A Brief Introduction:
GST
is a comprehensive value added Tax on Goods & Services, collected at each
stage of supply chain, and with applicable set off in respect of the tax
remitted at previous stages. It is a destination based consumption tax i.e. on
final consumption. India has adopted concurrent Dual GST Model for implementing
GST i.e. Tax levied by Centre & State on both Goods & Services –
1. Central Goods &
Service Tax (CGST): It is a Central level
tax levied by Central Govt. which subsumes current central taxes such as
Central Excise Duty, Central Sales Tax, Additional Excise Duties, Service Tax,
CVD (Countervailing Duty or Additional Customs Duty), SAD (Special Additional
Duties of Custom, surcharges and subsumed. The revenue that shall be collected
under CGST shall belong to Central Govt. only.
2. State Goods &
Service Tax (SGST): For the purposes of
Intra-State supply of Goods & Services, SGST shall be levied which shall be
administered by State Govt. only.
3. Integrated Goods & Service
Tax (IGST): Being a hybrid of CGST & SGST,
IGST shall be levied for the purposes of Inter-State supply of goods &
services which shall be administered by Central Government.
Since
treatment of CGST & SGST to be done separately, Input Tax Credit for CGST
shall be allowed to be taken against taxes paid at central level only and
utilization of such credit can be done against the payment of CGST only. The
same principle shall be applicable on State level also. This concurrent dual
GST law does not permit cross set off of Input Tax Credit.
Why GST is necessary for India?
1. With
the launch of GST Bill, GDP Growth shall increase by approx. 1%
2. Increase
in Competition in International market by 5%
3. Boost
in Foreign Direct Investment
4. Abolition
of multiple taxes which will lead to One Nation – One Tax i.e. no more delays
due to different taxes levied by different states.
5. Direct
Tax & Indirect Tax Revenue shall get strengthened
6. Lower
transaction cost will in turn lead to minimal corruption.
7. Strikes
balance of fiscal autonomy between Centre & States.
GST,
a reform, will change the way of
generating revenues to the Central & State Governments which shall
ultimately contribute to the growth of Indian economy.
Do not miss our next update on Latest Amendments of
GST.
You
may drop in your queries at team@clicknfile.in
or directly get in touch with our finance/tax experts @ 8872032114, 8872032116,
8872013116
Updates that you would not like to miss –
1. In
GST, tax evasion up to Rs. 2 crore shall be a bailable offence. To make
goods and services tax regime less onerous, the Centre and states have decided
to make the penal provisions less stringent.
2. If a person who had taken voluntary registration but
fails to start business for six months, then the ‘Proper Officer’ can cancel
the registration on his own motion.
3. Temporary
use of business assets/services for private or non-business use is not Deemed
Supply in Revised GST Model Law.
4. Sale of shares outside the floor of Stock Exchange
is not an unlawful activity. Off-market transactions are not illegal. It is
always possible for the parties to enter into transactions even without the
help of brokers.
5. Trade
discount, as per order of Supreme Court of India, is deductible under VAT even
if it is given subsequent to sale via credit note.
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