gst

1. All you need to know about the
GST Constitutional
Amendment Bill
A primer on the issues surrounding the GST Bill and what its passage will mean
With the long-awaited passage of the GST Constitution Amendment Bill in Rajya
Sabha, here is a ready reckoner on the issues surrounding the proposed tax
reform and it will mean for the Indian economy.
What is GST?
The Goods and Service Tax (GST) will be a comprehensive nationwide indirect
tax on manufacture, sale and consumption of goods and services throughout
India. The aim is to have one indirect tax for the whole nation, which will make
India a unified common market. GST will be levied and collected at each stage
of sale or purchase of goods or services based on the input tax credit method
and would make not just manufacturing but also the inter-state transportation
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.
Read our full coverage on the GST Bill and its impact
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

2. 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.
All you need to know about GST
While the BJP hopes to pass Goods & Services Tax Bill in RS in this session, it is getting
strong opposition. Why?
What is the Goods and Services Tax?
As the name suggests, it is a tax leviedwhen a consumer buysa good or service. It is meant to be a
single, comprehensive tax that will subsume all the other smaller indirect taxeson consumption like
service tax, etc. Thisis how it is done in most developedcountries.
What is preventing GST from being a reality?

3. A major change like GST requiresa constitutionalamendment, which requires a bill to passed in
both houses of Parliament. The GST constitutionalamendment bill was passed in the Lok Sabha in
May this year.
It has been held up in the RajyaSabha due to objectionsbeing raised by the Opposition regarding the
Bill as well as issues with no direct connectionto GST.
The Bill was also placed before a RajyaSabha select committee, which made its recommendations
regarding changes to the Bill. The Cabinet clearedthese changes in July.
What are the Opposition’s objections?
The Congress wants a provisioncapping the GST rate at 18per cent to be added to the Bill itself.
It also wants to scrap the proposed1 per cent additional levy (over andabove the GST)for
manufacturing states.
Thislevy was demanded by manufacturing states who argued that they needed to be compensated
for the investment they had made in improving their manufacturing capabilities. The Centre had
agreed to this demand to encourage the states to support the GST Bill.
The third demand by the Congress was to change the compositionof the GST council—the body that
decides the variousnitty-gritty’slike ratesof tax, period of levy of additional tax, principles of supply,
special provisionsto certain states, etc. The proposedcompositionis for the Councilto be two-thirds
comprisedfrom states and one-third fromthe Centre.
The Congress wants the Centre’s share to be reducedto one-fourth.
Thisdemand, however, was rejectedby eventhe Rajya Sabha Standing Committee.
***
Ten things to know about the GST Bill
Source: prsindia.org
1
Officially, the Constitution (One Hundred and Twenty-Second Amendment) Bill 2014.
2
It was introduced in the Lok Sabha on December 19, 2014 by Finance Minister Arun Jaitley.
3
The Bill seeks to amend the Constitution to introduce a goods and services tax (GST) which will subsumes
various Central indirect taxes, including the Central Excise Duty, Countervailing Duty, Service Tax, etc. It
also subsumes State value added tax (VAT), octroi and entry tax, luxury tax, etc.
4
The Bill inserts a new Article in the Constitution make legislation on the taxation of goods and services a
concurrent power of the Centre and the States.
5
The Bill seeks to shift the restriction on States for taxing the sale or purchase of goods to the supply of
goods or services.
6
The Bill seeks to establish a GST Council tasked with optimising tax collection for goods and services by
the State and Centre. The Council will consist of the Union Finance Minister (as Chairman), the Union
Minister of State in charge of revenue or Finance, and the Minister in charge of Finance or Taxation or any
other, nominated by each State government.

4. 7
The GST Council will be the body that decides which taxes levied by the Centre, States and local bodies
will go into the GST; which goods and services will be subjected to GST; and the basis and the rates at
which GST will be applied.
8
Under the Bill, alcoholic liquor for human consumption is exempted from GST. Also, it will be up to the
GST Council to decide when GST would be levied on various categories of fuel, including crude oil and
petrol.
9
The Centre will levy an additional one per cent tax on the supply of goods in the course of inter-State trade,
which will go to the States for two years or till when the GST Council decides.
10Parliament can decide on compensating States for up to a five-year period if States incur losses by
implementation of GST.
What is the GST bill? Here's all you
need to know about India's biggest
tax reform
The Goods and Services Tax bill, touted to be India's biggest
tax reform, will simplify the current system of taxation. The
bill will convert the country into a unified market by
replacing all indirect taxes with one tax.
What is GST? Why is there a need for this bill?
Quite literally, GST (Goods and Services Tax) is a tax levied when a consumer buys a good or
service.
The current tax regime is riddled with indirect taxes which the GST aims to subsume with a
single comprehensive tax, bringing it all under a single umbrella. The bill aims to eliminate the
cascading effect of taxes on production and distribution prices on goods and services.
What is the cascading effect of taxation?
Cascading effect of taxes is caused due to levy of different charges by state and union
governments separately. In the current multi-staged tax-structure, the following taxes are levied
by the centre and state separately:
Taxes levied by the Centre include: Income tax, service tax, central sales tax, excise duty and
security transaction tax.

5. Taxes levied by the state include: VAT/sales tax, octroi, state excise, property tax, entry tax and
agriculture tax.
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6. This tax structure raises the tax-burden on Indian products, affecting their prices, and as a result,
sales in the international market. The new tax regime will therefore, help boost exports.

7. What are the challenges in the implementation?
India is adopting a dual GST, wherein the Central GST will be called CGST and state SGST.
The main road block is the coordination among states. Centre and states have to come to a
consensus on uniform GST rates, inter-state transaction of goods and services, administrative
efficiency and infrastructural preparedness to implement the new tax reform.
How will GST remedy the situation?
GST will do away with Gordian knot of multiple tax-rates which is a burden on the common
man.
Dual GST means it will have a federal structure. The GST will basically have only three kinds of
taxes - Central, state and another one called integrated GST to tackle inter-state transactions.
Under the current GST tax reform, all forms of 'supply' of goods and services like transfer, sale,
barter, exchange, and rental will have a CGST (central levy) and SGST (state levy).
GST will also help usher-in an era of a transparent and corruption-free tax administration. It is
set to weed out the current shortcomings of the supply chain owing to the complicated, multi-
layered policies.