GST in full detail
Here you know all about GST like introduction of GST, GST in India, advantages, disadvantages, GSNT ect.
Introduction of Goods and Services Tax (GST)
The new regime with the credo of One Nation – One Tax – One Market was rolled out at midnight on June so “, 2017. It is a comprehensive indirect tax. The term GST stands for ‘Goods and Services Tax, and is a broad – based consumption tax. It is levied on value addition at each stage of supply. Made for consideration in the course or furtherance of business at the national level. It is chargeable on an activity of supply of goods and / or services, irrespective of such activity being manufacture or sale of goods (intra – state or inter – state), provisioning of services or consumption of goods and services. It is basically a value – added tax on goods and / or services. GST is levied at every stage of the production – distribution chain with applicable set – offs in respect of tax remitted at previous stages. It is the subsumption of a large number of taxes and other levies which were prevalent in India. Therefore, it has been termed as a single levy on final consumption for all transactions on related to goods and services. It allow free flow of a larger pool of tax credits at both Central and State levels. The objective of amalgamating a large number of Central and State taxes into a single tax, was to mitigate double taxation and cascading in a major way and pave the way for a common national market.
The introduction of Goods and Services Tax (GST) would be a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, it would mitigate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated to be around 25% – 30%. . Introduction of GST would also make Indian products competitive in the domestic and international markets. Studies show that this would have a boosting effect on economic growth. Last but not the least, this tax, because of its transparent and self – policing character, would be easier to administer.
HISTORY OF GST – INTERNATIONAL
Presently, there are around 160 countries out of 195 in the world that have implemented GST or VAT in some form or the other. In some countries, VAT is the substitute for GST, but conceptually both are the destination based tax levied on the consumption of goods and services. France was the first country that implanted a comprehensive GST system in 1954. Brazil, by the fiscal reform of 1965, introduced a VAT, and applied at all stages of production. Followed by Canada in the late 1980s, where the federal government of Canada replaced its, MST (Manufacturers Sale Tax) with a new value – added sales tax called the GST. | In Australia, it was introduced by the Howard Government on 1 July 2000, replacing the previous Federal wholesale trade tax system and designed to phase out a number of various State and Territory government taxes, duties and levies such as banking taxes and stamp duty. Joining the league, China implemented GST in 1994, while Russia did it in 1991. Many countries in the world have a single / unified GST system i. e. a single tax applicable throughout the country. . However, in federal countries like Brazil and Canada, a dual GST system is prevalent whereby GST is levied by both | the federal / central and state or provincial governments. Except for Australia, which is not really comparable to India, a unified GST does not exist any federal structure. India has also joined the league with countries like Canada.
GST IN INDIA
Midnight June 30, 2017 or say 1 July 2017: The success knocked at the door after 17 turbulent years, faced and tackled by the different | regimes with different Finance Ministers to roll out GST and to overhaul the nation’s convoluted GST system. GST, was proposed to replace more than approximately dozen and a half central and state levies including excise duty, service tax and sate – VAT was going to be India’s biggest tax reform in 70 years of independence. Briefly, the idea of national GST was mooted by Kelkar Task Force in 2004. A task force was formed under the | chairmanship of mr. Vijay Kelkar on Implementation of Fiscal Responsibility and Budget Management Act. Tile Kelkar Committee submitted its report with a strong recommendation of fully integrated GST on national basis. Thereafter several government documents, reports and other relevant documents were presented in this direction. But the success achieved in the present year 2017. Let ‘s look into the making of the law. Following is the GS1 Timeline highlighting notable events.
SALIENT FEATURES OF GST
Supply: The taxable event in GST is supply of goods or services or both. Various taxable events like manufacture, sale, provisioning of service, purchase, entry into a territory of state etc. have been done away with in favor of just one event i. e. supply. The term, “supply” has been inclusively defined in the Act. The term covers wide range of activities resulting into no activity remains untaxed unless the law specifically exempts it.
