The introduction of Goods and Service tax would be one of the bigger reform in the Indian economy in the field of Indirect tax reforms. It would help in mitigating cascading or double taxation and pave the way for a common national market. In this article we are going to discuss all basics of GST.
A) What is GST?
GST is a tax that manufacturer/ trader/ Service provider have to pay on supply of goods & services and charged the same from the consumer.
B) Date of implementation?
As per the latest updates GST would be applicable from 1st July 2017. It seems little bit difficult as final GST law has not been approved yet and Moreover goods/ services are not yet categorized in relavant slabs of tax.
C) Expected Rate of GST?
GST council had prescribed four slabs of GST (excluding zero rated tax) i.e 5%, 12%,18% and 28%. Yet government not categorized any goods/services under relevant slabs.
5% would be for necessity goods, 12% and 18% would be for standard rate and 28% would be for luxury and sin goods.
D) Taxes that GST going to replace?
GST is going to replace almost all Indirect taxes in India as follow-
- Central excise duty and Additional excise duty
- Service Tax
- Additional and Special additional duty of customs
- Central cesses & surcharges on goods and services
- Central sales tax
- Purchase tax and luxury tax
- Entertainment tax
- Entry tax & Octroi
- Taxes on lottery
- Taxes on betting and gambling
E) Taxes to be remain?
Some indirect taxes still remain after implementation of GST as follow-
- Basic excise duty
- Taxes on liquor and petroleum products
- Stamp duty
- Excise duty on tobacco products
- Property tax
- Export duty
- Environment tax
- State electricity Duty
F) GST registration threshold?
Every supplier shall be liable to be registered in the state from where he makes a taxable supply if his aggregate turnover in a financial year exceeds Rs 20 lakh. (10 lakh in case if taxable person supplies goods/services from NE states).
G) Dual GST and IGST?
The GST will be a dual levy imposed concurrently by the Centre and the States.. It will have two components: one levied by the Centre and the other levied by the States.
For intra state supplies- CGST+SGST and for Interstate supplies – IGST would be charge.
H) Input Credit of input in GST?
Input tax in relation to a taxable person, means the (IGST and CGST) in respect of CGST Act and (IGST and SGST) in respect of SGST Act, charged on any supply of goods and/or services which are used in the course or furtherance of his business.
I) GST is consumption based tax?
GST is said to be destination-based or consumption-based tax. Hence, the place of consumption will decide the State that will collect tax.
J) Unutilized Input credit shall be allowed for GST?
In GST regime cross utilization of CGST and SGST credit will not be permitted except under IGST.
We hope this would definitlely help you to know a brief of GST as it is in edge of implementation from July 1st.