Bird’s eye view on GST (Goods And Service Tax) by CS Aakanchha vyas.


Introduction:

GST is an indirect tax imposed on goods and services throughout India to replace taxes levied by central and state governments. It is a multi-stage, destination based tax that will be levied on every value addition. GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the producer’s point and service provider point up to the retailer level.

The final Consumer bear only the GST charged by the last dealer in the supply chain, with set off benefits at all the previous stages.

Example:-

Stages of supplier

Purchase value

Value addition

Value at which goods made available to next stage

Rate of GST

Tax

Input tax

Net GST

Manufacturer

100

30

130

10%

13

10

13-10=3

wholesaler

130

20

150

10%

15

13

15-13=2

Retailer

150

10

160

10%

16

15

16-15=1

  • Why GST Introduced?

GST is introduced by the government, to remove the additional burden of CENVAT and service tax and to establish a continuous chain of set-off benefits from the original producer’s point upto the retailer’s level. It also eliminates the burden of all cascading effects including the burden of CENVAT and service tax.

  • Features of GST:-
  • The GST model have two components one levied by the centre (CGST) and other levied by state (SGST).
  • The CGST and SGST would be applicable to all transactions of goods and services except the exempted goods and services.
  • The CGST and SGST are to be paid to the accounts of the centre and states separately.
  • The CGST and SGST are to be treated separately, the taxes paid against the CGST shall be allowed to be taken as input tax credit, for the CGST and could be utilized against the payment of CGST.
  • Cross utilization of ITC between the CGST and SGST would not be allowed.
  • The administration of the CGST would be with the centre and for the SGST with state.
  • The taxpayer would need to submit periodical returns to both the CGST and to the concerned SGST authorities.
  • Taxes subsumed under GST:-

Following central taxes subsumed under CGST:-

  • Central excise duty;
  • Additional excise duties;
  • Service tax;
  • Additional custom duty (CVD);
  • Special additional duty of custom;
  • Surcharge ;
  • Cesses;

Following states tax subsumed under SGST:-

  • Value added tax/sales tax;
  • Entertainment tax;
  • Luxury tax;
  • Taxes on lottery, betting, gambling;
  • Cess;
  • Entry tax not in lieu of octroi ;

 

  • Slab rates:-

0%

No tax will be imposed on items like fresh meat, fish, chicken, eggs, milk, butter milk, curd, natural honey, fresh, fruits and vegetables, flour, besan, bread , Prasad, salt, bindi, sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom etc.

5%

Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza, bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract tax of 5%.

12%

Frozen meet product, cheese, ghee, butter, dry fruits in packaged form, animal fat, sausage, fruit, juices, bhutia, namkeen, ayurvedic medicines, tooth powder, agarabati, colouring books, picture books, umbrella, sewing machine, and cellphones, will be under 12% tax slabs.

18%

Most items are under this tax slab which include flavoured refined sugar, pasta, cornflakes, pastries, cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, note books, steel product, camera, monitor, speakers, printed circuits.

28%

Chewing gum, molasses, chocolate not containing cocoa, waffles and wafers, coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye,  sunscreen, wallpaper, ceramic tiles, water, heater, dishwasher, weighing machine, washing machine, ATM, vending machine, chines, vacuum cleaner, shavers, hair, clippers, automobiles, motorcycles, aircraft for personal use, and yachts will attract 28% tax.

  • Benefits of GST:-

For centre and state government:-

  1. Simple and easy administration;
  2. Transparency;
  3. Higher revenue;
  4. Effective control;
  5. Remove cascading effects and double taxation;

For consumers:-

  1. Single tax;
  2. Less tax burden;
  3. Less and easy compliances;
  4. Removed multiple tax;

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