GST is a single window to taxes on goods and services and will be with a regime to be charged on destination principal and credit of input will be availed once value addition is achieved.
GST, expected to be applicable w.e.f. 01st April, 2017, will change the existing model of business and reform it by giving an Organization single act to follow along with other state wise modules.
Important to understand difference between current tax structure and proposed GST operations
GST is defined as “any tax on supply of goods and services other than on alcohol for human consumption”.
Basically GST is a value added tax, which will be levied at all points in supply chain, where the deliverable changes hands, with a privilege to avail credit for any tax paid on input received for use in creating such supply.
GST Subsumes – VAT or sales tax, Central Sales tax, Entertainment tax (taxes on entertainment at panchayat, municipality or district level), Service Tax, Central Excise Duty, Purchase Tax, Octroi etc.
GST will work in 2 parts – Intra State and Inter State (IGST) and Intra State is further divided into two parts i.e. Central GST (CGST) and State GST (SGST) and the same will impact basis destination principal.
Input will be taken in following manner:
- CGST-> CGST & IGST
- SGST-> SGST & IGST
- IGST-> IGST, CGST & SGST
North Eastern States
- Registration – Aggregate Turnover in a year > USD 6,060/-*
- Tax Liability – Aggregate Turnover > USD 7,575/-* Other States
- Registration – Aggregate Turnover in a year > USD 13,636/-*
- Tax Liability – Aggregate Turnover > USD 15,152/-* *(1 USD = INR 66 approx)
- Simplified tax structure and single act to follow;
- Elimination of multiple taxes;
- Improved regime in terms of Central and State applicability;
- Increase in efficiency in terms of single line to follow;
- Exports, still exempt;
- Simplified compliance procedures;
- No scope of cess, multiple levy of taxes, re-sale tax, additional tax, special tax etc. and so on.
- Change from ORIGIN BASED TAXATION to DESTINATION BASED CONSUMPTION TAX
- Apply at all stages – Primary and Secondary, including retail
- Applied to Goods as well as Services
- Common list of exempted goods and services under CGST and SGST
- CGST will replace CENVAT and Service Tax whereas SGST will subsume VAT
- IGST will be applicable on Imports
- Model GST Law including Rules and Procedures to be recommended by GST Council
- Alcohol for Human Consumption – State Excise
- Electricity – Electricity Duty
- Real Estate – Stamp Duty along with Property Tax
- Petroleum Products (Some of them)
- Tobacco Products – Undr GST as well as Central Excise
- Composition of GST Council & Its Meetings
- Chairman – Union Finance Minister
- Minister of State (Finance)
- Finance Minister as member from each state
- The meetings of the GST Council can proceed with a quorum of 50 percent and decisions will be taken with at least three-fourth weighted majority voting for a resolution. All decisions of the GST Council will be made by three-fourth majority of the votes cast; the center shall have one-third of the votes cast, and the states together shall have two-third of the votes cast.
- What taxes, cesses, and surcharges to be subsumed under the GST?
- What goods and services are subject to, or exempted from GST?
- The threshold limit of turnover for application of GST
- Rates of GST
- Model GST laws, principles of levy, apportionment of IGST and principles related to place of supply
- Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand
- Other related matters
Pros of GST – Once Gained
Features of GST
Exceptions on Applicability of GST
GST Council will be a constitutional body established by president of India. It’s composition will be as follows:
Functions of GST Council
The functions of the GST council would be to make recommendation on: