Goods And Services Tax (GST)
Goods And Services Tax (GST)
Goods and Services Tax (GST), a tax reform, came into effect from 1 July, 2017. GST will completely transform the Indirect Taxation landscape in the country involving both the Central and State levies. It will be administered together by the Centre and States.
GST is a dual concept tax system. Under this system, tax is administered, collected and shared by both Centre and states based on the nature of transaction (With in State or interstate).
The biggest tax reform since independence—GST—paves the way for realization of the goal of One Nation-One Tax-One Market. GST will bene fit all the stakeholders namely industry, government and consumer. It will lower the cost of goods and services, give a boost to the economy and make the products and services globally competitive, giving a major boost to ‘Make in India’ initiative. Under the GST regime, exports will be zero-rated in entirety unlike the present system where refund of some of the taxes does not take place due to fragmented nature of indirect taxes between the Centre and the States.
In majority of supplies of goods, the tax incidence approved by the GST Council is much lower than the present combined indirect tax rates levied (on account of central excise duty rates/embedded central excise duty rates/ service tax post-clearance embedding, VAT rates or weighted average VAT rates, cascading of VAT over excise duty and tax incidence on account of CST, Octroi, Entry Tax, etc.) by the Centre and state(s).
What is the GST Structure?
» The threshold limit for exemption from levy of GST is Rs. 20 lakh for the States except for the Special Category, where it is Rs. 10 lakh.
» A four-slab tax rate structure of 5%, 12%, 18%, and 28% has been adopted for GST in primary phase.
» A cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28% for payment of compensation to the states.
» The threshold for availing the Composition scheme is Rs. 75 lakh except for special category States where it is Rs. 50 lakh and they are required to file quarterly returns only. Certain categories of manufacturers, service providers (except restaurants) are out of the Composition Scheme.