Under the historic indirect Tax reform in India, the Government of India has envisioned Goods and Services Tax which will subsume the following Taxes.
i. Taxes presently levied and collected by the Centre :
- Central Excise duty
- Duties of Excise (Medicinal and Toilet Preparations)
- Additional Duties of Excise (Goods of Special Importance)
- Additional Duties of Excise (Textiles and Textile Products)
- Additional Duties of Customs (commonly known as CVD)
- Special Additional Duties of Customs (SAD)
- Service Tax
- Central Surcharges and Cesses so far as they relate to supply of goods and services
ii. State taxes that would be subsumed under the GST are:
- State VAT
- Central Sales Tax
- Luxury Tax
- Entry Tax (all forms)
- Entertainment and Amusement Tax (Except when levied by the local bodies)
- Taxes on advertisements
- Purchase Tax
- Taxes on lotteries, betting and gambling
- State Surcharges and Cesses so far as they relate to supply of goods and services.
The Goods and Services Tax (GST) has made commodities slightly cheaper and the rates of GST depend upon whether the commodity is used by a rich person or a common man.
Under the regime of GST, sovereignty has been shared between the Centre and the states
Both the Houses of the Parliament i.e. Lok Sabha and Rajya Sabha passed the following four bills:
- Central GST
- Integrated GST
- Union territories GST
- GST Compensation
Hon’ble President of India has assented these four GST bills on 13.4.2017 and thereby, these bills have become Acts as under.
- Central Goods and Services Tax Act, 2017 (CGST)
- Integrated Goods and Services Tax Act, 2017 (IGST)
- Union Territories Goods and Services Tax Act, 2017 (UTGST)
- Goods and Services Tax (Compensation to States) Act, 2017 (CTS)
All the aforesaid four Acts have been notified with effect from 1st July, 2017
Amongst these four Acts, the CGST and IGST Act will enable the Centre to levy and collect Taxes across the Country. The Goods and Services Tax (Compensation to States) Act, provides for compensation to the State (s) for the loss of revenue arising on account of implementation of GST. The Union Territory Goods and Services Tax Act, will enable levy and collection of Tax on intra state supply of goods and services or both by the union territories.
The main features of four Acts are briefly listed below:
- A State-wise single registration for a taxpayer for filing returns, paying taxes, and to fulfil other compliance requirements. Most of the compliance requirements would be fulfilled online, thus leaving least scope for physical interface between the taxpayer and tax official.
- A taxpayer has to file one single return state-wise to report all his supplies, whether made within or outside the State or exported out of the country and pay the applicable taxes on them. Such taxes can be Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Union Territory Goods and Services Tax (UTGST) and Integrated Goods and ServicesTax (IGST)
- A business entity with an annual turnover of upto Rs. 20 lakhs would not be required to take registration in the GST regime, unless he voluntarily chooses to do so to be a part of the input tax credit (ITC) chain. The Annual turnover threshold in the Special Category States (as enumerated in Article 279A of the Constitution such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and other States of the North-East India) for not taking registration is Rs. 10 lakhs.
- A business entity with turnover upto Rs.50 lakhs can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.
- In order to prevent cascading of taxes, ITC would be admissible on all goods and services used in the course or furtherance of business, except on a few items listed in the law.
- In order to ensure that ITC can be used seamlessly for payment of taxes under the Central and the State Law, it has been provided that the ITC entitlement arising out of taxes paid under the Central Law can be cross –utilized for payment of taxes under the laws of the States or Union Territories. For example, a tax payer can use the ITC accruing to him due to payment of IGST to discharge his tax liability of CGST/SGST/UTGST. Conversely, a taxpayer can use the ITC accruing to him on account of payment of CGST/SGST/UTGST, for payment of IGST. Such payments are to be made in a pre –defined order.
- In the Services sector, the existing mechanism of Input Service Distributor (ISD) under the Service Tax law has been retained to allow the flow of ITC in respect of input services within a legal entity.
- To prevent lock-in of capital of exporters, a provision has been made to refund, within seven days of filing the application for refund by an exporter, ninety percent of the claimed amount on a provisional basis.
- In order to ensure a single administrative interface for tax payers, a provision has been made to authorize officers of the tax administrations of the Centre and the States to exercise the powers conferred under all Acts.
- To provide certainty in Tax matters, provision has been made for an advanced Ruling Authority.
- Exhaustive provision for Appellate mechanism has been made.
- Detailed transitional provisions have been provided to ensure migration of existing taxpayers and seamless transfer of unutilized ITC in the GST regime.
- An anti-profiteering provision has been incorporated to ensure that the reduction of tax incidence is passed on to the consumers.
- In order to mitigate any financial hardship being suffered by taxpayers, Commissioner has been empowered to allow payment of taxes in installments.
