Know About GST (Goods & Services Tax )

Goods And Services Tax (GST) (Draft stage)

(Correct idea will emerge only after it takes a final legal shape )

GST is one indirect tax for the whole nation which will make India one unified common market.

GST is a destination based tax on consumption of goods and services.

--Destination based tax means , the tax would accrue to the taxing authority which has jurisdiction over the place of consumption ( which is also called as place of supply )

--GST will be levied at all stages right from manufacture upto final consumption.

--Credit of taxes paid at previous stages will be available as set off.  In other words , only value addition will be taxed and the burden of tax is to be borne by the final consumer.

Following taxes currently levied and collected by the centre will be subsumed by GST or you may say that GST will replace following taxes.

1. Central Excise Duty

2. Duties of Excise (medicinal and toilet preparations)

3. Additional duties of excise ( Goods of special importance)

4. Additional duties of Excise ( textile and textile products)

5.Additional duties of custom ( commonly known as CVD)

6. Special additional duties of Custom (SAD) 

7. Service Tax

8. Central Surcharges and Cess so far as they relate to supply of goods and services.

Following are state taxes that will be subsumed under GST

1. State VAT

2. Central Sales Tax

3. Luxury Tax

4. Entry Tax ( all forms )

5.Entertainment and Amusement Tax ( except when levied by local bodies).

6.Taxes on Advertisement

7. Purchase Tax

8.Taxes on Lottery, Betting and Gambling

9. State surcharges and Cess so far as they relate to supply of Goods and services.

GST council will make recommendation to Union and States on the taxes, cesses and surcharges levied by centre , states and local bodies which will be subsumed under GST

Goods and Services Tax (GST) is an upcoming system of taxation in India which will merge many individually applied taxes into a single tax. 

The GST is governed by GST Council and its Chairman is Union Finance Minister of India - Arun Jaitley.

GST is 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.

This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity. 

Administrative responsibility would generally rest with a single authority to levy tax on goods and services.

Exports would be considered as zero-rated supply and imports would be levied the same taxes as domestic goods and services adhering to the destination principle in addition to the Customs Duty which will not be subsumed in the GST.

The GST regime will have five slabs including the zero-tax rate for items of basic needs. The highest rate of 28 per cent will apply on luxury and demerit goods, which will also attract varying cess over and above applicable GST.

Prices of items will change from Ist of July 2017 as the GST is proposed to be implemented from that day. 

The GST council has finalised the tax slabs for all the articles of consumption.

7 (Seven) per cent of the items fall under the exempt list 

14 (forteen) per cent of the items have been put in the lowest tax bracket of 5 per cent.

17 per cent items are in 12 per cent tax bracket, 

43 per cent of items are in 18 per cent tax slab and 

only 19 per cent of goods fall in the top tax bracket of 28 per cent. 

This means that as many as 81 per cent of the items will attract 18 per cent or less GST.

NO GST SLAB

Foodgrains, milk and other articles of daily use have been exempted from taxation under the GST regime.

These items are: 

Foodgrains, gur, milk, eggs, curd, lassi, unpacked paneer, natural honey, fresh vegetables, fruits, atta, besan, maida, vegetable oil, Prasad, common salt, contraceptive, bread, bindi, vermillion, stamp, judicial documents, printed books, bangles and handloom products.

5 PER CENT GST SLAB

The items that are used daily but are not considered articles of basic necessity are taxed at 5 per cent under the GST regime.

These items are: sugar, tea, coffee, edible oil, coal, skimmed milk powder, milk food for babies, condensed milk, packed paneer, newsprint, umbrella, PDS kerosene, LPG, broom, fish fillet, cream, frozen vegetables, spices, pizza bread, juice, sabudana, coal, medicines, stent and lifeboat.

12 PER CENT SLAB

The items that are not essential but used by large number of households and people will attract 12 per cent GST.

These items are: 

Butter, ghee, mobile phones, cashew, almonds, sausages, fruit juices, packed coconut water, agarbatti, frozen meat products, animal fat, mixtures, ayurvedic medicines, tooth powder, colour books and sewing machine.

18 PER CENT SLAB

The articles are considered to be used by middle class people will attract 18 per cent GST from Ist of July 2017.

These items are: 

Hair oil, soap, toothpaste, capital goods, industrial intermediaries, pasta, corn flakes, jams, soups, ice-cream, toilet paper, facial tissues, iron and steel, fountain pen, mineral water, camera, speaker, icecream, envelops and instant food items.

28 PER CENT SLAB

Such items, which are considered as luxury goods or health hazards will attract 28 per cent GST under the new taxation regime from July 1

These articles are: 

Consumer durables, cars, cement, chewing gum, custard powder, pan masala, perfume, shampoo, make-up items, fireworks, motorcycles, paint, deodorant, shaving cream, hair dye, washing machine, vending machines, vacuum cleaner, hair clippers and dish washer.

Following Items Will  BECOME CHEAPER

Foodgrains, cereals and milk will cost less from July 1 when the Goods and Services Tax (GST) is rolled out. 

Currently in many state VAT is charged on food-grains including wheat and rice and also on milk products.

However, sweets will attract five per cent GST but it will still become cheaper at places where VAT is charge right now.

Common use products like hair oil, soaps and toothpaste will be charged at 18 per cent GST instead of present 22-24 per cent tax.

Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 per cent. 

So, there won't be much difference in pricing after GST is rolled out as these articles attract almost the same tax at present.

Full List Of GST Published In Money Control

FAQ on GST

Click on Following Video To understand various points related to GST

History of GST

In the Indian System, first time discussion on GST has been started in 2000. In 2000, The Vajpayee Govt. started discussion on GST by setting up an empowered committee. The committee was headed by Asim Dasgupta (FM of West Bengal).

Later on In 2002 to 2004, The Kelkar Task Force on Implementation of Fiscal responsibility & Budget Mgmt.(FRBM) Act, 2003 and suggested a comprehensive Goods & Service Tax.

In 2006, A proposal to introduce a national level GST by 1st April 2010 was first mooted in Budget of FY 2006-07.

In 2007, In May, EC (empowered committee) of state FMs , on request, started work on GST roadmap. Further in Nov, The Joint Working Group submitted its report to the EC on 19th Dec.

In 2008, EC finalized views over GST and submitted report named “A model and roadmap for GST in India.

In 2009, First discussion paper on GST released by EC.

In 2010, Mentioned in speech of FM – “GST to be introduced in April 2011”.

In 2011, The Constitution 115th amendment bill introduced in Loksabha for levying of GST on all goods & services except specified goods.

In 2013- In Aug, Standing Committee submitted its report on GST. In Nov ,EC rejected Govt’s proposal to include petroleum products.

In 2014- The Constitution 122th amendment bill presented in Loksabha or levy of GST on 19th Dec 2014.