Taxes subsumed in GST: One of the main objectives of GST covered subsuming all those taxes that were levied on the sale of goods or provision of services by either Central or State Government. Subsumation of large number of taxes and other levies will definitely allow free flow of larger pool of tax credits at both central and state levels. Seventeen taxes, duties, cess were subsumed.
Scope of GST: GST is applicable on all goods and services, except alcoholic liquor for human consumption. Further, GST for five specific petroleum products ( petroleum crude, high – speed diesel, petrol, natural gas, aviation turbine fuel) have been provided that these goods shall – not be subject to the levy of GST till a date notified on me recommendation of the GST Council.
GST Council: It is very remarkable under the present GST regime that both the central and respective state governments have given – up their autonomy to levy taxes in favor of a common constitutional body, the GST Council. Technically,
Technically, as per Article 279A of the amended Constitution, the GST Council will be a joint forum of the Center and the States.
tile Council shall consist of: 1. Union Finance Minister – Chairperson, 2. the Union Minister of State, in – charge of | Revenue of finance – Member and 3. the Minister in – charge of finance or taxation or any other Minister nominated by each State Government Members.
Destination Based Tax: GST is said to be destination – based or consumption – based tax. Hence, the place of consumption will decide the state that will collect tax, the parody behind destination – based taxation is that the producing / selling state gets nothing while the consuming states receive its share of revenue. This is unlike the present origin based levy where the revenue accrues to the origin state from where the movement originates. Taxes in pre GST era were mostly origin – based.
Dual Administration: India being a federal country where the power to tax domestic trade is segregated between the Central Government and the State Government (s), the designing of a destination based GST becomes extremely complicated. Dual GST signifies that GST would be levied by both, the Central Government and the State, on supply of goods or services. Considering the dual taxation power to tax transactions under GST, the structure is referred to as dual GST. Union Territories without legislature would levy Union Territory GST.
Advantage OF GOODS AND SERVICES TAX:
Multiple taxes like octroi, central sales tax, state sales tax, entry tax, license fees, turnover tax etc. will no longer be present and all that will be brought under the GST. Also, doing business in India will now be easier and more comfortable as | various hidden taxation will not be present. So the benefits have been covered as follows: GST will strengthen the mission, Make in India.
- Mitigation of cascading effect of taxes is the factor that will attract more businesses. As of now, Input Tax credit has | become an in – built feature of the contemporary tax regime which can be availed across goods and services at every | stage of supply.
- GST will result in cost competitiveness of goods and services in Global market. Thus, providing India with a competitive edge in the world market. A unified common national market for India will result into a boost to foreign investment and the “Make in India” campaign.
- Harmonization of laws and their compliances will at – ease doing business. It will reduce transaction costs for
- taxpaying business person through simplified tax compliance. That was one of the major hindrances in the old regime because of which doing businesses were not entertaining.
- Integration of goods and services taxation would end the long, standing distortions of differential treatments of manufacturing and service sector. Thus, GST is expected to improve manufacturing and distribution efficiency. GST will at – ease doing the Businesses:
- A clean and transparent system of taxation will make doing business in India hassle-free. As GST has not hidden mechanism of chargeability.
- Intensive use of information technology for GST portals would make easier the process of taxation, return filing and | GST payment across India.
- zero – based Export in GST will definitely going to encourage exportation. Indian exporters will be able to flush more in the international markets because of not being charged for their supplies, as a result exportation.
- In GST system both Central GST and State GST will be charaed on manufacturing cost and tax will be collected on point of sale. This will benefit people as prices will come down which in turn will help companies as consumption will increase.
- Uniform rates of taxes, will lead to less confusions and confrontations and thus reduce tax litigation.
- All interaction to be through the common GSTN portal. Therefore, there will be no personal influence of tax administrators on the taxpayers. GST will result increase in Governments’ Revenue:
- GST will broaden the tax base. Center and State government will get benefited from increase in tax collection due to the widening of tax base. GST will assist in better conformity and revenue resilience.
