GST India Biggest Tax Reform Since Independence
Post on 18,September 2016   4:00 AM
By - PolyEyes Staff
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Let's Discuss about Why does India need GST- Purpose of GST is being introduced majorly due to two reasons, first is the current indirect taxation structure is full of uncertainties due to multiple taxes. And the second is due to multiple rates there are multiple forms and intern cumbersome compliances.

This will improve tax compliances. Because of the above transparency in taxation would increase and lead to reduced tax evasion. More than 150 countries have adopted the GST.

Now let's discuss about what is GST can be defined as a consumption based tax which is levied whatever consumer will consume like a teacher's service, a lawyer's service or an architect's service and any kind of good that he or she purchase like a laptop, a book or purchase anything, GST will subsumed all forms of taxes and it is generally known as consumption based tax.

A new article (246A) would be introduced that states: "Parliament and the legislature of every state will have power to make laws with respect to goods and services tax imposed by the Union or the State" GST is a Single umbrella tax. There are few taxes that have been replaced by GST, hence it will encapsulate the following indirect taxes (Whether levied by Centre Government/State Government:

Taxes imposed by Union.
  • Central Excise Duty.
  • Additional Excise Duty.
  • ervice Tax.
  • Additional Duty on Customs(NOT Customs duty) also known as CVD.
  • Customs duty is that which is levied on any kind of Import and export, this will continue to exist even after GST.
Taxes imposed by States.
  • VAT/ Sales Tax
  • Octroi & Entry tax (which is also known as Chungi)
  • Purchase Tax 
  • State cesses/surcharges.
GST levy will be administered by GST Council. It has been proposed that would comprise of: Union Finance Minister (Chairman), Union Minister of State in charge of Revenue of Finance, Minister in charge of finance or Taxation or any other minister nominated by each state government would consulate the Council.

Objectives of GST Council.
  • which Centre/State Taxes would go to GST.
  • Goods and Services that are subject to GST and Rates/Basis on which GST will be decided.
  • For GST council voting strength will be 1/3 vote of Centre Government and 2/3 vote of State Government (and decision needs 75% support).
There will be a Dispute Settlement Authority (DSA) that will handle dispute between Centre Government and State Government. So that in addition to GST Council, another body that has been proposed is to set up a Dispute Settlement Authority that would resolve disputes. Appeals from the DSA would directly be dealt with the supreme court.

There are few things that have been particularly excluded from the ambit of GST: Certain goods which have been a point of contention between State Government and Centre Government will be excluded.
  • Petroleum Crude.
  • High Speed Diesel.
  • Petrol and Natural Gas.
  • Aviation Turbine Fuel.
  • Alcohol for human consumption (Comes under State Government-VAT).
Other important features of GST are in case of supply of goods on inter-state trade an additional tax would be levied the: 
  • Rate of which will not exceed 1% & Will be collected by the central government for a period of two years( first two years from the time GST will be implemented).
  • Amount so collected will be assigned to the States from where the supply originates.
Benefits derived from implementing GST:
  • GST at a single and unified rate is a efficient solution as it simplifies the indirect tax structure to one general rate that can be paid by every person/companies.
  • All the key decisions are in the hands of the GST council.
  • With both representatives from Centre and State in place, State would have a say in the implementation of tax laws is their territories.
  • Full compensation for the first five years to the State Government for any kind of revenue loss would attract less resistance from States.

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