GST Definition, GST Objectives
Historical background of GST
GST was first recommended by Kelkar Task Force on implementation of Fiscal Reforms and Budget Management Act 2004 but the First Discussion Paper on Goods and Services Tax in India was presented by the Empowered Committee of State Finance Ministers dtd.10th Nov.10th, 2009. Click here to know more for History of GST In 2011, the Constitution (115th Amendment) Bill, 2011 was introduced in Parliament to enable the levy of GST. However, the Bill lapsed with the dissolution of the 15th Lok Sabha. Subsequently, in December 2014, the Constitution (122nd Amendment) Bill, 2014 was introduced in Lok Sabha. The Bill was passed by Lok Sabha in May 2015 and referred to a Select Committee of Rajya Sabha for examination. Government is endeavoring to roll out GST by 1st July, 2017, by achieving consensus on all the issues relating thereto. It is geared to attain July 1 deadline for implementation of GST across India. GST is a path breaking indirect tax reform which will create a common national market by dismantling inter-State trade barriers. GST has subsumed multiple indirect taxes like excise duty, service tax, VAT, CST, luxury tax, entertainment tax, entry tax, etc. France was the first country to implement GST in the year 1954. Within 62 years of its advent, about 160 countries across the world have adopted GST because this tax has the capacity to raise revenue in the most transparent and neutral manner. GST Bill Passed in Rajya Sabha & Lock Sabha When GST is Applicable – Modi Government Want to applicable GST Bill From 1st July 2017, for more details about GST Applicability please visit on following link..
Definition of GST
“GST is a tax on goods and services with value addition at each stage having comprehensive and continuous chain of set of benefits from the producer’s / service provider’s point up to the retailers level where only the final consumer should bear the tax.”
Objectives of GST
One Country – One TaxConsumption based tax instead of ManufacturingUniform GST Registration, payment and Input tax CreditTo eliminate the cascading effect of Indirect taxes on single transactionSubsume all indirect taxes at Centre and State Level underReduce tax evasion and corruptionIncrease productivityIncrease Tax to GDP Ratio and revenue surplusIncrease ComplianceReducing economic distortions
Features of GST Constitution Amendment Act
Concurrent jurisdiction for levy & collection of GST by the Centre (CGST) and the States (SGST)Centre to levy and collect IGST on supplies in the course of inter-State trade or commerce including importsCompensation for loss of revenue to States for five yearsGST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas & aviation turbine fuel to be levied from a later date on recommendations of Council
Legislative Framework
There is single legislation – CGST Act, 2017 – for levying CGST. Similarly, Union Territories without State legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh] will be governed by UTGST Act, 2017 for levying UTGST. States and Union territories with their own legislatures [Delhi and Puducherry] have to enact their own GST legislation for levying SGST. Though there would be multiple SGST legislations, the basic features of law, such as chargeability, definition of taxable event and taxable person, classification and valuation of goods and services, procedure for collection and levy of tax and the like would be uniform in all the SGST legislations, as far as feasible. This would be necessary to preserve the essence of dual GST.
Regulatory Framework of GST
A new set up by Government of India named as ‘GST Council’. GST Council constituted w.e.f. 12.09.2016 The GST Council consists of
(a) the Union Finance Minister (as Chairman),(b) the Union Minister of State in charge of Revenue or Finance, and(c) the Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.
All decisions of the GST Council will be made by three fourth majority of the votes cast; the centre shall have one-third of the votes cast, and the states together shall have two-third of the votes cast.
Threshold limit for exemption to be Rs. 20 lakh (Rs. 10 lakh for special category States)Compounding threshold limit to be Rs. 50 lakh – not available to inter-State suppliers, service providers (except restaurant service) & specified category of manufacturersGovernment may convert existing area based exemption schemes into reimbursement based scheme
Action Plan of GST Council
List number of Taxes, cesses, and surcharges to be subsumed under GSTPreparation of list of goods and services subject to, or exempt from GSTDetermination of threshold limit of turnover for application of GSTFixation of ratesPreparation of model GST Laws, principles of levy, apportionment of tax benefitsFirming up Place of supply RulesRecommend on Compensation to states losing on revenue post implementation of GST, subject to maximum time limit of 5 years.Passage of SGST laws by all State legislaturesRecommendation of Model GST Rules by GST CouncilNotification of GST RulesRecommendation of GST Tax rates by GST CouncilEstablishment and upgradation of IT frameworkMeeting implementation challengesEffective coordination between Centre & State tax administrationsReorganization of field formationsTraining of OfficialsOutreach programs for all stakeholders including Trade & Industry
Scope of GST
GST shall cover all goods and services, except alcoholic liquor for human consumption, for the levy of goods and services tax. In case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy of Goods and Services Tax till a date notified on the recommendation of the Goods and Services Tax Council. Promulgation of GST Council: Proposed Article 279A of the Bill provides for constitution of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, exemption list and threshold limits. The Council shall function under the Chairmanship of the Union Finance Minister and will have the State Union Minister as its members.
All goods and services are covered under GST Regime except Alcoholic liquor for Human Consumption,Tobacco Products subject to levy of GST and Centre may also levy excise dutyGST Council yet to decide the incidence and levy of GST on following; a)Crude Petroleum b)High Speed Diesel (HSD) c)Motor Spirit (Petrol) d)Natural Gas e)Aviation Turbine Fuel
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Advantages of GST
CBEC has released few advantages which would accrue to Citizens, Trade/Industry and the Central/State Government with the introduction of GST. The advantages to the Citizens are listed as:
a. Simpler tax system.b. Reduction in prices of goods and services due to elimination of cascading.c. Uniform prices throughout the country.d. Transparency in taxation system.e. Increase in employment opportunities.
The advantages accruing to the Trade/ industry are listed as:
a. Reduction in multiplicity of taxes.b. Mitigation of cascading/double taxation.c. More efficient neutralization of taxes especially for exports.d. Development of common national market.e. Simpler tax regime-fewer rates and exemptions.
The advantages accruing to the Central/State Government are listed as:
a. A unified common national market to boost Foreign Investment and “Make inIndia” campaign.b. Boost to export/manufacturing activity, generation of more employment,leading to reduced poverty and increased GDP growth.c. Improving the overall investment climate in the country which will benefit thedevelopment of states.d. Uniform SGST and IGST rates to reduce the incentive for tax evasion.e. Reduction in compliance costs as no requirement of multiple record keeping.
GST Definition, Objective, FrameworkKey Features of GSTGST Annual ReturnTax layers under proposed GST ModelFiling of GST ReturnsGST on E- Commerce TransactionsReturns Under GSTGST Current Tax StructureExpected Scheme of GST
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