Important Facts You need to Know About GST

 The Goods and Services Tax (GST) is a value added tax that will replace all indirect taxes levied on goods and services by the Government, both Central and States, once it is implemented. The GST Bill, officially known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India from April 2016.

GST

The GST is a consolidated tax based on a uniform rate of tax fixed for both goods and services. All goods and services, leaving aside a few (alcohol, tobacco, petroleum products), will be brought into the GST and there will be no difference between goods and services. The GST rate is expected to be around 14-16 per cent.

Introduction of a GST is very much essential in the emerging environment of the Indian economy. In the GST system, when all the taxes are integrated, it would make possible the taxation burden to be split equitably between manufacturing and services. It will also help to build a transparent and corruption-free tax administration.

There are certain bottlenecks which need to be taken care of before that: What preparations are needed at the level of Central and State Governments for implementing the GST? Whether the Government machinery is efficient enough for such an enormous change? Whether the tax-payers are ready for such a change?

According to a study by the National Council of Applied Economic Research (NCAER), full implementation of the GST could expand India’s growth of gross domestic product by 0.9-1.7 percentage points. By implementing the GST, India will gain $15 billion a year. It will promote more exports, create more employment opportunities and boost growth.

10 things to know about the GST Bill

1. Officially, the Constitution (One Hundred and Twenty-Second Amendment) Bill 2014.

2. It was introduced in the Lok Sabha on December 19, 2014 by Finance Minister Arun Jaitley.

3. The Bill seeks to amend the Constitution to introduce a goods and services tax (GST) which will subsumes various Central indirect taxes, including the Central Excise Duty, Countervailing Duty, Service Tax, etc. It also subsumes State value added tax (VAT), octroi and entry tax, luxury tax, etc.

4. The Bill inserts a new Article in the Constitution make legislation on the taxation of goods and services a concurrent power of the Centre and the States.

5. The Bill seeks to shift the restriction on States for taxing the sale or purchase of goods to the supply of goods or services.

6. The Bill seeks to establish a GST Council tasked with optimising tax collection for goods and services by the State and Centre. The Council will consist of the Union Finance Minister (as Chairman), the Union Minister of State in charge of revenue or Finance, and the Minister in charge of Finance or Taxation or any other, nominated by each State government.

7. The GST Council will be the body that decides which taxes levied by the Centre, States and local bodies will go into the GST; which goods and services will be subjected to GST; and the basis and the rates at which GST will be applied.

8. Under the Bill, alcoholic liquor for human consumption is exempted from GST. Also, it will be up to the GST Council to decide when GST would be levied on various categories of fuel, including crude oil and petrol.

9. The Centre will levy an additional one per cent tax on the supply of goods in the course of inter-State trade, which will go to the States for two years or till when the GST Council decides.

10. Parliament can decide on compensating States for up to a five-year period if States incur losses by implementation of GST.