Goods and Services Tax (India)

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Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of
the existing taxes into single system of taxation accordingly .
"Goods and Services Tax" would be a comprehensive indirect tax on manufacture, sale and
consumption of goods and services throughout India, to replace taxes levied by
the central and state governments. Goods and Services Tax would be levied and collected at each
stage of sale or purchase of goods or services based on the input tax credit method. This method
allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of
goods or services as part of their normal commercial activity. Taxable goods and services are not
distinguished from one another and are taxed at a single rate in a supply chain till the goods or
services reach the consumer. Administrative responsibility would generally rest with a single
authority to levy tax on goods and services.[1] Exports would be zero-rated and imports would be
levied the same taxes as domestic goods and services adhering to the destination principle.
The introduction of Goods and Services Tax (GST) would be a significant step in the reform of
indirect taxation in India. Amalgamating several Central and State taxes into a single tax would
mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax
should lead to easier administration and enforcement. From the consumer point of view, the biggest
advantage would be in terms of a reduction in the overall tax burden on goods, which is currently
estimated at 25%-30%,[2] free movement of goods from one state to another without stopping at state
borders for hours for payment of state tax or entry tax and reduction in paperwork to a large extent.
What changes there would be if India launches GST- The tax rate under GST may be nominal or
zero rated for the time being. It has been proposed to insulate the revenues of the States from the
impact of GST, with the expectation that in due course, GST will be levied on petroleum and
petroleum products. The central government has assured states of compensation for any revenue
losses incurred by them from the date of introduction of GST for a period of five years. [3]
As India is a federal republic GST would be implemented concurrently by the central government
and by state governments.[4]
Contents
[hide]

1History

2Constitutional amendment

3Legislation

4GST council

5GSTN

6Current vs Proposed regime of Indirect Tax in India

6.1Current Indirect Tax Regime in India

6.1.1Problems in the Present Structure

6.2Multiplicity of Taxes

6.3Complex

6.4Cascading effects of taxes

6.5Multiple Compliance

6.6Tax Arbitrage

7Tax-Rate under the proposed GST

8Migration of the existing taxpayers to GST regime

9Renewed GST concerns

10See also

11External links

12References

History[edit]
The taxes which will be subsumed into GST include central excise duty, services tax, additional
customs duty, surchargesand state-level value added tax.[5]

Constitutional amendment[edit]
Main article: Goods and Services Tax Bill
The Constitution (One Hundred Twenty second Amendment) Bill, 2014 proposes a national Value
added Tax to be implemented in India[6] from 1 April 2017.[7][8]

Legislation[edit]
The draft GST law proposed in the parliament indicates all the entities that lie under the GST Bill.
The GST bill comes directly under the Central government and there is a certain procedure that is
meant to provide the feasible condition for the taxpayer. The power to grant exemption from the tax
between the states and the central government is well explained in the draft bill. The Central Goods
and Services tax grants power to the officers to discharge their duties under the GST Act. [9]
On September 8, Indian President Pranab Mukherjee has signed the bill and it becomes a law.[10]

GST council[edit]
GST threshold was set at 10 lakh (US$15,000) for the north-east and hill states and 20
lakh (US$30,000) for other states in the first GST council meet.[11]

GSTN[edit]
Goods and Services Tax Network (GSTN) is a not-for-profit, non-government firm that would provide
IT infrastructure and services to the central and state governments, taxpayers and other
stakeholders for implementation of the Goods and Services Tax (GST). [12]

Current vs Proposed regime of Indirect Tax in India [edit]

Current Indirect Tax Regime in India[edit]
Problems in the Present Structure[edit]
Present Indirect structure is marked with following problems:[13]

Multiplicity of Taxes[edit]
Presently, the Constitution empowers the Central Government to levy excise duty on manufacturing
and service tax on the supply of services. Further, it empowers the State Governments to levy sales
tax or value added tax (VAT) on the sale of goods. This exclusive division of fiscal powers has led to
a multiplicity of indirect taxes in the country. In addition, central sales tax (CST) is levied on interState sale of goods by the Central Government, but collected and retained by the exporting States.
Further, many States levy an entry tax on the entry of goods in local areas. Taxes by Union
Government, State Governments and the local governments have resulted in difficulties and
harassment to the tax payer. He has to contact several authorities and maintain separate records for
each of them.

