Saturday, 6 February 2016

Knowledge of GST what and how it will change taxation in India

GST was first made in the in the Indian Budget in  2006-07  by the the finance Minister Mr. P.
Chidambaraam as a single centralized Indirect tax.The GST Constitution [One Hundred and Twenty Second  Amendment] Bill 2014 was introduced on December 19, 2014 and passed on May 6, 2015 in the Lok Sabha still  not  passed in the Rajya Sabha

The Bill seeks to amend the constitution to Introduce Goods and services tax  proposed new Article 246A. This article gives power to legislature of Every state and Parliament to make laws with respect to goods and services tax where the supplies of goods or of service take place. Recently,

The introduction of such a tax in India is a concrete step of Government of India is one of The biggest tax  reforms and is all set to integrate State  economies  and   boost  overall  growth  It  will also  help  in  increasing  the  GDP of the country such a tax system has already been implemented  worldwide around 150 countries

The Government of India will be overture to replace the current complex structure of several indirect taxes in favor of GST "Goods and Services Tax" 

GST "Goods and Services Tax" is a comprehensive tax levy on manufacture ,sale and consumption of goods and services at a national level

GST is a single tax which will be levied on the product or service which is sold.
How and why GST  in india ?
There was a burden of "tax on tax"

Multiple taxes like CENVAT tax, CST tax, VAT tax, Octroi tax, etc

There are several taxes in every States

Different State VAT Acts
Advantages of GST in India

Multiple taxes like CENVAT tax, CST tax, VAT tax, Octroi tax, etc will not exist and GST will take please of it 
As multiple taxes on a product or service will fade out and a single tax "GST" will come in 
With the help of GST tax structure is expected to be much simpler and easier to understand.
As per Experts opine the implementation of GST would push up GDP
GST powerfull positive points is that goods and services tax will be common basis
GST will not only make the tax system simpler, but will also help in increased tax revenues,

GST is not simply VAT plus service tax, but a major improvement over the previous system of VAT and services tax 

The Central GST and the State GST would be applicable to all transactions of goods and services except the exempted goods and services, goods which are outside of GST. The Central GST and State GST are to be paid to the accounts of the Centre and the States separately.The Central GST and State GST are to be treated separately, in general, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST.

·        The extent feasible, uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST.
·        The administration of the Central GST would be with the Centre and for State GST with the States.
·        The taxpayer would be need to submit periodical returns to both the Central GST authority and to the concerned State GST authorities.
·        Each taxpayer would be allotted a PANlinked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance. The exact design would be worked out in consultation with the Income-Tax Department.
·        The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except the exempted goods and services,
·        The Empowered Committee has decided to adopt a two-rate structure –a lower rate for     necessary items and items of basic importance and a standard rate for goods in general.     There will also be a special rate for precious metals and a list of exempted items.
A Composition/Compounding Scheme will be an important feature of GST to protect the interests of small traders and small scale industries. The Composition/Compounding scheme for the purpose of GST should have an upper ceiling on gross annual turnover and a floor tax rate with respect to gross annual turnover. In particular there will be a compounding cut-off at Rs. 50 lakhs of the gross 49 annual turnover and the floor rate of 0.5% across the States. The scheme would allow option for GST registration for dealers with turnover below the compounding cut-off.

The Empowered Committee has accepted the recommendation for adoption of IGST model for taxation of inter-State transaction of Goods and Services. The scope of IGST Model is the Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims  and inform the respective governments to transfer the funds.

Textile and Garment sector demand that GST is necessary to pass in  budget 2016

The following are the salient features of the proposed pan-India Goods and Services Tax regime that was approved by the Lok Sabha by way of an amendment to the Constitution.
  • GST, or Goods and Services Tax, will subsume central indirect taxes like excise duty, countervailing duty and service tax, as also state levies like value added tax, octroi and entry tax, luxury tax.
  •  The final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
  •  As a measure of support for the states, petroleum products, alcohol for human consumption and tobacco have been kept out of the purview of the GST.
  •  It will have two components - Central GST levied by the Centre and State GST levied by the states.
  •  However, only the Centre may levy and collect GST on supplies in the course of inter-state trade or commerce. The tax collected would be divided between the Centre and the states in a manner to be provided by parliament, on the recommendations of the GST Council.
  •  The GST Council is to consist of the union finance minister as chairman, the union minister of state of finance and the finance minister of each state.
  •  The bill proposes an additional tax not exceeding 1% on inter-state trade in goods, to be levied and collected by the Centre to compensate the states for two years, or as recommended by the GST Council, for losses resulting from implementing the GST.

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