- Buoyant revenue collection in governments’ account is for sure. In order to avail input tax credit a recipient would | demand a proper tax invoice from the supplier, as a result in – built audit trail will make the supplier to collect and pay the taxes without exercising tax evasion practice. GST will benefit the Customers:
- In GST a registered person is bound to show the tax applied in the sales invoice. Also. having uniform GST rates | across the country will make the customer to know exactly the rate and amount of tax payable by him.
- Removable of multiplicity of taxes and cascading will eliminate the inflationary impact on prices. As a result now customers will get the goods / services at their worth, loaded with a reasonable amount of tax.
Disadvantage OF GST:
It is to be noted that GST is less distortive and more productive in nature. Transitional phase, new tax invoicing, new tax rates, new compliance procedures; exactly are not said to be the demerits of the system. Adopt ability of new – system is necessary and inconvenience cause in doing so should be ignored as it is for the betterment of all.
- An international experience has been marked that with the GST arises in overall prices has been experienced in many countries. It may be because of covering exempted supplies of pre – GST regime or deliberate inclusion with comparatively higher rate.
- GST being a comprehensive law will trap even those who were used to be exempt in the old regime because of being tiny – business units, not exactly recognized for production of goods, sales of goods or provising of services. Independent laws like, excise, service and sales tax (VAT and CST) were free to provide exemptions in their respective statutes. But with the consolidation now this has become tough.
- The system was brought not only to eliminate the cascading effect but also to eliminate tax evasion and black – money practices in the business class. As a result more strict provisions will disappoint genuine suppliers from doing the business. Also, the loopholes in the statute (s) and complications in proceeding against a wrong – doer cannot completely eliminate black money and tax evasion.
- Most of the developed economies use a single GST and not a dual GST. Federal distribution system following the dual system in India is expected to complicate the system.
- A huge disparity in Indian economy, with huge inequalities of income, a uniform tax rate would spell disaster for small businesses which are exempt from tax in current regime, leading to their eventual shut down.
TYPES OF GST
There are 4 types of GST i.e – CGST, SGST, IGST AND UTGST are effectively supporting such major economic development programs.
Under GST, CGST is a tax levied on Intra State supplies of both goods and services by the Central Government and will be governed by the CGST Act. SGST will also be levied on the same Intra State supply but will be governed by the State Government.
This implies that both the Central and the State governments will agree on combining their levies with an appropriate proportion for revenue sharing between them. However, it is clearly mentioned in Section 8 of the GST Act that the taxes be levied on all Intra-State supplies of goods and/or services but the rate of tax shall not be exceeding 14%, each.
Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. As explained above, CGST will also be levied on the same Intra State supply but will be governed by the Central Government.
Under GST, IGST is a tax levied on all Inter-State supplies of goods and/or services and will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India.
As we have already learned about CGST and SGST which are intra-state taxations and IGST which is inter-state, the union territories in India are accounted under a specialized taxation called Union Territory Goods and Services Tax as per the GST regime 2016. It will subsume the various taxations, levies and duties with one uniform taxation in Union Territories as well.
Delhi (India’s Capital Territory), Chandigarh, Dadra & Nagar Haveli, Andaman & Nicobar Islands, Daman & Diu, Lakshadweep and Puducherry are the prominent union territories in India.
Rates of GST IN India
Goods and Services Tax Network (GSTN)
Goods and Services Tax Network (GSTN) has been set up by the Government private company under erstwhile Section 25 of the Companies Act, 1956. GSTN would provide three front end services to the taxpayers namely registration, payment and return. Besides providing these services to the tax payers. GSTN would be developing back – end IT modules for 27 states who have opted for the same. The migration of existing taxpayers had already started from November, 2016. The Revenue department of both centers and states are pursuing the presently registered taxpayers 10 complete the necessary formalities on the IT system operated by GSTN for successful migration. About 75 percent of existing registrants have already migrated to the GST systems. GSTN has selected 34 IT, ITes and financial technology companies, to be called GST Suvidha Providers (GSPs). GSPs would develop applications to be used by taxpayers for interacting with the GSTN.