Complex[edit]
The taxes are levied by central government as well as state government. So, a person has to
maintain accounts which will comply with all the applicable laws. This multiplicity of taxes at the State
and Central levels has resulted in a complex indirect tax structure in the country that is ridden with
hidden costs for the trade and industry.

Cascading effects of taxes[edit]

In current indirect tax structure in India, there is cascading of taxes due to tax on tax. No credit of
excise duty and service tax paid at the stage of manufacture is available to the traders while paying
the State level sales tax or VAT, and vice versa. Further, no credit of State taxes paid in one State

can be availed in other States. Hence, the prices of goods and services get artificially inflated to the
extent of this tax on tax.

Multiple Compliance[edit]
A business person might have to comply with multiple compliance in terms of indirect taxes in India.
Certain major compliance in different states with different set of laws is as under:

Applicability

Law

Return filing
frequency

Due date of Filing Return

Due date of Pmt of Tax

For each
Factory

Excises
Duty

Monthly /
Quarterly

12th of succeeding month

12th of succeeding month

For each
premises

Service
Tax

Half Yearly

25th of succeeding month

after Half year

5/6th of succeeding
month

Karnataka

VAT

Monthly

20 days

20 days

Assam

VAT

Monthly

21 days

21 days

Tamil Nadu

VAT

Monthly

20 days

20 days

U.P.

VAT

Monthly

20 days

20 days

A.P.

VAT

Monthly

20 days

15 days

Kerala

VAT

Monthly

15 days

15 days

Gujarat

VAT

Monthly

30 days

22 days

Maharashtra

VAT

Monthly

30 days from half year

30 days

Delhi

VAT

Monthly

25 days

25 days

M.P.

VAT

Quarter

30th of month following

up to 10th of following

qtr.

month

Rajasthan

VAT

Quarter

30th of month following

qtr.

up to 14th of following
month

W.B.

VAT

Quarter

30th or 31st of month

following qtr.

30th or 31st of month

following qtr.

Tripura

VAT

Quarter

1 month from end of

Relevant Qtr.

1 month from end of

Relevant Qtr.

Himachal
Pradesh

VAT

Quarter

30th of Expiry of each Qtr.

10 days before expiry of

Return filing

Tax Arbitrage[edit]
The problem of tax arbitrage for a single nation poses an invisible barrier for free trade. In many
cases, a small difference in rate of tax can result in manifold implications and thus, can induce the
business to move into a lower tax territory. As an example, the different rate of VAT as levied on sale
of goods in different states is as under
S. No.

State

VAT Rate in Percentage

Essential goods

General rate

Andhra Pradesh

4.00

14.50

Assam

5.00

13.50

Bihar

4.00

12.50

Chandigarh

5.00

12.50

Gujarat

5.00

15.00

Haryana

5.25

13.125

Himachal Pradesh

5.00

13.75

Karnataka

5.50

14.50

Kerala

4.04

12.625

10

Madhya Pradesh

5.00

13.00

11

Maharashtra

6.00

13.50

12

Delhi

5.00

12.50

13

Rajasthan

5.00

14.00

14

Tamil Nadu

4.00

12.50

15

Tripura

4.00

12.50

16

Uttar Pradesh

5.00

13.50

17

Uttarakhand

4.50

14.50

18

West Bengal

4.00

13.50

Similarly, Entry tax also acts as barrier for free trade.

