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All you need to know about GST

All you need to know about GST

 

GST Means?

The Goods and Service Tax (GST) will be a comprehensive nationwide indirect tax on manufacture, sale and consumption of goods and services throughout India. It is meant to be a single, detailed tax that will subsume all the other smaller indirect taxes on consumption like service tax, etc. This is how it is done in most developed countries. And it would make inter-state manufacturing of goods more efficient.

How will GST work and what all will it subsume?

GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. 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.

At the central level, the following taxes will be subsumed: Central Excise Duty, Additional Excise Duty, Service Tax, Countervailing Duty, and Special Additional Duty of Customs.

At the State level, the following taxes will be subsumed: State Value Added Tax/Sales Tax, Entertainment Tax, Central Sales Tax, Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling.

How will GST be beneficial?

The introduction of GST would be a significant step in the reform of indirect taxation in India. Amalgamating several central and state taxes into a single tax will mitigate cascading or double taxation, facilitating a common national market. This would be hugely beneficial for consumers as the tax burden on inter-state logistics will be cheaper. A common tax would mean easy compliance and uniformity of tax rates and structures for industry and would thus contribute to ease of doing business by removing cascading costs. For central and state governments, GST is expected to 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.

By when will it be implemented?

Assuming the Constitution Amendment Bill does pass in the Monsoon Session, GST will still not be in force before April 1, 2017. And that is putting it optimistically. Apart from the legislative process mentioned above, the states, India Inc, and industries and service providers big and small, will also have to prepare themselves for a completely new nationwide tax regime.

How would GST be administered in India?

There will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State.

The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

Source: business-standard

 

 

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