Journey of GST-
In the Year 2000 – An empowered committee was set up by the Atal Bihari Vajpayee Administration to streamline the GST model to be adopted and to develop the required back-end infrastructure that would be needed for its implementation.
On 10th Nov. 2009- Introduction of first discussion paper on GST by Empowered committee.
On 15th Dec. 2009 – Task force appointed by 13th Finance commission released its report on GST.
On 25th Jan. 2010 – Comment of Department of Revenue on first Discussion paper on GST.
On 22th March 2011 – Constitution ( 115th amendment) Bill, 2011 introduced.
On 14th June 2016 – First model GST law introduced.
On 3rd August 2016- The Bill got passed by Rajya Sabha.
On 8th August 2016 – The bill got passed by Lok Sabha.
On 8th September 2016 – Received assent from President of India. Now, it becomes 101th amendment act, 2016.
On 12th Sept. 2016- GST council (section 12 ) got notified.
On 16th Sept. 2016- All other sections except section 12 got notified.
On 26th Nov. 2016 – Revised model GST law introduced
What is GST ?
GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. [ Destination based Tax]
Credit of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage.
Applicability :- Whole of India including Jammu & Kashmir
Dual Model of GST :-
Sale within State :- SGST (state goods and service tax) and CGST (central goods and service tax) would be levied. SGST – Goes to state govt. CGST- Goes to Central govt.
Sale outside state :- IGST (integrated goods and service tax) would be levied with the credit of SGST and CGST, if any. IGST – Goes to central govt.
Gyan :- What is the liability for GST registration in India?
Aggregate turnover requirement for GST registration is as below: Region Aggregate Turnover :- Liability to Register- North East India states- Rs. 9 Lakhs and Rest of India- Rs. 19 Lakhs ; Liability for payment of tax- North east india states- Rs. 10 Lakhs and Rest of India – Rs. 20 Lakhs
Taxes To be subsumed in GST :-
Which sectors will gain and lose under GST and which are out of the purview of GST ?
Now, Take a look at a comparison of Existing system with GST system :-
In the above example,
At 1st stage, In case of Intra-state supply of good and/or services Rs.50 collected towards CGST goes to central govt. and Rs. 50 collected towards SGST goes to state govt.
At 2nd stage, In case of Inter-state supply of goods and/or services Rs. 210 collected towards IGST goes to Central govt. after deducting therefrom input tax credit of CGST and SGST paid earlier i.e. Rs. 110 goes into pocket of Central govt. Loss suffered by State Govt. shall be compensated by Central govt.
What happen if there is amount of input tax credit in IGST and there is an intra-state supply of goods and/or services?
50% of IGST paid earlier shall be first adjusted against output tax of CGST and then remaining 50% of IGST shall be adjusted towards SGST.
Gyan – Input tax credit of SGST cannot be adjusted against output tax liablity of CGST and vice-e-versa.
What are the key Benefits of GST ?
More Tax revenues due to transparency of govt, reduce tax burden on industry.
Lower price for consumer for many manufactured products.
Expected to increase exports by 10%, adds to GDP growth. Expected increase in GDP by 2%.
Reduction in procedural complexity in paying taxes, less paperwork. As payment as well as return of GST will be filed online portal of GSTN.
GYAN – GSTN( Goods and service tax network) developed by private firms and accessible by Central Govt. tracks every transaction and maintain all the details of the taxpayers.
There will be uniformity in taxes. Earlier goods were taxed at different rates in different states under VAT system.
There will be no cascading effect. Earlier VAT charged on excise duty and no credit of excise duty to dealer.
Earlier the law relating to service tax, excise duty, VAT and CST are very complicated. Now, All the taxes will be subsumed in GST. There will be simplification in indirect tax laws.
Gyan :-There are many litigation and adjudications relating to service tax, excise and VAT already disputed in the court. Post GST these would be governed by the their earlier respective laws and same as credit can be availed under their earlier respective laws. In short, GST will not be applicable on such cases.
