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For All SSB Candidates GST and its importance

For All SSB Candidates GST and its importance

                                                        GST One NATION One Tax

gst one nation one tax

 

GST TIMELINE
2000 : The then PM Atal Bihari Vajpayee intruded this concept to India and set up a committee under the then West Bengal Finance Minister Asim Dasgupta to design a GST model for India

2003 : The BJP Government form a task force under Vijay Kelkar to recommend tax reform . In 2004 it recommended GST to replace all the Indirect Taxes.

2006: For the first time GST Made its appearance in the budget speech by then finance minister P. Chidambram and April 1, 2010 is set up as an ambitious date for its implementation

2008: The empowered committee submitted a report titled “ A model and roadmap for goods and Service tax in India “

2009 : The then Finance Minister Pranab Mukherjee Announced the basic structure of GST as designed by Dasgupta committee deadline of 2010 retained

2011: UPA 2 tabled 115th constitutional amendement in LS to pass GST

2011: The GST referred to parliamentary standing committee led by Yashwant Sinha

2013:The parliamentary committee submits its report

2014: GST Bill cleared by standing committee lapses as lok sabha dissolves

2014: Arun Jaitley (FINANCE MINISTER) introduces the bill 122nd constitutional amendment Congress objects demands capping rate at 18 percent

2016: Congress and BJP Agree to pass the bill

Sept 2016 : 16 states ratify it , Pranab Mukherjee gives assent to the bill

June 30 Midnight : Roll out of the GST Bill

THE CONCEPT
GST is a destination based Single tax on the supply of goods and services from manufacturer to the consumer and is one direct tax for the entire country . It will replace all the cascading taxes such as octori, CENVAT , central sales tax , states sales tax
It is a Consumption based tax where in taxes are to be paid to the state where the goods and services and not the state where they are produced .
The centre will levy it CGST and where as the states will levy its SGST whereas IGST will be levied by the centre in case of inter state supply of goods and services in accordance with the share of the states where the goods and services are consumed.
Whereas VAT was imposed at various stages GST will be imposed only at one stage at the destination point.

Taxes subsumed under GST                                                                                     state level
Central level                                                                                                              state value added tax
Duties of excise(Medicinal and toilet preparations)                                          entertainment tax(other than the tax levied by the local bodies
Additional excise duty                                                                                             central sales tax(levied by the centre and collection by the states
Additional customs duty commonly known as countervailing duty               octroi and entry tax
Special additional duty of customs                                                                       purchase tax
Cesses and surcharges in so far as they relate to supply of goods or             taxes on lottery, betting and gambling
services. Luxury tax.                                                                                                  Taxes on advertisements
state cesses and surcharges in so far as they relate to supply of                                 .                                                                                                                                     goods and service

NOTE:GST applies to all goods and services (including tobacco products),except alcohol for human consumption.GST on the specified petrolumn products(crude, petrol,diesel,aviation turbine fuel&natural gas)would be applicable from a date to be recommended by the gst council.
VAT V/S GST

        VAT                                                                                                                     GST
MAJOR FEATURES               Structure of vat in different states               A dual tax with both central gst and                                                                                                                                     state gst is levied on the                        .                                                                                                                                       same base.GST to have four rates(5% 12,18,28%
Differed,vat rates also differed.                                The introducing of gst not only includes ,more

indirect                              .                                                           central/state taxes and integrate goods and services taxes ,but          .                                                                                                      also captures valus addition in distributive trade from the .                            .                                                                                original producer’s and service provider’s point upto the .                                                                                  .                   retailer’s level the eliminates the burden of all casacading effects
coverages                         relatively narrow base and separate service tax.     Wider base and applied on both goods and services
Procedures for collection of tax          it varied from state to state                uniform throughout the country
Tax administration                               complex due to number of taxes        simple,easy and tax payer friendly
Use of information technology                      not much.                         completely it based .it success to a great extent depend on it for which           .                                                                                                                                   .                                                                                                                the goods and services tax and networks(GSTN)-                   .                                                                                                                  has been formed.
CHALLENGES
GST undoubtedly brings supply chain efficiencies in manufacturing but since it is a destination tax, it has intrinstic disincentive for the manufacturing states.for example,s tates like tamil nadu,india’s manufacturing hub  had opposed the GST precisely due to this reason ,as it saw a huge revenue loss under GST the political opposition to the GST primarily arising from manufacturing states have been placated for the time being with the assurance of compensation for  revenue losses a fund of RS -55,000 crore created with the levy of a cess on luxury and demerit goods.
However, this is a temporary relief and in a long run disincentives manufacturing states.
Another big concern arises from the requirement of huge it enabled infrastructure and corresponding skills base required for GST. Looking back at the chaos during demonetisation this is another big decision from current government where the lack of preparedness is quieter visible with rise in number of online returns to be filled under the new system existing inadequate it infrastructure and poor digital literacy can act as a spoiler.

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