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    An Overview on GST

    Brief Introduction

    GST, Entire India is eagerly waiting for its implementation. In Indirect Taxes, rolling out of GST is a major reform. Globally, most of the countries are under GST regime and now India is also going to step in to GST Net. The idea of national GST was first put forward by Kelkar Committee in 2004. Sri Chidambaram was announced the introduction of GST in his budget speech in 2006, however due to political issues, the dream to roll out GST got delayed for a decade. 

    Through implementation of GST, Consumers shall be benefitted through the reduction of cascading effect and tax burden. Further, for the administrators, it would be easier to collect the taxes and also our Indian products would become competitive in the global markets resulting in strengthening the economy.

     

    Power to levy 

    The Constitution of India gives fiscal powers to the Centre and State Governments for levying the taxes and clearly various transaction elements are divided between Centre and State for levy of taxes. The Constitution (One Hundred and First Amendment) Act, 2016, through Article 246A and Article 269A of the constitution conferconcurrent powers to the Union and State Government to levy and collect Goods and Service Tax on supply of goods or services 

    Amalgamation of Indirect Taxes 

    Goods and Service Tax has been come into picture by subsuming most of the prevailing indirect taxes at state level and central level. 

    1. At the Central Level, Taxes such as Excise Duty, Service Tax, Countervailing Duty, Special Additional Duty, Additional duties of Excise and all the surcharges and cess relating to the goods and services.
    2. At the State Level, Taxes such as State VAT, Central Sales Tax, Luxury Taxes, Entry Taxes, Entertainment and Amusement Tax, Purchase Tax and all the surcharges and cess relating to the goods and services. 

    Continuation of some of the taxes 

    After the implementation of GST, Petroleum products are not subsumed into GST. They are continued to be subject to excise duty and other State taxes as applicable in the current regime. They will be brought into GST net from a date recommended by GST Council. Though tobacco products are brought under GST, Centre continues to have power to levy excise duties. Taxes on Alcoholic liquor for human consumptionare not subsumed under GST. They are subject to State excise duties. Further Local Government bodies like Municipality, Panchayat, Regional Council and District Council will have powers to impose tax on entertainment and amusement. These taxes on entertainment and amusements will be over and above GST. 

    Taxation of transaction 

    On every transaction of supply of goods/services, GST shall be levied except on exempted goods/services and the goods outside the preview of GST and the transactions falling below the prescribed limits 

    For Intrastate supply of goods and /or services, there is a concept of dual GST. State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) shall be charged on the common taxable value of a particular transaction. State Government and Central Government shall have the power to levy and collect SGST and CGST respectively. GST is a destination based consumption tax. Therefore, the State where consumer is located will have the power to collect and receive the tax. 

    For Interstate supply of goods and/or services, Integrated Goods and Services Tax (IGST) shall be charged and the rate is expected to be equal to CGST and SGST. It shall be levied and administered by the central government and SGST component of IGST levied shall be apportioned by Centre to the consuming states. 

    Import of goods and/or services are to be considered to be interstate transaction and IGST shall be charged on such event .However, export of goods and/or services are considered as zero rated supplies and no such tax shall be levied on such exports and the related input credits are refunded. 

    Taxable Event under GST 

    In case of Excise Law, Excise Duty shall be payable on the manufacture, in case of VAT laws, VAT shall be payable on the Sale of Goods and in case of Service Tax laws, Service Tax shall be chargeable on provision of services. However, under GST regime, Tax is payable by the taxable person on the supply of goods and/or services. The word supply attained a very noteworthy place in the GST domain, as the taxable event of supply is wide enough to cover all sought of movement of goods (sale or otherwise) and also provision of services. It is a destination based consumption tax where upon consumption of goods and services, the tax revenue shall accrue to the State (jurisdiction) where such consumption has taken place. 

    Taxable event shall be the supply of goods and/or services for a consideration in the course/furtherance of the business. Unlike existing laws, GST shall also be charged on certain transactions even though there is no element of consideration. There are some categories of supply of services and goods which shall be payable on the reverse charge basis and reverse charge applies to supplies of both goods and services. Even interstate stock transfers/branch transfers and stated free supplies come under the roof of GST. 

    Taxable Person 

    Taxable Person means a person who is registered or liable to be registered under GST 

    If a person got more than one registration, either within the state or outside the state, he shall be treated as distinct person in respect of each registration. If the establishments in different states of a common person got registered under GST, they shall be treated as distinct persons. 

    Registration 

    Every person whose aggregate turnover exceeding Rs 20 lakhs (Rs. 10 Lakhs in case of North eastern states including Sikkim) shall get registered under the GST law within 30 days from the date he become liable for registration. Now, there is no concept of centralised registration and Assesse having place of business in more than one state shall get the registration separately in each state. However, if assesse having more than one place of business in same state, then he can take registration for the principle place of business within that state. 

    Input Credit 

    The tax paid on inputs i.e. purchases by an Assesse shall be eligible for claiming the Input Credit subject to the condition as may be prescribed.

    Utilisation of Input tax credit (ITC) as follows:

    1. ITC of IGST can be utilised for the payment of IGST followed by CGST and SGST
    1. ITC of CGST can be utilised for the payment of CGST followed by IGST
    2. ITC of SGST can be utilised for the payment of SGST followed by IGST
    3. ITC of SGST cannot be utilised for the payment of CGST and vice versa 

    Composition Levy 

    A registered taxable person may opt for composition levy scheme, if his aggregate turnover does not exceed Rs 50 Lakhs (Aggregate turnover shall include the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services and exclude taxes viz. GST) 

    In this scheme, the Assesse shall pay tax at a prescribed rate, but not less than one percent of the turnover during the year and for the manufacturer the rate shall not be less than two and half percent of the turnover during the year. 

    The scheme shall not be applicable to the following taxable persons: 

    1. who engaged in the provision of services
    1. who deals with the goods not leviable under this Act
    2. who engaged in making any inter-State outward supplies of goods; 
    1. who makes any supply of goods through an electronic commerce operator who is required to collect tax at source under section 56; or 
    1. who is a manufacturer of such goods as may be notified on the recommendation of the Council 

    Transitional Provisions 

    Existing Registered VAT Dealers/Service tax assesses shall be continued as registered under GST provisions, provided if they submit some additional information. Any accumulated and utilised Cenvat and VAT credit as shown in the last return to be filed under current regime will be allowed to carried forward as opening credits under GST. 

    Goods and Services Tax Network 

    A Special Purpose Vehicle, GSTN has been set up to cater to the needs of GST. The GSTN shall provide IT infrastructure and services to Central and State Governments, tax payers and other stakeholders for implementation of GST.GSTN is information technology network for smooth functioning of GST and facilitation of Registration and filing of Returns and also to ensure a proper mechanism for input tax credit utilisation, tax computation and other services. 

    CONCLUSION: 

    The proposed GST law is vague in certain aspects viz. exemptions and rates of taxes casting doubts on reality of the Central Government chants ‘One Nation— One Tax’, ‘Ease of doing Business’. However, to suit the current political conditions and also to compete globally, there is an urge for roll out of GST. It leads to avoiding the cascading effect of taxes and is alsoexpected to trim the transportation and the distribution costs and thereby contributes to GDP’s growth. 

    Let us welcome the implementation of GST with effect from 1st April 2017 to view a new era in economic reformation of our country!!! 

    "The fragrance of flowers spreads only in the direction of the wind. But the goodness of a person spreads in all directions."

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