition."It is an Indirect Tax which has replaced  many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage,destination-based tax that is levied on every value addition. This law has replaced many indirect tax laws that previously existed in India.

GST is one indirect tax for the entire country.
 

GST History

  1.   2000-PM Vajpayee set up a committee to draft  GST law.
  2.   2004- Task force concludes GST must be implemented  to improve current tax structure.
  3.   2006-Finance minister proposes GST introduction from April1 2010.
  4.   2007-CST to be phased out. Rates reduced from 4% to 3%.
  5.   2008-EC finalizes dual GST structure to have separate levy & legislation.
  6.   2010-Project to computerize commercial taxes launched but GST implementation postponed.
  7.   2011-Constitution amendment bill to enable GST  law introduced.
  8.   2012 -Standing committee begins discussion on GST but stored it over clause 279 B.
  9.   2013- Standing committee tables it report on GST.
  10.   2014- GST bill reintroduced in Parliament by Finance Minister.
  11.   2015-GST bill passed in Lok Sabha but not passed in Rajya Sabha.
  12.   2016-GSTN goes live .
  13.   2016-Amended model GST law passed in both houses. President gives assent.
  14.   2017-Four supplementary GST bills passed in Lok Sabha & approved by cabinet.
  15.   2017-Rajya sabha passes four supplementary GST bills. Final GST to be implemented on July 1st .
  16.   2017- Finally GST is launched on 1st July ,2017


Components of GST

  • SGST - State GST, collected by the State Govt.
  • CGST - Central GST, collected by the Central Govt.
  • IGST - Integrated GST, collected by the Central Govt.
  • UTGST - Union territory GST, collected by union territory government

The following is the list of indirect taxes in the pre-GST regime:

*       Central Excise Duty
*       Duties of Excise
*       Additional Duties of Excise
*       Additional Duties of Customs
*       Special Additional Duty of Customs
*       Cess
*       State VAT
*       Central Sales Tax
*       Purchase Tax
*       Luxury Tax
*       Entertainment Tax
*       Entry Tax
*       Taxes on advertisements
*       Taxes on lotteries, betting, and gambling

CGST, SGST, and IGST have replaced all the above taxes.
However, the chargeability of CST for Inter-state purchase at a concessional rate of 2%, by issue and utilization of c-Form is still prevalent for certain Non-GST goods such as:

(i) Petroleum crude

(ii) High-speed diesel

(iii) Motor spirit (petrol)

(iv) Natural gas

(v) Aviation turbine fuel

(vi) Alcoholic liquor for human consumption

Multi-stage

There are multiple change-of-hands an item goes through along its supply chain: from manufacture to final sale to the consumer.

*      Purchase of raw materials
*      Production or manufacture
*      Warehousing of finished goods
*      Sale to wholesaler
*      Sale of the product to the retailer
*      Sale to the end consumer

 GST will be levied on the value additions i.e. the monetary worth added at each stage to achieve the final sale to the end customer.

Destination-Based

Consider goods manufactured in Tamil Nadu  and are sold to the final consumer in Karnataka. Since Goods & Service Tax is levied at the point of consumption, in this case, the entire tax revenue will go to Karnataka and not Tamil Nadu.

Advantages of GST

GST will mainly remove the Cascading effect on the sale of goods and services.

 Removal of cascading effect will directly impact the cost of goods.

Since tax on tax is eliminated in this regime, the cost of goods

Goods and Services Tax Network (GSTN)

The GSTN software is developed by Infosys Technologies and IT network is maintained by the NIC. "Goods and Services Tax" Network (GSTN) is a nonprofit organization formed for creating sophisticated network, accessible to stakeholders, government and taxpayers to access information from on a single source (portal). The portal is accessible to the Tax authorities for tracking down every transaction, while taxpayers have the ability of connect for their tax returns.

The GSTN's authorised capital is 10 crores (US$1.5 million) in which Central Government holds 24.5 percent of shares while the state government holds 24.5 percent. The remaining 51 percent are held by non-Government financial institutions, HDFC  and HDFC Bank hold 20%, ICICI Bank  holds 10%, NSE Strategic Investment holds 10% and LIC Housing Finance holds 11% decreases.

GST is also mainly technologically driven.All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal.This will speed up the processes.


Rates

The GST is imposed at variable rates on variable items. The rate of GST is 18% for soaps and 28% on washing detergents. GST on movie tickets is based on slabs , with 18% GST for tickets that cost less than Rs. 100 and 28% GST on tickets costing more than Rs.100 and 5% on readymade clothes. The rate on under-construction property booking is 12%. Some industries and products were exempted by the government and remain untaxed under GST, such as dairy products, products of milling industries, fresh vegetables & fruits, meat products, and other groceries and necessities.

Check posts across the country were abolished ensuring free and fast movement of goods.

The Central Government had proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products. The central government had assured states of compensation for any revenue loss incurred by them from the date of GST for a period of five years. However, no concrete laws have yet been made to support such action. GST council adopted concept paper discouraging tinkering with rates.

Impact of GST on Consumers

GST is also beneficial for consumers. Here is how it impacts the Indian consumers:

  •  Simpler Tax system
  •  Reduction in prices of goods & services due to elimination of cascading
  •  Uniform prices throughout the country
  •  Transparency in taxation system
  •  Increase in employment opportunities