GOODS AND SERVICES TAX (GST)
The empowered committee of the State Finance Ministers has come up with the first discussion paper on Goods and Services Tax. The broad contours of the proposed GST structure are as under:
PROPOSED GST STRUCTURE
DUAL GST MODEL
The GST shall have two components:
DATE OF IMPLEMENTATION
PROPOSED GST STRUCTURE
DUAL GST MODEL
The GST shall have two components:
- one levied by the Centre (CGST i.e Central GST ) and
- the other levied by the States (SGST i.e State GST)
CGST and SGST applicable on all transactions of goods and services for consideration except
- exempt goods and services,
- goods and services outside the purview of GST and
- transactions below threshold limits
CREDIT AND REFUND
- Separate books to be maintained for utilization or refund of credit.
- Cross credits between CGST and SGST generally not permissible except in case of Inter State GST model
- All inter-state transactions of goods and services to attract IGST i.e Inter State GST
- IGST will be equal to CGST plus SGST
- Inter-state seller to pay IGST after adjusting credit of IGST, CGST and SGST
- The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST
- The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State
- The Centre will transfer to the importing State the credit of IGST used in payment of SGST.
Two-rate structure –
- a lower rate for necessary items and goods of basic importance and
- a standard rate for goods in general.
- There will also be a special rate for precious metals and a list of exempted items
- Threshold limit under SGST for goods and services may be adopted of INR 10 lakhs
- Threshold limit under CGST for goods may be kept of INR 1.5 crores, and for services not specified
- Composition/ compounding cut-off of INR 50 lakhs and floor rate of 0.5% across states.
- Scheme to allow option for GST registration to dealers with turnover below compounding cut off
At Central Level
Central Excise Duty, Additional Excise Duty, Excise duty under Medicinal and Toiletries Preparation Act, Additional Customs Duty (CVD) and Special Additional Custom Duty (SACD),
Service Tax, Surcharges and Cess
At State Level
VAT, Sales Tax, Entertainment Tax (not levied by local bodies), Luxury Tax, Taxes on lottery, betting and gambling, State Cesses and Surcharges relating to supply of goods and services, Entry tax (not in lieu of octroi)
EXPORTS AND IMPORTS
- Exports including supplies to SEZ (processing zones only) would be zero-rated.
- Both CGST and SGST will be levied on import of goods and services into the country.
- The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed.
- Full and complete set-off will be available on the GST paid on import on goods and services
- Periodical returns to be filed before the respective CGST and SGST authorities in common format as far as possible
- PAN Based Identification Number with a total of 13/ 15 digits
- The tax exemptions, remissions etc. related to industrial incentives should be converted into cash refund schemes after collection of tax
- Exemptions, remissions etc. would continue up to legitimate expiry time both for the Centre and the States.
- Any new exemption, remission etc. or continuation of earlier exemption, remission etc. would not be allowed
- Effective date of GST implementation, rate of GST, and similar other aspects will be known in the course of appropriate legislative actions
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