Hello and welcome to exampundit. So here is an article on Goods & Services Tax under our Banking Awareness 2017 Series.
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. It was introduced by The Constitution (One Hundred and First Amendment) Act 2016.
“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.
Features:
- GST is one indirect tax for the whole nation, which will make India one unified common market.
- GST 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.
- GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes.
Which taxes at the Centre and State level are being subsumed into GST?
At the Central level, the following taxes are being subsumed:
I. Central Excise Duty,
II. Additional Excise Duty,
III. Service Tax,
IV. Additional Customs Duty commonly known as Countervailing Duty, and
V. Special Additional Duty of Customs.
At the State level, the following taxes are being subsumed:
I. Subsuming of State Value Added Tax/Sales Tax,
II. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
III. Octroi and Entry tax,
IV. Purchase Tax,
V. Luxury tax, and
VI. Taxes on lottery, betting and gambling.
The GST council on 3 November 2016 approved four tier tax structure of 5, 12, 18 and 28 percent under the proposed Goods and Services Tax (GST) and one No Tax slab. There will be two standard tax rates- 12 percent and 18 percent under the GST. Under the tax structure of 5, 12, 18 and 28 percent, the lower rates will be applicable for essential items and the highest for luxury and de-merits goods that will also attract an additional cess.
Main Highlights
- Essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate.
- The lowest rate of 5 percent will be for common use items while there will be two standard rates of 12 and 18 percent under the Goods and Services Tax (GST) regime.
- Most white goods like washing machines, air conditioners, refrigerators, shampoo, shaving stuff and soap will be taxed at 28 percent (with riders).
- The highest tax slab will be applicable to items which are currently taxed at 30-31 percent (excise duty plus VAT).
- Demerit goods or sin goods such as luxury cars, pan masala, aerated drinks, and tobacco and tobacco products, will invite a tax of 28 percent plus the cess which could vary between 40 percent and 65 percent.
- There has been no consensus yet on tax rate for gold.
- The collection from this cess as well as that of the clean energy cess will create a revenue pool which will be used for compensating states for any loss of revenue during the first five years of implementation of GST.
- The cess will be lapsable after five years.
- GST threshold was set at ₹10 lakh for the north-east and hill states and ₹20 lakh for other states in the first GST council meet.
- Centre and states agreed that assessee up to ₹1.5 crore will be assessed by states and above that will be assessed by centre and states.
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.
GST SLABS & Rate List
No tax (0%)
Goods
No tax will be imposed on items like Jute, fresh meat, fish
chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and
vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial
papers, printed books, newspapers, bangles, handloom, Bones and horn cores,
bone grist, bone meal, etc.; hoof meal, horn meal, Cereal grains hulled,
Palmyra jaggery, Salt – all types, Kajal, Children’s’ picture, drawing or
colouring books, Human hair
chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and
vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial
papers, printed books, newspapers, bangles, handloom, Bones and horn cores,
bone grist, bone meal, etc.; hoof meal, horn meal, Cereal grains hulled,
Palmyra jaggery, Salt – all types, Kajal, Children’s’ picture, drawing or
colouring books, Human hair
Services
Hotels and lodges with tariff below Rs 1,000, Grandfathering
service has been exempted under GST. Rough precious and semi-precious stones
will attract GST rate of 0.25 per cent.
service has been exempted under GST. Rough precious and semi-precious stones
will attract GST rate of 0.25 per cent.
5%
Goods
Items such as fish fillet, Apparel below Rs 1000, packaged
food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer,
frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene,
coal, medicines, stent, lifeboats, Cashew nut, Cashew nut in shell, Raisin, Ice
and snow, Bio gas, Insulin, Agarbatti, Kites, Postage or revenue stamps,
stamp-post marks, first-day covers
food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer,
frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene,
coal, medicines, stent, lifeboats, Cashew nut, Cashew nut in shell, Raisin, Ice
and snow, Bio gas, Insulin, Agarbatti, Kites, Postage or revenue stamps,
stamp-post marks, first-day covers
Services
Transport Services (Railways,
air transport), small restraurants will be under the 5% category because their
main input is petroleum, which is outside GST ambit.
air transport), small restraurants will be under the 5% category because their
main input is petroleum, which is outside GST ambit.
