GST

GST AND SALIENT FEATURES
(By Shri Joseph Selvakumar, SSO(A)/Trichy )

GST represents Goods and Service Tax implemented on July 01, 2017 through the 101 Amendment of Constitution of India by the Government.

GST is a single tax on supply of Goods and Services, right from the manufacturer to the consumer.

The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set off benefits at all the previous stages.

GST has been envisaged as a more efficient tax system neutral in its application and distributional attractive.

GST are divided into five tax labs for collection of tax i.e., 0%, 5%, 12%, 18% and 28%.

The tax rates, rules and regulations are governed by GST council which consists of finance ministers of Centre and all the States.

SALIENT FEATURES OF GST

The introduction of GST would be a very significant step in the field of indirect tax reforms in India.

By amalgamating a large number of taxes, it would mitigate cascading or double taxation in a major way and pave the way for a common natural market.

The overall tax burden is reduced and Indian product become competitive in domestic and international markets.

GST is applicable on sale of Goods and Services as against the present concept of tax on the manufacture of goods.

GST would be destination based Tax as against the present Concept of Origin based tax.

The GST levied by the Centre is called CGST and that to be levied by State is SGST.

An integrated GST (IGST) would be levied on interstate supply of Goods or Services.  This is collected by Central Government.

Import of Goods or Services would be treated as interstate supplies and would be subject to IGST in addition to applicable custom duties.

GST has replaced the following taxes which were collected by Central Government:

Central Excise Duty (including additional duties of Excise)

Service tax

CVD (Levied on imports in lieu of Excise Duty)

SACD (Levied on imports in lieu of VAT)

Central Sales Tax(CST)

Excise Duty levied on medicine & toiletry preparations

Surcharges and Cesses.

State taxes that would be subsumed within GST are:

VAT / Sales Tax

Entertainment Tax

Luxury Tax

Taxes on lottery, betting and gambling

Surcharges and Cesses.

The list of exempted Goods and Services are kept to a minimum and harmonised for Centre and States as far as possible.

The credit permitted to be utilised in the following manner:

ITC of CGST allowed for payment of CGST & IGST in that Order.

ITC of SGST allowed for payment of SGST & IGST in that Order.

ITC of IGST allowed for payment of IGST, CGST & SGST.

Create unified common national market for India, giving a boost to Foreign Investment and “Make in India Campaign”

Boost export and Manufacturing activity and leading to substantive economic growth.

Help in poverty eradication by generating more employment.

Uniform SGST and IGST rates reduce the incentive for tax evasion.

Simple tax based system online

Uniform prices followed throughout the country.

Transparency prevails in taxation system.

Higher threshold achieved for registration.

Composition scheme for small business

The number of compliance is lesser.

Defined treatment for E-commerce operations

Improved efficiency of logistics

Unorganised sector is regulated under GST

GST would apply to all Goods and Services except alcohol for human consumption.

GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural Gas) would be applicable from a date to be recommended by the GST council.

Exports would be zero rated.

A common threshold exemption would apply to both CGST & SGST tax payers with an annual turnover of Rs.20 Lakhs (Rs.10 Lakhs for special category States as specified in article 279A of the constitution) would be exempt from GST.

Delay in implementing GST

Increased costs due to software purchase.

Being GST compliant.

Increase in operational costs due to GST implementation may affect existing costs.

GST was introduced in the middle of financial year.

GST is an online taxation system.

SME’s will have a higher tax burden.

GSTIN

GSTIN refers to GST Identification Number assigned to every GST dealer.

Before GST was implemented, all dealers registered under the State VAT law were assigned a Unique TIN Number by the respective State Tax Authorities.

Similarly, service providers were assigned a service tax registration number by the Central Board of Excise and Custom (CBEC)

Going forward in the new GST regime all registered tax payers will get consolidated into one single platform for compliance and administration purposes and will be assigned registration under a single authority.

It is expected that 8 million tax payers will be migrated from various platforms to GST.

All of these businesses will be assigned a unique Goods and Services Tax Identification Number (GSTIN)

Each tax payer is assigned a State wise PAN based 15 digit GSTIN.

The first 2 digit represents the State Code as per Indian Census 2011.  The next 10 digit will be PAN number of the tax payer. The thirteenth digit will be assigned based on the number of registration within a state.  The fourteenth digit will be Z by default. The last digit will be for check code. It may be an alphabet or number.