15 July 2015
GST(Goods and Service Tax) is an indirect tax that brings together most of the taxes that are imposed on all goods and services(Except few)under a single banner.
Broadly, the GST will operate on the following structure:
++ The term 'GST' is defined in Article 366 (12A) to mean "any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption".
++ All Central taxes and duties like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), Surcharges, Cesses etc. will be subsumed in GST.
++ At the State level, all taxes such as VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Luxury Tax, Lottery Tax, Octroi and Entry Tax not in lieu of Octroi, Purchase Tax etc. would be subsumed in GST.
++ Article 366 (26A)provides that "services means anything other than goods". Therefore all services will be covered under the scope of GST unless "negative list of services" are separately notified.
++ The concept of "declared goods of special importance" will be abolished.
++ All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST.
++ Petroleum and petroleum products (Crude Petroleum, Petrol, Diesel, ATF) have also been brought under GST. However, it has also been specifically provided that petroleum and petroleum products shall not be subject to the levy of GST till a date to be notified. Till such time Petroleum products will continue to attract duty of excise
++ Both Centre and States will simultaneously levy GST on each transaction of Goods and Services. Centre would collect Central Goods and Services Tax (CGST), and States would collect the State Goods and Services Tax (SGST) on all transactions within a State. Under GST regime, there will be separate CGST Act and Rules and SGST Act and Rules.
++ The Centre would levy Integrated (Inter-state) Goods and Services Tax (IGST) on all transactions related to inter-State supply of goods and services.The IGST is expected to be aggregate of CGST Plus SGST. It is not clear as to what treatment is going to be given to Consignment Transfers/Branch Transfers as separate rules would be formulated to govern the same. Forms such as C-Form, F-Form will be abolished.
++ Import of goods will attract BCD and IGST and import of Services will attract IGST.
++ The SGST rates are expected to be uniform in all the States.
++ An additional tax upto 1% will be levied by Centre on inter-State supply of goods. This additional tax will be applicable for a period of two years and could be extended further by GST Council. There will not be imposition of additional tax on services.
++ Works contract involves both supply of goods and services and therefore will attract GST.
++ At present, Cenvat Credit on Inputs, Capital Goods and Input Services is admissible with certain exclusions. After introduction of GST it is expected that there will be not be any exclusions and credit will be admissible on goods and services without any exception. Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST may not be allowed except in the case of inter-state supply of goods and services under IGST.
++ GST will be levied on "supply of goods and services" and therefore the concepts such as "Manufacture", "provision of service", "Sale of goods" etc. will lose their relevancy.
++ There will also be threshold exemption limit in GST scenario.
++ It is not clear whether Royalties and Electricity duty will be subsumed in GST.
++ Exports and Supplies to SEZ units will be zero rated. Location based tax exemptions to Industrial units are expected to be protected upto completion of eligibility period and thereafter would be covered under GST.
++ Both Centre and States will have concurrent jurisdiction for the entire value chain and all tax payers as the administration of CGST will be with Central Government and SGST will be with respective State Governments. The tax payer may be required to submit periodical returns in a common format to both Centre GST Authority (Central Board of Excise & Customs) and the concerned State GST Authorities.
++ There may be two rate structure in GST scenario - a lower rate for goods of basic importance and standard rates for other items. There will be special rate for precious metals. Government may also come out with a list of items exempted from payment of GST.
In nutshell with the introduction of GST the problems such as burden of tax on tax, multiplicity of taxes and higher rate of taxes will be addressed to a large extent.
CAclubindia
