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Overview of GST(Goods and Services Tax)

GST(Goods and Services Tax)

Goods and Services Tax bill is India’s biggest reform in India’s indirect tax structure.The purpose of bill is
to introduce one single tx on supply of goods and services,from the manufacturing stage until its delivery to
final consumer.Interim tax stages such as excise duties and service tax and state levies like VAT will be
absorbed under GST.

GST aims to streamline the taxation structure in the country and replace indirect taxes with a singular GST
to simplify the taxation procedure.It avoids the cascading effect or tax on tax which increases the tax burden
on the end consumer.It is collected on goods and services at each point of sale in the supply line.

Benefits of GST(Goods and Services):

For business and industry:

  1. Easy compliance – All tax payer services such as registrations,returns,payments etc.would be available to
    the taxpayers online,which would make compliance easy and transparent.
  2. Uniformity of tax rates and structures – GST will ensure that indirect tax rates and structures are common
    across the country,thereby increasing certainty and ease of doing business.
  3. Removal of cascading – A system of seamless tax-credits throughout the value-chain,and across boundaries of
    States,would ensure that there is minimal cascading of taxes.It also reduce hidden costs of doing business.
  4. Improved Competitiveness:-Reduction in transaction costs of doing business would eventually lead to an
    improved competitiveness for the trade and industry.

For Central and States Governments:

  1. Simple and easy to administer- Multiple indirect taxes at the central and state levels are being replaced
    by GST. Backed with a robust end-to-end IT systems,GST would be simpler and easier to administer than all other
    indirect taxes of the Center and States leviesd on it.
  2. Higher revenue efficiency -GST is expected to decrease the cost of collection of tax revenues of the
    Government,and will therefore,lead to higher revenue efficiency

For the Consumer:

  1. Single and transparent tax proportionate to the value of goods and services:- Due to multiple indirect
    taxes being levied by the Center and State.Under GST, there would be only tax from the manufacture to the
    consumer,leading to transparency of taxes paid to the final consumer.
  2. Relief in overall tax burden:-Because of efficiency gains and prevention of leakages,the overall tax burden
    on most commodities will come down,which will benefits consumers.

Features of GST:

  1. The GST would be applicable on the supply of goods and services as against the present concept of tax on
    the manufacture or sale of goods or provision of services.It would be a destinaation based consumption tax.It would be a dual GST with the center and states simultaneously levying tax on a common tax base.
  2. The GST would apply to all goods other than alcoholic liquor for human consumption and five petroleum
    products ex:petroleum crude,motor spirit(petrol),high speed diesel,natural gas and aviation turbine fuel.
  3. The GST would replace the following taxes currently levied and collected by the centre:
    • Central Excise Duty.
    • Duties of Excise(Medical and Toilet Preparations).
    • Additional Duties of Excise(Goods of special Importance).
    • Additional Duites of Excise(Textiles and Textile Products).
    • Additional Duties of Customs.
    • Special Tax.
    • Central Surcharges(an additional charge/payment.) and Cess(Applied to local taxation,after complete work, tax will be removed.example: Krishi kalyan cess,education cess etc. )
  4. State taxes that would be subsumed under the GST are:
    • State VAT.
    • Central Sales Tax.
    • Luxury Tax.
    • Entry Tax(all forms).
    • Entertainment and Amusement Tax.
    • Taxes on advertisements.
    • Taxes on lotteries, betting and gambling.
    • State surcharges and Cesses so far as they relate to supply of goods and services.

GST Council:

GST Council aims to develop a harmonized national market of goods and services between the Center and the
States as well as among States.The GST Council shall established a mechanism to adjudicates arising out of its
recommendation or implementation thereof.

The GST Council will make recommendations on:

  • Taxes,cesses,and surcharges to be subsumed under the GST.
  • Goods and services which may be subject to,or exempt from GST.
  • The threshold limit of turnover for applicable of GSThe threshold limit of turnover for applicable of GST.
  • Rates of GST.
  • Model GST laws.
  • Special provisions with respect to the eight north eastern states,Himachal Pradesh,Jammu and Kashmir,and
    uttarakhand.
  • Other related matters.

CGST,SGST,IGST:

Full form of CGST– is Central Goods and services Tax.CGST is also charged on local sales within states.
It is charged and collected by central Government.It has replaced taxes like Central Excise and
Services tax.

Full form of SGST– is State Goods and Services Tax.SGST is also charged on Local Sales within States.It is
charged and collected by State Government.It has replaced taxes like VAT,Luxury Tax and Entertainment tax.

Full form of IGST– is Integrated Goods and Services Tax.IGST is charged on Central sales(Sales Outside State).
It is charged and collected by central government on interstate supply of Goods and services.It has replaced
taxes like CST(Central sales tax).

Features of proposed returns filing procedures under GST:

  1. Common return would serve the purpose of both Center and State Government.
  2. Basically there are 8 forms provided for in the GST business processes for filing for returns.But most
    popular return for supplies,return for purchases,monthly returns and annual return.
  3. Small taxpayers shall have to file return on Quarterly basis.
  4. Filing of returns shall be completely online.All taxes can also be paid online.