GST is seen as a solution to the above problems.
GST shall subsume the following taxes in the times to come once the law is in force:

The proposed GST regime shall have the following features:

It shall be a destination based taxation

It shall have a Dual Administration Centre and state

State wise determination of taxable person no more centralized registration

Seamless credit amongst goods and services

Tax-Rate under the proposed GST[edit]

As per the decisions made by all will of GST Council on November 3rd, 2016, The tax rates would be
at 4 slabs of 5%, 12%, 18% and 28%. Although rates have come down, tax collection would go up
due to increased tax elasticity. The government is working on a special IT platform for smooth
implementation of the proposed Goods and Services Tax (GST). The IT special vehicle (SPV)
christened as GST N (Network) will be owned by three stakeholdersthe centre, the states and the
technology partner NSDL, then Central Board of Excise and Customs (CBEC) Chairman S Dutt
Majumdar said while addressing a "National Conference on GST". On the possibility of rolling out
GST, he said, "There was no need for alarm if GST was not rolled out in April 1, 2012. [14]

Migration of the existing taxpayers to GST regime[edit]

All the existing taxpayers registered under VAT, Service Tax, and Excise are required to furnish the
details at GST Common portal for the purpose of migrating themselves into GST regime. To begin
with, the taxpayers registered under the State Vat Department needs to provide their details and
period for furnishing these details are specified for every state.Once the taxpayers provide their

details there will be no need for them to register again with the State or Center once the GST Act is
implemented. Enrolment process for other existing taxpayers not registered with VAT will be started
at a later date.[15]

Renewed GST concerns[edit]

With heterogeneous State laws on VAT, the debate on the necessity for a GST has been reignited [16]
[citation needed]
. The best GST systems across the world use a single GST, while India has opted for a dualGST model. Critics claim that CGST, SGST and IGST are nothing but new names for Central
Excise/Service Tax, VAT and CST, and hence GST brings nothing new to the table. The concept of
value-added has never been utilized in the levy of service, as the Delhi High Court is attempting to
prove in the case of Home Solution Retail, while under Central Excise the focus is on defining and
refining the definition of manufacture, instead of focusing on value additions. The Revenue can be
very stubborn when it comes to refunds, as the Maharashtra Government proves, and software
entities that applied for refunds on excess service tax paid on inputs discovered [citation needed].[14]
The all-new Cenvat Credit Rules, 2014 do little to clarify eligibility for input credits, by using general
terms such as "any goods which have no relationship whatsoever with the manufacture of a final
product" and "services used primarily for personal use or consumption of any employee" [citation needed].[17]

One Hundred and First Amendment of the

Constitution of India
From Wikipedia, the free encyclopedia

This article is about Constitutional amendment act. For GST (tax), see Goods and Services Tax
(India).

The Constitution (One Hundred and

First Amendment) Act, 2016

Parliament of India

An Act further to amend the Constitution of India.

Citation

101st Amendment

Territorial extent India

Enacted by

Lok Sabha

Date passed

8 August 2016

Enacted by

Rajya Sabha

Date passed

3 August 2016

Date assented to 8 September 2016

Date

1 April 2017

commenced

Legislative history

Billintroduced in The Constitution (One Hundred and

the Lok Sabha

Twenty-Second Amendment) Bill,

2014

Bill citation

Bill No. 192 of 2014

Bill published on 19 December 2014

Introduced by

Arun Jaitley

Committee

Report of the Select Committee

report

Status: In force

The One Hundred and First Amendment of the Constitution of India, officially known as The
Constitution (One Hundred and First Amendment) Act, 2016, introduced a national Goods and
Services Tax in India from 1 April 2017.[1][2][3][4]
The GST is a Value added Tax (VAT) and is proposed to be a comprehensive indirect tax levy on
manufacture, sale and consumption of goods as well as services at the national level. It will replace
all indirect taxes levied on goods and services by the Indian Central and State governments. It is
aimed at being comprehensive for most goods and services.[5][6]
Contents
[hide]

1Background

2Legislative history
2.1Ratification

3See also

4Notes

5References

6External links

Background[edit]
Part of a series on

Constitution of India

Preamble

Parts[show]

Schedules[show]

Appendices[show]

Amendments[show]

Related topics[show]

