* GST is a comprehensive tax on manufacture, sale and consumption of goods and services at a national level and aimed to remove the cascading effect of tax, standardise the procedural aspect and create a single, unified Indian market to strengthen the economy. * Its effective implementation would change the tax administration and the manner of conducting business in India. In short, the GST is likely to be a game changer for the industry.
ITS APPLICABILITY
* GST is a tax on supply of goods and services.
* It is proposed to implement dual GST in India.
* GST would be applicable to all the industry except alcohol, petroleum products and power. * However, gradually, these sectors may also be included within the ambit of GST.
WHEN IS GST LIKELY TO BE IMPLEMENTED?
* Considering the progress made till date, implementation before 1st April 2013 seems unlikely. * The Industry expects the Finance Minister to come up with a certain date for implementation of GST in the Union Budget 2012-13.
WHAT COULD BE THE RATE OF GST?
* The objective of GST was to have one single rate across the country for all goods and services. * However, after constant deliberation between the States and the Centre, it was decided to have two rates for goods i.e. concessional and standard rate along with a list of exempted goods. * The standard and concessional rate of GST on goods for the first three years from the date of implementation of GST would be Services are however likely to be taxed @16% (8+8) under the GST regime.
DIFFERENCE BETWEEN GST AND THE CURRENT INDIRECT TAX REGIME?
* With the introduction of GST, the taxable event would shift to supply of goods and services. Thus, even branch transfers would be subject to GST. * Under GST, the cascading effect, that is, tax on tax, would be removed. The base for calculating SGST and CGST would remain the same unlike currently where VAT is payable on sale price plus the excise duty.
WHAT ARE THE TAXES THAT ARE LIKELY TO BE SUBSUMED IN GST?
Taxes proposed to be subsumed under SGST and CGST are
* Purchase tax: The food grain-producing states felt that they are getting substantial revenue from purchase tax and, therefore, it should not be subsumed under GST, while others were of the contrary view. THE FOLLOWING CENTRAL TAXES SHOULD BE BEGIN WITH, SUBSUMED UNDER THE GOODS AND SERVICES TAX .
* (i) Central Excise Duty
* (ii) Additional Excise Duties
* (iii) The Excise Duty levied under the Medicinal and
* Toiletries Preparation Act
* (iv) Service Tax
* (v) Additional Customs Duty, commonly known as
* Countervailing Duty (CVD)
* (vi) Special Additional Duty of Customs – 4% (SAD)
* (vii) Surcharges, and Cesses.
FOLLOWING STATE TAXES AND LEVIES WOULD BE, TO BEGIN WITH
* subsumed under GST:
* (i) VAT / Sales tax
* (ii) Entertainment tax (unless it is levied by the local * bodies).
* (iii) Luxury tax
* (iv) Taxes on lottery, betting and gambling.
* (v) State Cesses and Surcharges in so far as they
* relate to supply of goods and services.
* (vi) Entry tax not in lieu of Octroi.
HOW WILL GST BENEFIT INDUSTRY, TRADE AND AGRICULTURE?
* As GST will give more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set-off, subsuming of several Central and State taxes in the GST and phasing out of CST. * The transparent and complete chain of set-offs will help widen tax base, achieve better tax compliance, lower tax burden on an average dealer in industry, trade and agriculture.
KEY FEATURES OF INDIAN GST STRUCTURE
* Comprehensive coverage of supply of goods and services except few exempted goods and services
* Similar tax treatment for goods and services
* Identical tax treatment for inter-state and intra-state supplies
* Common classification by Center as well as all states
* Export & Supply to SEZ (Processing area) zero rated
* Same taxable value base for computing Central and State GST hence no cascading impact of tax.
* Similar compliance for Central & State GST.
* Uniform returns and collection procedure for central and State GST
* Cross Credit not allowed between Central GST and State GST
* Check post at state boundaries may continue but will become irrelevant in due course with IGST.
* The GST will be levied on imports with necessary Constitutional Amendments. Both CGST and SGST will be levied on import of goods and services into the country.
CAN IT BE THE GAME CHANGER FOR THE GOVT. ?
Yes ,it can be the Game Changer because of the Following Facts and Figures……. * It is estimated that the GST will add about $500 billion to India’s GDP over the next 10 years. * Estimated that it will increase India’s GDP by about 0.9% to 1.7% a year once implemented. * It will bring a large portion of India’s unreported economy into the tax net and will lower the incidence of tax on the legitimate economy. * By eliminating area based exemptions and distorting state taxes, it will enable larger single location investments and will improve the efficiency of capital.