Taxation
GST Bill tabled in Rajya Sabha but a long road ahead
On 3 August 2016, union finance minister Arun Jaitely tabled the Goods and Services Tax (GST) bill in Rajya Sabha. The GST will replace a patchwork of central and state levies on goods and services and will bring multiple taxes on goods and services and bring them under one rate. Once passed, the GST is expected to be the most significant tax reform since Independence. However, the passage of the GST Constitution Amendment Bill is just one milestone and lot will depend on its implementation.
 
Rohit Jain, Partner, Economic Laws Practice says that “though the passage of the Constitution Amendment Bill through the Rajya Sabha is one of the milestone moments for the introduction of GST. Thereafter, there is still a lot of ground to cover.” According to Jain, the government will need to take in to account stakeholder comments, formation of the GST Council, evolving the GST Network (GSTN) which will form the IT backbone and to ensure that there is breathing room for industry to prepare for the transition.
 
The actual GST rate will be decided over the next few months in consultation with state governments; it will then be brought for review to parliament in separate legislation. A GST Council combining representatives of the Centre with state governments, with decision-making powers skewed towards them will decide on the tax rate to be submitted to parliament for its review. Therefore, according to Mr Jain, an April 2017 deadline would therefore be challenging – realistically, the date may be closer to July or October 2017.
 
According to news reports, The National Institute of Public Finance and Policy (NIPFP) favoured a standard GST rate in the range of 23-25%. In December 2015, a committee headed by the chief economic adviser Dr Arvind Subramanian on ‘Possible Tax rates under GST’ recommended that lower rates be kept around 12% (Centre plus states) with standard rates varying between 17% and 18%. On the revenue neutral rate, the Committee’s view was that the range should between 15% and 15.5% (Centre and states combined) but with a preference for the lower end of that range based on the analysis in this report.
 
The Central levies which would be subsumed under GST are Central Excise Duty, Service Tax, Countervailing Duty (CVD) on imports, Special Additional Duty (SAD) on imports, Surcharges and Cesses. The State levies which would be subsumed under GST are VAT / Sales Tax, Luxury Tax, Taxes on Lottery, Betting and Gambling, Entertainment Tax, Entry Tax (not in lieu of Octroi), State Surcharges and Cesses.
 
The GST bill will cover taxes like central excise duty, state-level taxes like, VAT or sales tax, entertainment tax, entry tax, purchase tax, luxury tax and octroi. The reform will create uniformity in taxes across states, increasing efficiency & compliance. The Rajya Sabha appears ready to approve an amendment to the constitution that gives the government new taxation powers.  

User

Goods and Services Tax: Frequently Asked Questions
1. What is Goods and Services Tax (GST)? How does it work? 
The GST is a single indirect tax for the whole nation, which will make India one unified common market. It is a single tax on the supply of goods and services, right from the manufacturer to the consumer.
 
Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
 
2. What are the benefits of GST?
 
The benefits of GST can be summarised as under:
 
-- For business and industry:
 
** Easy compliance
** Uniformity of tax rates and structures
** Removal of cascading
** Improved competitiveness
** Gain to manufacturers and exporters
 
-- For central and state governments:
 
** Simple and easy to administer
** Better controls on leakage
** Higher revenue efficiency
 
-- For the consumer:
 
** Single and transparent tax proportionate to the value of goods and services
** Relief in overall tax burden
 
3. Which taxes at the Centre and state level are being subsumed into GST?
 
At the Central level: 
 
Central excise duty, additional excise duty, service tax, additional customs duty (commonly known as countervailing duty) and special additional duty of customs.
 
At the state level: Subsuming of state value added tax/sales tax, entertainment tax (other than the tax levied by the local bodies), central sales tax (levied by the Centre and collected by the states), octroi and entry tax, purchase tax, luxury tax, and taxes on lottery, betting and gambling.
 
4. How will GST be levied?
 
The Central GST (CGST) and the State GST (SGST) would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. 
 
Further, both would be levied on the same price or value unlike state value added tax, which is levied on the value of the goods inclusive of central excise.
 
5. How will imports be taxed under GST?
 
The Additional Duty of Excise and the Special Additional Duty presently being levied on imports will be subsumed under GST. Unlike in the present regime, the states where imported goods are consumed will now gain their share from this Integrated GST paid on imported goods.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

COMMENTS

Dahyabhai S Patel

4 months ago

What would be the status of taxes like STT, Stamp Duty, Turnover Tax, Swachchha Bharat cess and Krishi Kalyan Cess which are levied on trading of securities?

Pradeep Kumar M Sreedharan

4 months ago

Is it true that potable alcohol, petrol,Real estate are outside the purview of GST?

Emami Ltd's net profit down in Q1, augments production capacity
Fast moving consumer goods major Emami Ltd. on Wednesday reported a 34.59 per cent dip in its net profit to Rs 56.65 crore in the this fiscal's first quarter ended June 30 compared with Rs 86.61 crore in the corresponding period last fiscal.
 
The company is setting up a third manufacturing unit at Guwahati in Assam under a mega project. "The total planned outlay for the project is Rs 300 crore, out of which the company has already invested Rs 195 crore. The unit is expected to commence operations by FY17," said a company statement.
 
The net profit was impacted due to amortisation of Kesh King intangibles. 
 
"PAT (profit after tax), however, was impacted by Rs 60 crore, mainly because of amortisation of Kesh King intangibles. However, cash profits at Rs 128 crore grew by 18 per cent during the quarter," it said.
 
Overall, the domestic business delivered a strong topline growth of 21 per cent and CSD business grew by 12 per cent.
 
While the turnover at Rs 644 crore in the first quarter grew by 20 per cent, EBIDTA grew 49 per cent to Rs 147 crore over the corresponding quarter in previous year.
 
International business grew by 14 per cent during the quarter despite economic challenges in the overseas markets led by robust growth in Bangladesh and Gulf Cooperation Council.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)