ALL About GST – What Is GST & How Will It Effect You: Sixteen years in the making, India rolls out the Goods and Services Tax (GST) from July 1, 2017. A minute after the stroke of midnight, President Pranab Mukherjee and Prime Minister Narendra Modi pressed the button to launch the new indirect tax regime on a digital screen with ‘GST’ emblazoned on it in a golden hue. Conceived on the principle of ‘one nation, one tax, one market’, the tax that subsumes 17 central and state levies was launched in the presence of Vice President Hamid Ansari, former Prime Minister HD Deve Gowda, Lok Sabha Speaker Sumitra Mahajan, Finance Minister Arun Jaitley, MPs, chief ministers, state finance ministers, officials of the Centre and states. But Yet The Common People of our nation are in doubt all abou GST. So here We going to discuss all Details about GST, to make it clear. All information regarding What is GST, GST rates,How will GST affect the common man, & All other details are discussed through the following paragraphs…
What is GST?
GST is one indirect tax for the whole nation, which will make India one unified common market.
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.
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GST Rates:
The GST Council, headed by Jaitley and of which all states Finance Ministers are members, has approved four main tax slabs — 5 per cent, 12 per cent, 18 per cent and 28 per cent that aims to lower tax incidence on essential items and to keep the highest rate for luxury and demerits goods. The lowest rate of 5 per cent will be on items of mass consumption which are used particularly by common people. The second and third category of standard rates of 12 and 18 per cent will accommodate most of the goods and services. The fourth slab of 28 per cent is levied mainly on white goods such as refrigerators, washing machines etc.
Which taxes at the Centre and State level are being subsumed into GST?
At the Central level, the following taxes are being subsumed:
» Central Excise Duty,
» Additional Excise Duty,
» Service Tax,
» Additional Customs Duty commonly known as Countervailing Duty, and
» Special Additional Duty of Customs.
At the State level, the following taxes are being subsumed:
» Subsuming of State Value Added Tax/Sales Tax,
» Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
» Purchase Tax,
» Luxury tax, and
» Taxes on lottery, betting and gambling.
What is State GST and Central GST?
For transactions within a State, there will be two components of GST – Central GST (CGST) and State GST (SGST) – levied on the value of goods and services. Both the Centre and the States will simultaneously levy GST across the value chain.
In the case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST). The IGST would be roughly equal to CGST plus SGST.
How would GST be administered in India?
Keeping in mind the federal structure of 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.
Key Features of Goods and Service Tax:
Listed below are the main features of the Goods and Service tax in India:
» The Goods and Services Tax will include Central Indirect taxes such as Excise Duty, Service Tax, Special Additional Duty of Customs, Countervailing Duty , Central Surcharges and Cesses as long as they are related to the supply and consumption of goods and services.
» It will also include State Value Added Tax or Sales Tax, Entertainment Tax, (excluding the tax charged by the local bodies), Entry and Octroi tax, Central Sales Tax (taxed by the Centre and collected by the State Government) , Purchase Tax, Luxury tax, Taxes on betting, lottery and State cesses and surcharges involved in the supply and consumption of services and goods.
» Inclusion of the concept of ‘declared goods of special importance’ as per the Indian Constitution.
» Will levy integrated Goods and Services Tax on inter-State transactions of goods and services.
» Will levy additional tax of 1% on supply of goods in inter-State trade which will be collected by the Government of India for a period of two years and will be allocated to the states from where the supply comes.
» Petroleum and petroleum products and alcohol have been kept out of the reach of GST.
» The act will have two constituents – Central GST charged by the Centre and State GST charged by the states. But, in case of inter-state trade or commerce, only the Centre will levy tax and collect Goods and Service Tax, and the tax collected would be divided between the Centre and the State as per the provision made in the parliament.
» Also an additional tax of 1% on inter-state trade in goods and services will be imposed and collected by the Centre and provided to the states for two years to compensate the loss ( of any) faced by the states for implementing the GST.
» A Goods and Services Tax Council will be created to address the issues relating to goods and services tax and give recommendations to the Union and the States on areas such as rates, exemption list and threshold limits. The GST Council will constitute of the Union Finance Minister as chairman followed by the Minister –in-charge of Finance or Taxation or any other Minister nominated by each State Government. The GST Council will function under the Chairmanship of the Union Finance Minister and it will be a joint forum of the Centre and the States.