An empowered committee was set up by the Atal Bihari Vajpayee administration in 2000 to
streamline the GST model to be adopted and to develop the required back-end infrastructure that
would be needed for its implementation.[7][8]
In his budget speech on 28 February 2006, P. Chidambaram, the then Finance Minister, announced
the target date for implementation of GST to be 1 April 2010 and formed another empowered
committee of State Finance Ministers to design the roadmap. The committee submitted its report to
the government in April 2008 and released its First Discussion Paper on GST in India in 2009. [7]Since
the proposal involved reform/ restructuring of not only indirect taxes levied by the Center but also the
States, the responsibility of preparing a Design and Road Map for the implementation of GST was
assigned to the Empowered Committee of State Finance Ministers (EC). In April, 2008, the EC
submitted a report, titled "A Model and Road map for Goods and Services Tax (GST) in India"
containing broad recommendations about the structure and design of GST. In response to the report,
the Department of Revenue made some suggestions to be incorporated in the design and structure
of proposed GST bill . Based on inputs from GoI and States, The EC released its First Discussion
Paper on Goods and Services Tax in India on the 10th of November, 2009 with the objective of
generating a debate and obtaining inputs from all stakeholders.
A dual GST module for the country has been proposed by the EC. This dual GST model has been
accepted by centre. Under this model GST have two components viz. the Central GST to be levied
and collected by the Centre and the State GST to be levied and collected by the respective States.
Central Excise duty, additional excise duty, Service Tax, and additional duty of customs (equivalent
to excise), State VAT, entertainment tax, taxes on lotteries, betting and gambling and entry tax (not
levied by local bodies) would be subsumed within GST. Other taxes which will be subsumed with
GST are Octroi, entry tax and luxury tax thus making it a single indirect tax in India. [9]
In order to take the GST related work further, a Joint Working Group consisting of officers from
Central as well as State Government was constituted. This was further trifurcated into three SubWorking Groups to work separately on draft legislations required for GST, process/forms to be
followed in GST regime and IT infrastructure development needed for smooth functioning of
proposed GST. In addition, an Empowered Group for development of IT Systems required for Goods
and Services Tax regime has been set up under the chairmanship of Dr. Nandan
Nilekani.Amendment

Legislative history[edit]
The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 was introduced in
the Lok Sabha by Finance Minister Arun Jaitley on 19 December 2014, and passed by the House on
6 May 2015. In the Rajya Sabha, the bill was referred to a Select Committee on 14 May 2015. The
Select Committee of the Rajya Sabha submitted its report on the bill on 22 July 2015. The bill was
passed by the Rajya Sabha on 3 August 2016, and the amended bill was passed by the Lok Sabha
on 8 August 2016.[10]
The bill, after ratification by the States, received assent from President Pranab Mukherjee on 8
September 2016,[11][12] and was notified in The Gazette of India on the same date.[13]

Ratification[edit]
The Act was passed in accordance with the provisions of Article 368 of the Constitution, and has
been ratified by more than half of the State Legislatures, as required under Clause (2) of the said
article. On 12 August 2016, Assam became the first state to ratify the bill, when the Assam
Legislative Assembly unanimously approved it.[14][15] State Legislatures that ratified the amendment
are listed below:[16]

1. Assam (12 August)

2. Bihar (16 August)[17][18]
3. Jharkhand (17 August)[19]
4. Himachal Pradesh (22 August)[20]
5. Chhattisgarh (22 August)[21]
6. Gujarat (23 August)[22]
7. Madhya Pradesh (24 August)[23]
8. Delhi (24 August)[24]
9. Nagaland (26 August)[25]
10. Maharashtra (29 August)[26]
11. Haryana (29 August)[27]
12. Telangana (30 August)[28]
13. Sikkim (30 August)[29]
14. Mizoram (30 August)[30]
15. Goa (31 August)[31]
16. Odisha (1 September)[32]
17. Puducherry (2 September)[33]
18. Rajasthan (2 September)[34]
19. Andhra Pradesh (8 September)[35]
20. Arunachal Pradesh (8 September)[36]

21. Meghalaya (9 September)[37]

22. Punjab (12 September)[38]
23. Tripura (26 September)

[39]