GST Explained with Examples

Brief Intro: Introduction of Goods and Services Tax (GST) will indeed be an important perfection and the next logical step towards a widespread indirect tax reforms in India. As per, First Discussion Paper released by the Empowered Committee of the State Finance Ministers on 10.11.2009, it has been made clear that there would be a “Dual GST” in India, i.e. taxation power lies with both by the Centre and the State to levy the taxes on the Goods and Services.

The scheme was supposed to be implemented in India from 1st April 2016, however it may get delayed since the NDA government does not have majority in Rajya sabha (‘The upper house of parliament’ or ‘the house of states’).

Further, Punjab and Haryana were reluctant to give up purchase tax, Maharashtra was unwilling to give up octroi, and all states wanted to keep petroleum and alcohol out of the ambit of GST. Gujarat and Maharashtra want the additional one per cent levy extended beyond the proposed two years, and raised to two per cent. Punjab wants purchase tax outside GST.

Constitutional Amendment: 

Concepts in GST

Benefits of GST

1.         One Tax

2.          Common Market

3.          Distinction Between Goods and Services will go

4.         Invoicing will be Simpler

5.         No Entry Tax

6.         Common Exemptions between Centre and State

7.         Big Central Excise Tariff Will Go

8.         Concept of Manufacture will go

9.         Classification Controversies will go

10.     Problem of Identification will go

11.     Undue Enrichment Law will go

12.     Zero Rating will be more Comprehensive & More Easy

Components of GST

 CGST

— It would be levied by the Centre

 SGST

— It would be levied by the States

Highlights of GST Bill Passed by Lok Sabha

Lok Sabha passes GST Constitutional Amendment Bill with 2/3 majority

Amid stiff resistance followed by walk out by the Congress Members, the Lok Sabha , on May 6, 2015 has passed the much awaited Constitutional (122nd Amendment) Bill, 2014 on Goods and Services Tax (GST) with 2/3rd majority.

The Hon’ble Finance Minister, Mr Arun Jaitley, has indeed been working hard for the smooth passage of the GST Constitutional Amendment Bill tabled in the last session of the Parliament in December, 2014 [calling it the “Single biggest tax reform since Independence”], but he was taken aback by the sudden vociferous stand coupled with aggressive and brisk walk-out from the House by the main Opposition Party.

About GST Bill

GST Bill

Lok Sabha has finally passed the GST Amendment Constitutional Bill on 5th May 2015 .

The GST Bill no. 192 of 2014 will result the 122th amendment in Constitution of India

GST is an indeed path breaking tax reform since 1947 in India .

Goods and Service Tax (GST) in India can be soon a reality in 2016 .But, the April factor seems doubtful and more realistic time can be anywhere between August to October 2016.

GST Bill Vs Rajya Sabha Via State Assemblies

GST threshold set at Rs 10 lakh

Traders with a turnover below R10 lakh a year won’t have to register for or pay the goods and services tax (GST), and those with annual sales of R10 lakh to R50 lakh will need to pay the tax at a rate lower rate than the standard GST rate, official sources told FE.

The concessional tax rate would, however, not be available for traders making interstate transactions irrespective of their turnover, they said. The quantum of concession will be decided by the proposed GST Council which will also determine the standard GST rate. The threshold levels were finalised by the empowered committee of state finance ministers that met here for the second consecutive day on Friday.

10 things to watch out for in GST Bill

10 things to watch out for in GST Bill

The Constitution does not provide for a parallel levy of indirect taxes by the Centre and states, a pre- requisite for the roll- out of goods and services tax ( GST) in the country. The government introduced in Parliament last week the 122nd Constitution amendment Bill to address this. Some key highlights of the Bill are:

1. Enables introduction of GST The Bill replaces the lapsed 115th Constitution amendment Bill, introduced by the United Progressive Alliance ( UPA) government in March 2011. This enables the Centre and state governments, including Union territories, to introduce the law for levying GST on supply of goods and services. Under the GST regime, there will be one Central GST law and one state GST law each for the states.

Background Material on GST

As you may be aware, Hon’ble Finance Minister Shri Arun Jaitley, while presenting Union Budget 2015-16, has proposed to implement Goods & Services Tax (GST) in India with effect from 1st April 2016. GST is a broad based and a single comprehensive tax levied on goods and services consumed in an economy. More than 100 countries across the world have introduced GST or Federal VAT in one form or the other with Malaysia being the latest to join the trend. The Indirect Taxes Committee of ICAI, with a view to update the members and other stakeholders at large about GST, had launched a Background Material on GST in October, 2014. The said material has now been revised and includes the changes proposed by 122nd Constitution Amendment (GST) Bill, 2014 and standardized PPT on GST launched by Indirect Taxes Committee which is used for conducting Programmes on GST across all branches of ICAI. It also acclaimed by Hon’ble Finance Minister and Chairperson, CBEC.  It is an all-inclusive material, which would provide an insight to the basic concepts of proposed GST regime. You can download the Background Material on GST from website of Indirect Taxes Committee www.idtc.icai.org , which is available on the following link:  Download GST Background Material