GST Tax Structure – Is It Really Simple?

Yes, GST is all around as biggest tax reform tool to solve the present complex tax structure.

Is it true?

Is GST really simplifying the current tax structure or it is just a fresher? Read the following 4 question and judge yourself:

1. WHAT IS THE CURRENT TAX STRUCTURE?

Current Tax Structure – Currently, two kinds of taxes are being levied:

Taxes by Central Government: – It includes, Central Excise duty, Service Tax, Central Custom Duty, Duties on excise on Medical and toilet preparations, and other industry based duties.

  • Tax by State Government: – it includes, VAT, CST, Entertainment Taxes, Octroi, Entry Tax,
  • Tax Lotteries, betting and gambling, stamp duty, motor vehicle taxes.

2. WHAT IS PROPOSED TAX STRUCTURE IN GST?

Proposed GST Tax Structure – As per the GST modal Laws, there would three kind of levies:

  • CGST (Central Goods & Service Tax): – CGST would be levied by central government, to replace:
    Central Excise Duty- charged on manufacturing and production
    Duty on Medical and toilet preparations – charged on manufacture medical products
    Service Tax – charged on provision of services
  • SGST (State Good & Service Tax) :- SGST would be levied by respective State Government. It would replace :

VAT – charged on sale of goods within the State
CST – charged on sale of goods within two States
Tax on lotteries, betting and gambling – charged on lotteries, betting and gambling

  • IGST (Inter-State Goods and Services Tax):- It would be levied on inter- State Supplies. It would be equal to CGST plus SGST.

3. WHETHER GST MODAL WOULD COVER ALL THE PRESENT TAXES ON GOODS AND SERVICES?

No, the following levies would not be covered in the proposed GST laws

  • Central excise duty on petroleum products
  • Tobacco would be subject to excise duty plus GST
  • Sales Tax on petroleum products would be levied by State Governments (it would be covered at later Stage)
  • Sales Tax on alcoholic liquor would be levied by State Government.
  • Tax on entertainment only by Municipalities, Panc
  • +++hayat, Regional council and District Council.

4.WHETHER PRESENT LAWS WOULD BE ABOLISHED?

These should be abolished, however I have doubt. Since some part of the present taxes would still continue to operate as discussed in question 3 above, either (i) new laws would be proposed for such taxes or (ii) existing laws would be modified to suit the proposed new structure.

5. WHAT IS THE CRUX?

Crux is that we perceived the GST as eight lane super national highway, but it turnout to be a typical Indian road with encroachments, potholes and diversions. Rest you are best to judge.

The article is based on the personal interpretation of laws which may differ person to person. Author can be reached at amarpal@centrik.in

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