What is GST?
GST is an acronym for Goods and Services. GST is a single comprehensive destination based tax that will be levied on the supply of goods and services across India.
Will GST be applicable to the whole of India?
Yes, it will be applicable throughout India, including Jammu & Kashmir. While, currently, some tax laws are not applicable to Jammu &Kashmir, such as Excise Act. However, under GST, it will not be the case anymore.
Will GST be applicable to all Goods and Services?
It is applicable to all goods and services, except the following:
- Alcohol for human consumption (Alcohol for commercial consumption is covered under GST)
- Petroleum products (till notified otherwise at a future date on the recommendation of the GST Council)
- Electricity (Not confirmed yet)
- Real Estate –Sale Purchase of Property (not in the course of furtherance of business), payment of stamp duty only.
- Other products exempted by Government through exemption notification
*Taxes on tobacco and tobacco products imposed by the Centre shall continue to be levied over and above GST
In aforementioned cases, existing taxation system will continue to apply.
When will GST come in force?
GST is expected to come in force from July 1st 2017.
Which taxes will GST replace?
There are number of taxes in India which are levied by Central Government and State Governments. By introducing GST, Government is going to replace 17 different taxes by one tax, i.e. GST. Out of 16 taxes, 8 taxes are levied by the Central Government and 8 taxes are levied by the State Governments.
The GST will replace the following taxes:
Taxes levied and collected by the Central Government
Taxes levied and collected by the State Governments
|Central Excise Duty||State VAT/Sales Tax|
|Duties of Excise (Medicinal & Toilet preparation)||Central Sales Tax (levied by the Centre)|
|Additional Duties of Excise (Goods of Special Importance)||Luxury Tax|
|Additional Duties of Excise (Textiles & Textiles Products)||Entry Tax, such as Octroi, in all forms|
|Additional Duties of Custom (Commonly known as CVD)||Entertainment & Amusement Tax (Except when levied by the local municipal corporation)|
|Service Tax||Purchase Tax|
|Special additional duty of Custom (SAD)||Taxes on Lotteries, Betting & Gambling|
|Central Surcharges &Cessesin so far as they relate to supply of goods and services||State Surcharges &Cessesin so far as they relate to supply of goods and services|
What are the benefits of GST?
GST is going to transform India and the way the business is done in India for better. The difficulties with the current taxation regime are hidden to no one, for long, businesses have been burdened with double taxation, complicated rules, and uncompetitive tax rates and structures. Central and State Governments have been unable to control leakages from the system, and lastly, the public has been suffering from higher prices on goods and services. But no longer, once GST comes into effect the Indian economy will be set on course for unprecedented growth.
There will be number of benefits of GST, some of them are as follows:
Uniformity in tax rates and structures across the country, thereby allowing businesses to choose the place of business free of any tax considerations.
Minimal cascading of taxes by a system of seamless tax-credits throughout the value-chain.
Improved competitiveness domestically and internationally because of reduced compliance cost, abolishment of Central Sales Tax (CST), and comprehensive set-off of input goods and services.
A modern IT system for compliance of GST online, thus making compliance easy and transparent.
For Central and State Governments
Supported with a robust end-to-end IT infrastructure, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.
Better controls on leakages because of native feature in the design of GST that would incentivize tax compliance
Higher revenue efficiency because of harmonisation of central and state tax administrations, the cost of collection of tax revenues is expected to decrease.
For the Indian public
Relief in overall tax burden on most commodities because of efficiency gains, imposition of only single tax proportionate to the value of goods and services and prevention of leakages.