The Goods and Services Tax (GST) is a comprehensive indirect tax levy on manufacturer, sale and consumption of goods as well as services at National level. GST may be defined as –
- Tax on supply of goods and services
- Leviable on value addition at each point of sale of goods and services.
- Where the seller of goods and provider of services may claim credit of input tax paid at previous stages
- Final consumer will bear the burden of GST.
GST is a destination based and consumption based tax. Therefore, GST would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as “place of supply”. GST is levied at every stage of production - distribution with applicable set-off in respect of tax levied at previous stages. It is also to be noted that the word used here is “Supply” and not “sale” and hence, any supply including stock transfers, branch transfers, etc will also attract GST.
Every supplier shall be liable to be registered under the GST Act, in the State from where he makes a taxable supply of goods and / or services if the “aggregate turnover” in a financial year exceeds 20 lakhs rupees. However, for special category States (such as Arunachal Pradesh, Assam, J&K, Manipur,s Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, HP and Uttrakhand), the threshold limit is Rs.10 lakhs.
Each Taxpayer would be allotted a PAN – linked taxpayer identification number. This would bring the GST PAN - linked system in line with the prevailing PAN –based system for Income tax, facilitating data exchange and tax payer compliance.
The taxpayer would need to submit periodical returns, in common format as far as possible , to both the Central GST authority and to the concerned State /UT GST authorities.
GOODS AND SERVICES TAX COUNCIL (GSTC)
As per the Constitution (101st Amendment) Act, 2016, GST Council (GSTC) will be created to examine issues relating to goods and services tax and make recommendation to the Union and the States on the parameters like rates, exemption list and threshold limits. The council shall function under the chairmanship of the Union Finance Minister and will have the Union Minister of State in charge of Revenue or Finance as member, along with Minister in-charge of Finance or Taxation or any other Minister nominated by each State Government. It is further provided that every decision of the council shall be taken by a majority of not less than ¾th(i.e.75%) of the weighted votes of the members present and voting in accordance with the following principles:-
- The vote of the Central Government shall have a weightage of 1/3rd of the total votes cast. and
- The votes of all the State Governments taken together shall have weightage of 2/3rd of the total votes cast in that meeting.
GOODS AND SERVICES TAX NETWORK (GSTN)
For the implementation of GST in the country, the Central and State Governmentsh ave jointly registered Goods and Services Tax Network (GSTN) as a not-for profit, non - Government Company to provide shared IT infrastructure and services to Central and State Governments, taxpayers and other stakeholders. The key objectives of CGST are to provide a standard and uniform interface to the taxpayers, and shared infrastructure and services to Central and Sate / UT governments.
GSTN is working on developing a state – of – the – art comprehensive IT infrastructure including the common GST portal providing frontend services of registration,returns and payments to all taxpayers, as well as the backend IT modules for certain States that include processing of returns, registrations, audits, assessments, appeals, etc.
GSTN is a Section 25 (not for profit), non - Government, private limited company. It was incorporated on 28thMarch 2013. The Government of India holds 24.5%. Equity in GSTN and all States of the Indian Union, including NCT of Delhi and Pondicherry, and the empowered Committee of State Finance Ministers (EC) together hold another 24.5%. The remaining 51% equity is with non – Government financial institutions. The Authorized Capital of company is Rs. 10 Crores only.
Wide Publicity through online as well as offline Training Programmes
There are various procedural and technical complexities involved in administration of Goods and Service Tax Act, 2017 and also, in ensuring proper compliance of the requirements of the said Act. All such matters / issues require serious examination and interpretation of the provisions of the Goods and Service Tax Act, 2017, Therefore, nine modules have been prepared by the team of Experts on different aspects / major areas as contained in the aforesaid Act. The Company, M./s Vision IT Consultants Pvt Ltd in association with M/s Builtuff has developed the site viz www.munimgst.com which provides ‘online for self study’ as well as ‘offline by attending classes’ training programmes to the students, tax professionals, entrepreneurs and other stakeholders so as to familiarize them aboutthe provisions contained in the Goods and Service tax Act, procedural requirements, filing of returns, claim of refunds, composition, advance ruling etc. To obtain access to the technical modules, it is essential to get registration and then, pay the fees of Rs. 1500/- for availing the facility of viewing the chapters for three months on the portal and raise queries for specific answers free of charge. In case of offline training, training programme for two days has been devised and the details of the same can be watched by clicking the option “training” on home page. We can provide training by organizing classes with the batch of 15 to 18 participants at Vaishali as well as Connaught Place to undergo this offline training and the participants are required to pay Rs.2500/- at the time of registration. The participants will be free to raise queries and seek answer(s) / clarification(s) during the interactions with the Experts.