Who are supposed to take compulsory registration under GST ?
TAX Rates under GST system :-
As per the decisions made by all will of GST Council on November 3, 2016
Tax rates would be at 4 slabs of 5%, 12%, 18% and 28%.
Luxury and demerit goods will be taxed at 28% plus cess. Daily needs will be taxed at 5%
Gyan – NO GST has been prescribed on following :-
Employer- employee relationship
Service by Foreign diplomatic mission
Service by MLA/ MP
Court fees/ tribunal fees paid
Furnel and crematorium services.
Healthcare service provided by govt.
Who can opt for composition scheme under GST?
Whose turnover for preceding financial year doesn’t exceed Rs. 50 lakhs.
COMPOSITION SCHEME TAX RATES :-
Manufacturer:- Not less than 2.5% i.e. Total 5% (CGST+ SGST)
Trader – Not less than 1% i.e. Total 2% (CGST+ SGST)
GYAN – Credit cannot be availed ,if the benefit of credit cannot be passed on to the buyer which means if the cost of goods is not reduce, the credit of tax cannot be availed.
:: IMPORTANT HIGHLIGHTS OF 101th AMENDMENT ACT, 2016 ::
Section 2 ( Insertion of Article 246A) :- Which says :-
(1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
Section 9 ( Insertion of Article 269A):-
(1) Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
(2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India.
(3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State under article 246A, such amount shall not form part of the Consolidated Fund of India.
(4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State.
(5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.’’
Section 12 ( Insertion of article 279A) :-
(1)The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council.
(2) The Goods and Services Tax Council shall consist of the following members, namely:—
(a) the Union Finance Minister …………………… Chairperson;
(b) the Union Minister of State in charge of Revenue or Finance…………….. Member;
(c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government………………..Members.
(4) The Goods and Services Tax Council shall make recommendations to the Union and the States on following matters some of them are :-
(a) Taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
(b) The goods and services that may be subjected to, or exempted from the goods and services tax.
Section 14 (Amendment In article 366 of the Constitution)—
(i) after clause (12), the following clause shall be inserted, namely:—
(12A) “Goods and Services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;’;
(ii) after clause (26), the following clauses shall be inserted, namely:—
(26A) “Services” means anything other than goods;
(26B) “State” with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature;
Section 17 (Amendment of Seventh Schedule):-
(a) In List I (Union List) —
(i) for entry 84, the following entry shall be substituted, namely:—
“84. Duties of excise on the following goods manufactured or produced in India, namely:—
(a) Petroleum crude;
(b) High speed diesel;
(c) Motor spirit (commonly known as petrol);
(d) Natural gas;
(e) Aviation turbine fuel; and
(f) Tobacco and tobacco products.”;
(ii) Entries 92 (Taxes on Sale or purchase of newspapers and on advertisement published therein) and 92C (Taxes on service) shall be omitted;
(b) in List II (State List) —
(i) Entry 52 ( Taxes on entry of goods into local area for consumption) shall be omitted;
(ii) For entry 54 (Taxes on sale or purchase of goods other than newspapers), the following entry shall be substituted, namely:—
“54. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods.”;
(iii) entry 55 (Taxes on advertisements) shall be omitted;
(iv) for entry 62 (Taxes on luxuries), the following entry shall be substituted, namely:—
“62. Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.
Section 18 (compensation to states for loss of Revenue) :- Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of five years.
Gyan :- New concept such as electronic cash ledger(same as paytm wallet), electronic liability ledger and electronic credit ledger has been introduced in GST, which make the procedure of claiming credit more easily and transparently.
The exercise comes as the GST Council, comprising state finance ministers and the Centre, is ready with the final plan and is hoping to roll out GST from July, three months behind the original deadline.
Officers have been asked to organize at least one town hall meeting with tax practitioners, lawyers and businessmen in every town which has a population of one Lakh or more.“In Mumbai and Delhi, we will have we will have hundreds of meetings with trade bodies and other stakeholders,“ said a source.