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GST: Goods & Service Tax (India)

All About GST in India - Goods and Services Tax

» The One Hundred and First Amendment of the Constitution of India, officially known as The Constitution (One Hundred and First Amendment) Act, 2016, introduced a national Goods and Services Tax in India from 1 July 2017.
» Good and Services Tax (GST)- The Goods and Services Tax (GST) has been heralded as the biggest indirect tax reform in India after Independence. After much deliberation, the GST bill has been passed in the Rajya Sabha and is set to be discussed in the state legislative assemblies in this winter session. With the ball set to roll for a unified country-wide tax reform, the market is filled with new found optimism among industry leaders and government officials.
» The GST is administered & governed by GST Council and it's Chairman is Union Finance Minister of India Arun Jaitley.

What is GST bill about?

» GST stands for "Goods and Services Tax", and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments.
» The introduction of Goods and Services Tax (GST) would be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement. 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 at 25%-30%, free movement of goods from one state to another without stopping at state borders for hours for payment of state tax or entry tax and reduction in paperwork to a large extent.
» GST is a uniform indirect tax levied on goods and services across a country. Many developed nations tax manufacture, sale and consumption using a single, comprehensive tax.
» Central Taxes GST would replace Central Excise Duty, Service Tax, Additional Duties of Excise & Customs, Special Additional Duty of Customs, and cesses and surcharges on supply of goods and services.
» State Taxes GST would replace VAT, Central Sales Tax, Purchase Tax, Entry Tax, Entertainment Tax, taxes on advertisements, lotteries, betting and gambling, and state cesses and surcharges.
» The main objectives of GST would be to eliminate excessive taxation. Central and state agencies often calculate taxes based not on the original cost of the product, but over and above the several layers of tax already levied on the product. This negatively affects the Gross Domestic Product of a nation.
GST is also expected to disincentivize tax evasion, lower tax rates, and make business operations easier.
» The current NDA government and the Opposition disagree over the contents of the GST Bill
» According to PRS Legislature Research, the 2011 Bill defined GST as any tax on the supply of goods or services, except taxes on the supply of petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption.
» The 2011 Bill provided for the creation of the Goods and Services Tax Dispute Settlement Authority to adjudicate disputes between the central government and state governments on the issues of GST resulting in any loss in revenue, and affecting the harmonized structure of the tax. The 2014 Bill deleted the provision of such an authority.
» The 2014 Bill defined GST as any tax levied on the supply of goods, or services, except taxes on the supply of alcoholic liquor for human consumption. 
» In addition, the 2014 bill also deleted a provision of the 2011 bill that imposed restrictions on states on taxation of products deemed of special importance in inter-state trade or commerce.
» It also removes a 2011 provision allowing states to tax the entry of goods into a local area that are for use or sale only to the extent levied by a Panchayat or a Municipality.
» GST threshold was set at ₹10 lakh (US$15,000) for the north-east and hill states and ₹20 lakh (US$30,000) for other states in the first GST council meet. Centre and states agreed that assessee up to ₹1.5 crore (US$220,000) will be assessed by states and above that will be assessed by centre and states.

» The Act was passed in accordance with the provisions of Article 368 of the Constitution, and has been ratified by more than half of the State Legislatures, as required under Clause (2) of the said article. On 12 August 2016, Assam became the first state to ratify the bill, when the Assam Legislative Assembly unanimously approved it. State Legislatures that ratified the amendment are listed below:
  1. Assam (12 August)
  2. Bihar (16 August)
  3. Jharkhand (17 August)
  4. Himachal Pradesh (22 August)
  5. Chhattisgarh (22 August)
  6. Gujarat (23 August)
  7. Madhya Pradesh (24 August)
  8. Delhi (24 August)
  9. Nagaland (26 August)
  10. Maharashtra (29 August)
  11. Haryana (29 August)
  12. Telangana (30 August)
  13. Sikkim (30 August)
  14. Mizoram (30 August)
  15. Goa (31 August)
  16. Odisha (1 September)
  17. Puducherry (2 September)
  18. Rajasthan (2 September)
  19. Andhra Pradesh (8 September)
  20. Arunachal Pradesh (8 September)
  21. Meghalaya (9 September)
  22. Punjab (12 September)
  23. Tripura (26 September) 

» Did not ratify:
  1. Jammu and Kashmir
  2. Karnataka
  3. Kerala
  4. Manipur
  5. Tamil Nadu
  6. Uttar Pradesh
  7. Uttarakhand
  8. West Bengal
» GST shall subsume the following taxes in the times to come once the law is in force:
» GST is proposed to have a dual structure. It will have two components: Central GST and State GST. Central GST will replace Central excise duty, services tax and additional customs duties etc. and will be levied by the centre. State GST will replace VAT, Central State Tax, entertainment tax, luxury tax, lottery tax, electricity duty etc. and will be levied by the states.
» The proposed GST regime shall have the following features:
  • It shall be a destination based taxation
  • It shall have a Dual Administration – Centre and state
  • State wise determination of taxable person – no more centralized registration
  • Seamless credit amongst goods and services
Frequently asked:

Is GST a constitutional amendment bill?

The Goods and Services Tax Bill or GST Bill, officially known as The Constitution(One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India from 1 April 2017.

Which is the first state to ratify GST?

Assam becomes first state to ratify GST Bill. Bihar is the Second state to ratify GST

What are the benefits of GST?

GST has been adopted by around 140 countries around the world. It’s benefits are:
  • Simplified tax regime
  • Increased revenues
  • Reduce the cascading effect of taxation
  • Improve ease of doing business
  • Boost GDP
  • Optimal supply chain decisions

GST Council Composition & Members list

» As per Article-279 (1) of the amended Constitution, the GST Council was to be constituted by the President within 60 days of the commencement of Article 279A. This is a joint forum of centre & state.
» GST Council consists of the following members
1.  Union Finance Minister who will be the Chairperson
2. The Union Minister of state, in-charge of Revenue of Finance.
3. The Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.
» The Secretary (Revenue) is the Ex-officio Secretary to GST Council.
» The Chairperson, Central Board of Excise and Custom (CBEC), is a permanent invitee (non voting) to all proceedings of the GST Council.
» The decisions will br made by three-fourth majority of votes cast
» The centre shall have a third of votes cast, States shall together have two thirds

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