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12%
Goods
Apparel above Rs 1000, frozen meat products , butter,
cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices,
Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books,
picture books, umbrella, sewing machine, cellphones, Ketchup & Sauces, All
diagnostic kits and reagents, Exercise books and note books, Spoons, forks,
ladles, skimmers, cake servers, fish knives, tongs, Spectacles, corrective,
Playing cards, chess board, carom board and other board games, like ludo,
cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices,
Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books,
picture books, umbrella, sewing machine, cellphones, Ketchup & Sauces, All
diagnostic kits and reagents, Exercise books and note books, Spoons, forks,
ladles, skimmers, cake servers, fish knives, tongs, Spectacles, corrective,
Playing cards, chess board, carom board and other board games, like ludo,
Services
State-run lotteries, Non-AC hotels, business class air
ticket, fertilisers, Work Contracts will fall under 12 per cent GST tax slab
ticket, fertilisers, Work Contracts will fall under 12 per cent GST tax slab
18%
Goods
Most items are under this tax slab which include footwear
costing more than Rs 500, Trademarks, goodwill, software, Bidi Patta, Biscuits
(All catogories), flavoured refined sugar, pasta, cornflakes, pastries and
cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food
mixes, mineral water, tissues, envelopes, tampons, note books, steel products,
printed circuits, camera, speakers and monitors, Kajal pencil sticks, Headgear
and parts thereof, Aluminium foil, Weighing Machinery [other than electric or
electronic weighing machinery], Printers [other than multifunction printers],
Electrical Transformer, CCTV, Optical Fiber, Bamboo furniture, Swimming pools
and padding pools, Curry paste; mayonnaise and salad dressings; mixed
condiments and mixed seasonings
costing more than Rs 500, Trademarks, goodwill, software, Bidi Patta, Biscuits
(All catogories), flavoured refined sugar, pasta, cornflakes, pastries and
cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food
mixes, mineral water, tissues, envelopes, tampons, note books, steel products,
printed circuits, camera, speakers and monitors, Kajal pencil sticks, Headgear
and parts thereof, Aluminium foil, Weighing Machinery [other than electric or
electronic weighing machinery], Printers [other than multifunction printers],
Electrical Transformer, CCTV, Optical Fiber, Bamboo furniture, Swimming pools
and padding pools, Curry paste; mayonnaise and salad dressings; mixed
condiments and mixed seasonings
Services
AC hotels that serve liquor, telecom services, IT services,
branded garments and financial Services will
attract 18 per cent tax under GST, Room tariffs between Rs 2,500 and Rs 7,500,
Restaurants inside five-star hotels
branded garments and financial Services will
attract 18 per cent tax under GST, Room tariffs between Rs 2,500 and Rs 7,500,
Restaurants inside five-star hotels
28%
Goods
Bidis, chewing gum, molasses, chocolate not containing
cocoa, waffles and wafers coated with choclate, pan masala, aerated water,
paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen,
wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing
machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers,
automobiles, motorcycles, aircraft for personal use, will attract 28 % tax –
the highest under GST system.
cocoa, waffles and wafers coated with choclate, pan masala, aerated water,
paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen,
wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing
machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers,
automobiles, motorcycles, aircraft for personal use, will attract 28 % tax –
the highest under GST system.
Services
Private-run lotteries authorised by the states, hotels with
room tariffs above Rs 7,500, 5-star hotels, race club betting, cinema will
attract tax 28 per cent tax slab under GST
room tariffs above Rs 7,500, 5-star hotels, race club betting, cinema will
attract tax 28 per cent tax slab under GST
Key features of GST
- GST envisages all transactions and processes to be done only through the electronic mode, to achieve a non-intrusive administration. This will minimise the taxpayer’s physical interaction with tax officials.
- GST provides for the facility of auto-populated monthly returns and annual return.
- It also facilitates the taxpayers by prescribing grant of refund within 60 days, and provisional release of 90 per cent refund to exporters within 7 days.
- Further facilitation measures include interest payment if refund is not sanctioned in time, and refund to be directly credited to bank accounts.
- Comprehensive transitional provisions for ensuring smooth transition of existing taxpayers to GST regime, credit for available stocks, etc.
- Other provisions include system of GST Compliance Rating, etc.
- Anti-profiteering provisions for protection of consumer rights.
- Under the GST regime, exports will be zero-rated in entirety, unlike the present system where refund of some of the taxes does not take place due to fragmented nature of indirect taxes between the Centre and the States.
- GST is largely technology driven and will reduce the human interface to a great extent
- GST is expected to improve ease of doing business in India.
Goods and Services Tax Network (GSTN), the company which was tasked to set up IT infrastructure for the GST, said that by January it will start training around 60,000 state government officials to equip them to handle GST roll out. The non-profit organisation said that the Centre agreed to pay around Rs 500 crore every year on behalf of the tax payers as service charge.
The known authorized capital of GSTN is Rs 10 crore (US$1.6
million) in which Central Government holds 24.5 percent of shares while the
state government holds 24.5 percent and rest with private banking firms.
million) in which Central Government holds 24.5 percent of shares while the
state government holds 24.5 percent and rest with private banking firms.
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Team ExamPundit
This post was last modified on November 27, 2017 8:51 am