GST: A Cure For Ills Of Existing Indirect Tax Regime
A comprehensive tax structure covering both goods and services viz. Goods and Services Tax (GST) addresses the above-mentioned problems. Simultaneous introduction of GST at both Centre and State levels has integrated taxes on goods and services for the purpose of set-off relief and ensures that both the cascading effects of CENVAT and service tax are removed and a continuous chain of set-off from the original producer’s point/ service provider’s point upto the retailer’s level/ consumer’s level is established
In the GST regime, the major indirect taxes have been subsumed in the ambit of GST. The erstwhile
concepts of manufacture or sale of goods or rendering of services are no longer applicable since the tax is now levied on “Supply of Goods and/or services”.
FRAMEWORK OF GST AS INTRODUCED IN INDIA
I. Dual GST: India has adopted a Dual GST model in view of the federal structure of the country. Consequently, Centre and States simultaneously levy GST on taxable supply of goods or services or both which, takes place within a State or Union Territory. Thus, tax is imposed concurrently by the Centre and States, i.e. Centre and States simultaneously tax goods and services. Now, the Centre also has the power to tax intra-State sales & States are also empowered to tax services. GST extends to whole of India including the State of Jammu and Kashmir
GST is a destination based tax applicable on all transactions involving supply of goods and
services for a consideration subject to exceptions thereof. GST in India comprises of Central Goods and Services Tax (CGST) - levied and collected by Central Government, State Goods and Services Tax (SGST)
- levied and collected by State Governments/Union Territories with Legislatures and Union Territory Goods and Services Tax (UTGST) -levied and collected by Union Territories without Legislatures, on intra-State supplies of taxable goods and/or services.
Inter-State supplies of taxable goods and/or services are subject to Integrated Goods and Services Tax (IGST). IGST is the sum total of CGST and SGST/UTGST and is levied by Centre on all inter-State supplies.
I. Legislative Framework
There is single legislation – CGST Act, 2017 - for levying CGST. Similarly, Union Territories without Legislatures [Andaman and Nicobar
Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh] are governed by UTGST Act, 2017 for levying UTGST. States and Union territories with their own legislatures [Delhi and Puducherry] have their own GST legislation for levying SGST.
Though there are multiple SGST legislations, the basic features of law, such as chargeability, definition of taxable event and taxable person, classification and valuation of goods and services, procedure for collection and levy of tax and the like are uniform in all the SGST legislations, as far as feasible. This is necessary to preserve the essence of dual GST.
Classification of goods and services
HSN (Harmonised System of Nomenclature) is used for classifying
the goods under the GST. Chapters referred in the Rate Schedules for goods are the Chapters of the First Schedule to the Customs Tariff Act, 1975.
A new Scheme of Classification of Services has been devised wherein the services of various descriptions have been classified under various sections, headings and groups. Each group consists of various Service Codes (Tariff).
Every supplier of goods and/ or services is required to obtain registration in the State/UT from where he makes the taxable supply if his aggregate turnover exceeds the threshold limit during a FY.
States with threshold limit of 10 lakh for both goods and services
States with threshold limit of 20 lakh for both goods and services
• Arunachal Pradesh
States with threshold limit of 20 lakh for services and ` 40 lakh for goods**
• Jammu Kashmir
• Himachal Pradesh
• All other States
**persons engaged exclusively in supply of goods
Composition Scheme Under GST
In GST regime, tax (i.e. CGST and SGST/UTGST for intra-State supplies and
IGST for inter-State supplies) is payable by every taxable person and in this regard provisions have been prescribed in the law.
However, for providing relief to small businesses, primarily manufacturers, suppliers of food articles, traders, etc., making intra- State supplies, a simpler method of paying taxes is prescribed, known as Composition Levy. Further, for small service providers also, a scheme prescribing concessional rate of tax has been formulated