Information about GST

1. GST
Goods & Service Tax
GST is a comprehensive tax levy on manufacture, sale, and consumption of goods and
services at national level. One of the biggest taxation reforms in india the GST is all set
to integrate state economies and boost overall growth.
Regards
Suresh Guleria

2. GST India – Goods & Service tax
• Goods and service tax is being glorified as a system of taxation by which economy will
take upward swing and further it will ease the trade & industry with respect to indirect
tax system of the country. Only one indirect tax to be paid by trade & industry & all other
indirect taxes will be subsumed in GST.

3. What is GST
• GST is consumption based tax levied on sale, manufacture & consumption on goods &
services at a national level . This tax will be substitute for all indirect tax levied by state &
central government. Exports & direct tax will not be affected by GST. It would apply to all
services barring a few to be specified. With the increase of international trade in
services, GST has become a global standard. The proposed tax system will take the form
of dual GST which is concurrently levied by central & state government. This will
comprise of :-
• Central GST (CGST) which will be levied by Centre.
• State GST (SGST) which will be levied by State.
• Integrated GST (IGST) which will be levied by central government on inter state supply of
goods & services.

4. Many tax has been subsumed under GST
• Central indirect taxes & levies :-
• Central excise duty, Additional excise duty, Service tax, Additional customs duty (CVD),
special additional duty of customs, Central surcharge & cess .
• State indirect taxes & levies :-
• VAT / Sales tax, Entertainment tax, Central sales tax, Octrio and entry tax, Purchase tax,
Luxury tax, taxes on lottery & state cesses & surcharges.

5. Who will pocket taxes ?
• For intra state transactions :-
• In case of intra state transactions, Seller collects both CGST & SGST from the buyer and
CGST need to be deposited with central government & SGST with state government.
• For inter state transactions :-
• Integrated Goods & services tax (IGST) shall be levied on the interstate transactions of
goods and services which are based on destination principle. Tax get transferred to
importing state. Moreover it is proposed to levy an additional tax on supply of goods,
not exceeding one percent, in the course of interstate trade or commerce, to be
collected by central govt for the period of two years, & assign to the states where the
supply originates. Valuation of stock transfer to be determined. Exports and supplies to
SEZ unit will be zero rated.

6. How to adjust the credits ?
• Set of IGST, CGST, SGST will be as follows
Credit of To be adjusted with
IGST 1. IGST
2. CGST
3. SGST
CGST 1. CGST
2. IGST
SGST 1. SGST
2. IGST

7. LIKE EVERY COIN HAS TWO SIDES, EVEN THIS CONCPET OF GST HAS
ITS OWN POSITIVES AND NEGATIVES.

8. POSITIVES ASPECT
• The main reason of implement GST is to abolish the cascading effect on tax. A product on
which excise duty is paid can also be liable for VAT. Suppose a product XYZ is
manufactured in a factory. As soon as it releases from factory, excise duty has to be paid
to central government. When that XYZ is sold in same state then VAT has to be paid to
state government. Also no credit on excise duty paid can be taken against output VAT.
This is termed as cascading effect since double tax is levied on same product.
• The GST is being introduced to create a common market across states, not only to avoid
enfeebled effect of indirect tax but also improve tax compliances.
• GST will lead a more transparent and neutral manner to raise revenue.
• Price reduction as credit of input tax is available against output tax.
• Simplified and cost saving system as procedural cost reduces due to uniform accounting
for all type of taxes. Only 3 accounts to be maintained – IGST, CGST, SGST.
• GST is structured to simplify the current indirect tax system. It is long term strategy
leading to higher output, more employment opportunities, and economic boom.
• GST is beneficial for both economy and cooperations . The reduces tax burden on
companies will reduce production cost making exporters more competitive.

9. NEGATIVES ASPECTS
• GST is being referred as a single taxation system but in reality it is a dual tax in which
state and Centre both collect separate tax on a single transaction of sale and service.
• At present the main indirect tax system of central government is central excise. All the
goods and commodities are not covered by the central excise and further there is an
exemption limit of Rs 1.50 crores in the central excise and further traders are not liable
to pay central excise. The central excise is payable up to the stage of Manufacturing but
now GST is payable up to the stage of sale.
• Majority of dealer are not covered with the central excise but are only paying VAT in the
state. Now all the VAT dealer will be required to pay CGST.
• The calculation of RNR (Revenue neutral rate) is very difficult and further govt want to
enhance its revenue hence rate of tax will be a problem. As per source the proposed rate
for State GST is 12% , Centre GST 14% plus govt want to impose 1% CST at the initial
stage of GST on the interstate sale of goods and services .So the normal rate of overall
tax will be 26%. This rate is very high comparing to the fact that small and medium
industries are at present not covered by the central excise and most of goods such as
agricultural products are out of preview of the central excise.

10. Facts about GST
• GST bill passed in Lok Sabha on 5th May 2015.
• A GST council headed by the central finance minister and represented by the state
finance ministers will decide on the rates , exemptions, threshold limits and dispute
resolution.
• Next government need to pass this bill in Rajya Sabha.
• The govt plan to roll out GST from 1st April 2016.
• State govt feared that GST implementation will rob them of fiscal power and erode
revenues, for this Constitution amendment bill will offer a compensation package for
potential revenue loss under a clauses of five year. In the first 3 year the Centre will
reimburse 100% revenue loss, 75% in the 4th year & 50% in the 5th year.
Refer website for further updates w.r.t GST :- http://www.gstindia.com/