GST – One Nation, One Tax, One Market India is a federal country. Both the Centre and the States has the powers to levy and collect taxes. Both the levels of Government have distinct responsibilities to perform for which they need to raise resources. Existing Indirect Tax Structure in India Central Taxes Central Excise duty […]
GST – One Nation, One Tax, One Market
India is a federal country. Both the Centre and the States has the powers to levy and collect taxes. Both the levels of Government have distinct responsibilities to perform for which they need to raise resources.
Existing Indirect Tax Structure in India
Central Taxes
Central Excise duty
Additional duties of excise
Excise duty levied under Medicinal & Toilet Preparation Act
Additional duties of customs (CVD & SAD)
Service Tax
Surcharges & Cesses
State Taxes
State VAT / Sales Tax
Central Sales Tax
Purchase Tax
Entertainment Tax (other than those levied by local bodies)
Luxury Tax
Entry Tax (All forms)
Taxes on lottery, betting & gambling
Surcharges & Cesses
Constitution amended to provide concurrent powers to both Centre & States to levy GST (Centre to tax sale of goods and States to tax provision of services)
Understanding CGST, SGST, UTGST & IGST
Central government will charge Central GST or CGST
State government will charge State GST or SGST
Central government on the inter-state supply of various goods and services will charge Integrated GST or IGST
Features of Constitution Amendment Act
Alcohol for human consumption – Power to tax remains with the State
Five petroleum products – crude oil , diesel, petrol, natural gas and ATF – GST Council to decide the date from which GST will be applicable
Tobacco – Part of GST but power to levy additional excise duty with Central Government
Entertainment tax levied by local bodies – Power to tax remains with the State
GST Council – Constitution
Chairperson – Union FM
Vice Chairperson will be amongst the Ministers of State Government
Members – MOS (Finance) and all Ministers of Finance / Taxation of each State
Quorum is 50% of total members
States – 2/3 weightage and Centre – 1/3 weightage
Decision by 75% majority
Council to make recommendations on everything related to GST including laws, rules and rates etc.
Main Features of the GST Act
All transactions and processes only through electronic mode – Non-intrusive administration
PAN Based Registration
Registration only if turnover more than Rs. 20 lac
Option of Voluntary Registration
Deemed Registration in three working days
Input Tax Credit available on taxes paid on all procurements (except few specified items)
Set of auto-populated Monthly returns and Annual Return
Composition taxpayers to file Quarterly returns
Automatic generation of returns
GST Practitioners for assisting filing of returns
GSTN and GST Suvidha Providers (GSPs) to provide technology based assistance
Methods of tax payment – internet banking, NEFT / RTGS, Debit/ credit card and over the counter
Concept of TDS for certain specified categories
Concept of TCS for E-Commerce Companies
within 60 days Refund shallbe credited into bank account
Provisional release of 90% refund to exporters within 7 days
Interest payable if refund not sanctioned in time
Comprehensive transitional provisions for smooth transition of existing tax payers to GST regime
Special procedures for job work
System of GST Compliance Rating
Anti-Profiteering provision
Benefits of GST
Decrease in Inflation
Ease of Doing Business
Decrease in “Black” Transactions
More informed consumer
Poorer States to Gain
Make in India
Reduction in Cascading of Taxes
Overall Reduction in Prices
Common National Market
Benefits to Small Taxpayers
Self-Regulating Tax System
Non-Intrusive Electronic Tax System
Simplified Tax Regime
Reduction in Multiplicity of Taxes
Consumption Based Tax
Abolition of CST
Zero Rated exports
Protection of Domestic Industry – IGST
Important Terms
TAXABLE PERSON
Taxable person is a person who carries on any business at any place in India and who is registered or required to be registered under GST Act. The person who engages in economic activity including trade and commerce is treated as taxable person.
CASUAL TAXABLE PERSON
A person who occasionally supplies goods and/or services in a territory where GST is applicable, but s/he does not have a fixed place of business.
NON-RESIDENT TAXABLE PERSON
A person does not have a place of business in India, but occasionally supplies goods/services in a territory where GST applies.
SUPPLY
The term ‘supply’ is wide in its import and includes all forms of supply of goods and / or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. It also includes import of service. The model GST law also provides for including certain transactions made without consideration within the scope of supply.
Composite Supply
A composite supply is an organic combination of two or more individual supplies of goods and services or any other natural arrangement of goods or services made by a GST payer for a single price.
A composite supply is of two parts:
Principal Supply: The major and the foremost element in the Composite Supply of goods or services.
Dependent Supply: This is the depending element and rests on the Principal Supply.
A composite supply could be a breakfast coupled with the stay package in a hotel, which would be seen as a natural blend. In this case, stay package is the Principal Supply and the breakfast is a Composite Supply.
REVERSE CHARGE
The supplier is liable to pay the tax on supply in general. In certain cases, the liability is passed on to the receiver to pay the tax, which means the chargeability gets reversed. In GST regime, reverse charge is applicable to goods as well as services.
GSTN
Goods and Services Tax Network is a non-profit, public-private partnership company. Its main purpose is to provide IT infrastructure and services to Central and State Governments, tax payers and other stakeholders to facilitate the implementation of GST.
SUPPLIER
A supplier is a person supplying goods and/or services and shall include an agent acting as such on behalf of such supplier in relation to the goods and/or services supplied.
TAXABLE SERVICE
It means any service provided or to be provided to a client by any person in relation to business auxiliary service.
COMPOSITION SCHEME
Composition scheme under GST contains an option for a registered taxable person having turnover less than the limit to pay tax at a lower rate respect to certain specified conditions. When opting for the composite scheme, a taxpayer will be required to file summarized returns on a quarterly basis, instead of three monthly returns. A trader registered under the composition scheme shall not collect tax from the consumer.
COMPOUNDED DEALER
A registered tax payer, who is registered under the composition scheme, is a compounded dealer. A compounded dealer is neither allowed to avail Input Tax Credit of GST paid to the supplier nor to collect tax from the final consumer.
A taxable supply means a supply of goods and / or services which is chargeable to good and services tax under the GST Act.
GOODS
In GST ‘goods’ may refer to every kind of movable property other than money and securities but included actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.
Place of supply is the registered place of business of the recipient. Place of supply is important in GST as it is a destination based tax on consumption. The place of supply determines intra-state or interstate. It will define the type of tax to be levied such as CGST, SGST and IGST.
SPECIAL ECONOMIC ZONE (SEZ)
Special Economic Zone is a dedicated zone wherein businesses enjoy simpler tax and legal compliance. SEZs are located within a country’s national borders; however, they are treated as a foreign territory from taxability perspective. As per the legal definition, a SEZ is a geographically bound zone where the economic laws relating to export and import are more liberal as compared to other parts of the country. Supply of goods or services to a Special Economic Zone is considered as a zero rated supply.
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