ALL ABOUT GST

Full Video of GST with all Details :- 

ABOUT:-

The Goods and Services Tax, which has been in the making for over nine years, is undoubtedly the most significant and transformative piece of tax reform that India has seen since Independence. 

It is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. One of the biggest taxation reforms in India – the GST – is all set to integrate State economies and boost overall growth.

At the Central level, GST will subsume Central excise duty, countervailing duty, service tax and additional customs duties 

while at the state level it will subsume value-added tax, entertainment tax, octroi and entry tax, luxury tax, lottery taxes and electricity duty.

The rate for GST is as yet undecided, but it would be in a range that would make exports competitive.

SALIENT FEATURES OF THE GST BILL

1. The Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 has been passed in Lok Sabha on May 5th, 2015, but is pending in Rajya Sabha.

2. A new Article 246A is proposed which will confer simultaneous power to Union and State legislatures to legislate on GST.

3. A new Article 279A is proposed for the creation of a Goods & Services Tax Council (GST Council) which will be a joint forum of the Centre and the States.

4. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. The tax collected would be divided between the Centre and the states in a manner to be provided by parliament, on the recommendations of the GST Council.

5. The bill will pave the way for the Centre to tax sale of goods and the states to tax provision of services.

6. Parliament may, by law, provide compensation to states for any loss of revenue from the introduction of GST, up to a five year period.

7. The bill proposes an additional tax not exceeding 1% on inter-state trade in goods, to be levied and collected by the Centre to compensate the states for two years, or as recommended by the GST Council, for losses resulting from implementing the GST.

COMPOSITION AND ROLE OF GST COUNCIL

Composition – 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 Minister nominated by each State Government would constitute the council to ensure that both the Centre and the states are on an equal footing.

The GST Council will recommend rates of tax, period of levy of additional tax, principles of supply, special provisions to certain states etc.

DUAL STRUCTURE OF GST

GST will have two components – Central GST levied by the Centre and State GST levied by the states.

The CGST will be framed based on the model GST law. Also the states will draft their own SGST based on the draft model law with minor variation incorporating state based exemption.

BRIEF HISTORY OF GST:-

In the Budget Speech of 2005-06, P. Chidambaram as Finance Minister of India, had set the goal of a Goods and Services Tax (GST). According to him, the fundamental objective of GST is to redeem the promise of Article 301 in Part XIII of the Constitution of India: “Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.”

WHY IS IT NEEDED  ??

1. It is estimated that GST can boost India’s GDP by 1-2 per cent.

2. GST will convert the country into unified market, replacing most indirect taxes with one tax.

3. GST is expected to provide the benefits of simplification of tax regime, broadening of tax base, elimination of tax cascades, enhancing export competitiveness, ensuring greater regional equity, and improvement in transparency.

4. GST is a Value added tax, i.e., the final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

5. GST has become a preferred global standard. All OECD countries, except the US, follow this taxation structure.

POINT OF CONTENTION BETWEEN THE CENTRE AND THE STATES

For the time being, the bill has kept certain goods out of the purview of GST, which have been a point of contention between state governments and the Centre.

These include:

* Petroleum crude
* High speed diesel
* Petrol
* Natural gas
* Aviation turbine fuel
* Alcohol for human consumption

At present, the Constitutional Amendment Bill covers all goods and services, except alcoholic liquor for human consumption. In the case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy of GST till a date notified on the recommendation of the Goods and Services Tax Council.

The States’ resistance to the inclusion of these sectors is primarily on account of fear of losing their fiscal autonomy and revenues from these sectors. Historically, the petroleum, alcohol and tobacco sectors have been “cash cows” for government revenues. State exchequers rely heavily on taxing these sectors.

Argument against their exclusion from GST – Their exclusion would lead to an erosion of the tax base for GST, adversely impacting the Revenue Neutral Rate (RNR) and raising the tax burden on other sectors.

FUTURE OF GST

Although the government had planned to roll out the GST from April 1, 2016, it seems difficult.

It has been held up in the Rajya Sabha due to objections being raised by the Opposition.

i) The Congress wants a provision capping the GST rate at 18 per cent to be added to the Bill itself.

ii) It also wants to scrap the proposed 1 per cent additional levy (over and above the GST) for manufacturing states.

iii) The third demand by the Congress was to change the composition of the GST council. The proposed composition is for the Council to be two-thirds comprised from states and one-third from the Centre. The Congress wants the Centre’s share to be reduced to one-fourth.