Arjuna (Fictional Character): Krishna, by subsuming indirect taxes such as Excise, VAT, Service Tax, etc. the GST is coming. What will happen if there will be an IPL match played between Excise and GST?
Krishna (Fictional Character): Arjuna, GST law is framed by incorporation peculiar provisions of all indirect taxes. Therefore some provisions of Excise duty and GST are similar whereas some provisions are different. Currently Excise duty is levied on only manufacture. While GST will be levied from manufacture till the sale of goods to the customer. GST will levied on goods and services also. For levying tax in excise goods are classified and given HSN code, the same HSN code has been taken in GST for classification. Therefore there is tough fight between Excise and GST. Today excise is levied on goods and VAT is levied on value of goods plus Excise, which leads to double taxation. But in GST, CGST, SGST / IGST will be levied only on the basic price so there will be no double taxation.
Arjuna: Krishna, when is Excise duty and GST levied?
Krishna: Arjuna, Excise duty is levied on manufacture of goods and levied at the time of removal of goods. While GST will be levied on supply of goods and services. In GST, Excise will take the place of Central GST as excise is levied by Central Government and revenue from CGST will also be of Central government.
Arjuna: Krishna, What are the differences between rate in Excise duty and GST ?
Krishna: Arjuna, As per central excise tariff rules the rates of excise duty are specified. Currently rate of excise duty is 12.36% and it varies according to the type of goods. While in GST the rate will be 0%, 5%, 12%, 18%, 28%. However, which goods fall in which type of category has not been specified yet.
Arjuna: Krishna, what will be the difference in filling return in Excise and GST?
Krishna: Arjuna, As per Excise Law, each tax payer has to file monthly returns and annual return has to be filled before 30th April. In GST 3 returns has to be filled each month and annual return has to be filled before 30th September.
Arjuna: Krishna, what are the provisions for payments in excise duty and GST?
Krishna: Arjuna, as per excise rules, payment has to be made before 6th of the following month and for the month March payment has to be made on or before 31st March. In GST, payment has to be made before 20th of the following month that means the taxpayer will get 14 days extra for payment of tax.
Arjuna: Krishna, what will be the difference in availing credit in Excise and GST?
Krishna: Arjuna, In Excise, credit can be taken on the tax charged on input goods and services. In GST also credit can be taken of both goods and services. But the CGST credit cannot be adjusted against SGST credit and vice versa. IGST credit can be availed against IGST or CGST or SGST. In GST, credit will be given on the basis of invoice number matching, however it was not matched in excise. Further credit of all expenses was not allowed in excise but it will be allowed in GST.
Arjuna: Krishna, what is the difference between reverse charge mechanism in excise duty and GST ?
Krishna: Arjuna, There is no reverse charge mechanism in excise duty. In service tax reverse charge is only applicable to certain services and to certain persons. In GST Reverse charge will be applicable on purchases from unregistered dealers.
Arjuna: Krishna, what is the difference in the composition schemes of GST and Excise duty?
Krishna: Arjuna, There is no composition scheme in Excise, but in GST composition is applicable to a manufacturers if their turnover is below Rs. 50 Lakhs and they will have to pay tax at the rate of 1%
Arjuna: Krishna, what is compliance rating?
Krishna: Arjuna, There is no concept of compliance rating in Excise duty but in GST compliance rating will be taken of every taxpayer. Compliance rating will be based on timely filling of return and payment of taxes and will be shown on GSTN network. Doing business might be difficult if the compliance rating goes down.
Arjuna: Krishna, what lesson can be learnt from this match of GST and excise?
Krishna: Arjuna, in excise, the manufacturer have to maintain many registers, records which were required by the department. In GST if documents and returns are properly filled then there will be no problem. The government has introduced E-Way bill which will be used to track the goods sold. One can hope that there will be simpler provisions in GST than in excise duty.