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Tuesday 18 July 2017

GST: GOODS AND SERVICES TAX

                                     GST: GOODS AND SERVICES TAX



       Goods and Services Tax:   

                                              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.
                         In other words: 
                         GST is one indirect tax for the whole nation, which will make India
                         one unified common market.


                                               A nationwide tax reform cannot function without strict 
                        guidelines and provisions. The GST Council has devised a fool proof 
                        method of implementing this new tax regime by dividing it into three
                        categories. 
                        Wondering how they work? Let our experts explain this to you in detail.

                        In most cases, the tax structure under the new regime will be as follows:


       Transaction                      New Regime             Old Regime                     Comments

    Sale within the state            CGST + SGST         VAT + Central Excise       Revenue will now be                                                                                                                                 /Service tax               shared between the                                                                                                                                                                           Centre and the State


    Sale to another State                    IGST              Central Sales Tax            There will only be one                                                                                                                  + Excise/Service Tax         type of tax (central)                                                                                                                                                                             now in case of 
                                                                                                                                              inter-state sales.




         GST Law in India – A Detailed History:



                                          GST is not a new phenomenon. It was first implemented in 
                    France in 1954, and since then many countries have implemented this 
                    unified taxation system to become part of a global whole. Now that India 
                    is adopting this new tax regime, let us look back at the how and when of 
                    the Goods and Services Tax and its history in the nation.


           What are final GST rate slabs?


                                        The Goods and Services Tax (GST) will be levied at multiple 
                      rates ranging from 0 per cent to 28 per cent. GST Council finalised a 
                      four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates
                      for essential items and the highest for luxury and de-merits goods that 
                     would also attract an additional cess.

                    Service Tax will go up from 15% to 18%. The services being taxed at
                    lower rates, owing to the provision of abatement, such as train tickets,
                    will fall in the lower slabs.
                    In order to control inflation, essential items including food, which presently 
                    constitute roughly half of the consumer inflation basket, will be taxed at zero
                    rates.

                    The lowest rate of 5% would be for common use items. There would be two
                    standard rates of 12 per cent and 18 per cent, which would fall on the bulk 
                    of the goods and services. This includes fast-moving consumer goods.

                   Highest tax slab will be applicable to items which are currently taxed at 
                   30-31% (excise duty plus VAT).

                   Ultra luxuries, Demerit and Sin Goods (like tobacco and aerated drinks),
                   will attract a cess for a period of five years on top of the 28 per cent GST.

                   The collection from this cess, as well as that of the clean energy cess, would 
                   create a revenue pool which would be used for compensating states for any
                   loss of revenue during the first five years of implementation of GST.
                   Finance minister said that the cess would be lapsable after five years.

                   The structure to agree is a compromise to accommodate a demand for the
                   highest tax rate of 40% by states like Kerala.
                   While the Centre proposed to levy a 4% GST on gold but the final decision 
                   on this was put off. 
                   During a press conference, finance minister Mr Jaitley said, “GST rate on
                   gold will be finalised after the fitting to the approved rates structure of all 
                   items are completed and there is some idea of revenue projections”.

                  The principle for determining the rate on each item will be to levy and collect
                  the GST at the rate slab closest to the current tax incidence on it.

                  The GST will subsume the multitude of cesses currently in place, including 
                   the Swachh Bharat Cess, the Krishi Kalyan Cess and the Education Cess. 
                   Only the Clean Environment Cess is being retained, revenues from which 
                   will also fund the compensations.!!!




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