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Goods & Services Tax

August 9, 2017

The Goods and Services Tax (GST) is a major indirect tax reform introduced in India by integrating the major existing indirect taxes of the centre and states. GST is based on the concept of ‘One Nation, One Indirect Tax’. It will make India one unified common market.

GST was first introduced by France and Indian form of GST has been taken from Canada.

The Goods and Services Tax Network (GSTN) was created to function as a digital platform for administering the tax transactions.

 

Some Facts :

  • 122nd Constitution Amendment Bill & 101st Constitution Amendment Act.

  • There are two components of GST – Central GST and State GST.

  • Integrated GST (IGST) would come into picture when there is an inter state transfer of goods and services. IGST rate would be roughly equal to the sum of CGST and SGST.

  • Four tax rates namely 5%, 12%, 18% and 28%

  • GST Council consists of Finance Minister, the MOS (Finance) and the Minister of Finance / Taxation of each State

  • Chairperson – Union Finance Minister

  • Vice Chairperson - to be chosen amongst the Ministers of State Government

 

 The following taxes levied and collected by the Centre are merged with the GST:

  • Union Excise duties

  • Service tax

  • Duties of Excise (Medicinal and Toilet Preparations)

  • Additional Duties of Excise (Textiles and Textile Products)

  • Additional Duties of Excise (Goods of Special Importance)

  • Additional Duties of Customs (commonly known as CVD)

  • Special Additional Duty of Customs (SAD)

  • Cesses and surcharges

State taxes that are merged with the GST are:

  • State VAT

  • Central Sales Tax

  • Entertainment Tax (not levied by the local bodies)

  • Entry Tax (other than those in lieu of octroi)

  • Luxury Tax

  • Taxes on advertisements

  • Taxes on lotteries, betting and gambling

  • State cesses and surcharges insofar as they relate to supply of goods or services.

 

Customs duties as a tax on trade was not merged with the GST. Some notable items are not covered under GST and these include: levies on petroleum products, tax on alcoholic products, electricity duties/taxes, stamp duties on immovable properties and vehicle taxes.

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