GST one of the most Chanted Word in the Finance Industry , abbreviated as Goods & Service Tax.
Two different opinion : A major Tax relief or a Tax burden?
Though, i may not have a detailed knowledge about it but nobody would deny the fact that they are familiar to the term (GST). By this article I hope some of the concepts would be clear.
- Salient Features
- Proposed GST Rates
- Indirect Taxes included in GST
- Registration under GST
- Filling of Return under GST
GST is a comprehensive indirect tax through which various tax will be collected under a single roof mitigating the cascading or double taxation, facilitating a common national market. GST is a consolidated tax based on a uniform rate of tax fixed for both goods and services and is payable at final point of consumption. Goods and Service Tax is recently a bill passed from Lok Sabha and not from Rajya Sabha.
Salient Features :
- Dual GST model (Central GST & State GST ) i.e. State and parliament legislature will have concurrent powers to make laws in GST,
- Single step tax collection,
- Additional tax upto 1 % will be imposed on interstate supply of goods,
- Compensation to the state will be provided by Parliament for any kind of revenue loss upto 5 years. 100% of loss in 3 years , 75% in 4th year and 50% in the 5th year will be compensated,
- Cross utilization of ITC between the central GST and the state GST would not be allowed except in the case of interstate supply
Proposed GST Rate :
GST expected rate is to be around 14 – 16 %. After the combined GST rate is fixed, the states and center will decide on the SGST & CGST rate.
Indirect taxes included under GST
The following indirect taxes from state and central level is going to integrated with GST :
- VAT/Sales tax,
- Entertainment Tax (unless it is levied by local bodies),
- Luxury tax,
- Taxes on lottery, betting and gambling,
- State cesses and surcharges in so far as they relate to supply of goods and services,
- Entry tax not on in lieu of octroi,
- Purchase tax (This is not sure still under discussion)
- Central Excise Duty.
- Additional Excise Duty.
- The Excise Duty levied under the medical and Toiletries Preparation Act
- Service Tax.
- Additional Customs Duty, commonly known as countervailing Duty (CVD)
- Special Additional duty of customs- (SAD)
- Cesses The above taxes dissolve under GST; instead only CGST & SGST exists.
Registration under GST
Who have to get register?
A person should get registered
- If he carries out a taxable activity and his turnover was $ 60000 or more in the last 12 months or will be $ 60000 or more in the next 12 months , or
- His prices include GST .
As soon as these apply, one should get registered within 21 days.
Voluntary registration can also be done.
Filing of Return under GST
Once we get registered, we need to file regular returns. The return file can be filed in 3 different ways,
- Through my IR secure online services
- Through accounting software
- Through paper based return
- The burden of tax will be equally spread between manufacturing and services.
- Removing the cascading of taxes.
- Simplification of tax collection and building corruption free tax administration leading to reduce tax compliance.
- As it is levied only at the final destination of consumption, economic distortions would be removed.
- Promotes exports ,create employment opportunities and boost growth.
- The rate of GST,
- Parliament has to provide compensation to state for losses arising out of implementing the GST upto 5yrs,
- The big industrial houses are going to get benefited in a massive way and Small Scale Industries would die,
- Services will be charged on accrual basis which used to be on receipt basis,
- Uniform rate for all goods leads reduction in the tax revenue
Eg: Some states impose higher rate of tax on petroleum product and alcohol.
In my view GST (a most awaited bill), is to be considered as a major tax reform policy in India not a tax burden. It will give more relief to industry, trade and agriculture through a more comprehensive way.
GST is leviable on all supply of goods and provision of services as well combination thereof. All sectors of economy whether the industry, business including Govt. departments and service sector shall have to bear impact of GST.
One of the biggest taxation reforms in India — the Goods and Service Tax (GST) — is all set to integrate State economies and boost overall growth. GST will create a single, unified Indian market to make the economy stronger. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions.
- http://goodsandservicetax.com/gst/showthread. php?69-CHAPTER-X-Goods-and-Services-Tax-Theway-forward
- http://en.wikipedia.org/wiki/Goods_and_Service s_Tax_(India) accessed on 15 Jan 2014. Girish Garg, IJSRM volume 2 issue 2 feb 2014 [www.ijsrm.in] Page 549
- http://www.taxmanagementindia.com/visitor/de tail_rss_feed.asp?ID=1226
Happy Reading !!