Description
GOODS & SERVICE TAX
What is GST?
G
oods and Services Tax -- GST -- is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain. The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. Experts say that GST is li ely to improve tax collections and boost !ndia"s economic development by brea ing tax barriers between States and integrating !ndia through a uniform tax rate.
What are the benefits of GST?
#
nder GST, the taxation burden will be divided e$uitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimi%ing exemptions. !t is expected to help build a transparent and corruption-free tax administration. GST will be is levied only at the destination point, and not at various points &from manufacturing to retail outlets'. (urrently, a manufacturer needs to pay tax when a finished product moves out from a factory, and it is again taxed at the retail outlet when sold.
How will it benefit the Centre and the States?
!t is estimated that !ndia will gain )*+ billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. !t will divide the tax burden e$uitably between manufacturing and services.
What are the benefits of GST for individuals and companies?
!n the GST system, both (entral and State taxes will be collected at the point of sale. ,oth components &the (entral and State GST' will be charged on the manufacturing cost. This will benefit individuals as prices are li ely to come down. -ower prices will lead to more consumption, thereby helping companies.
What type of GST is proposed for India?
!
ndia is planning to implement a dual GST system. #nder dual GST, a (entral Goods and Services Tax &(GST' and a State Goods and Services Tax &SGST' will be levied on the taxable value of a transaction. .ll goods and services, barring a few exceptions, will be brought into the GST base. There will be no distinction between goods and services.
Which other nations have a similar tax structure?
.lmost */0 countries have already implemented the GST. 1ost of the countries have a unified GST system. ,ra%il and (anada follow a dual system where GST is levied by both the #nion and the State governments. 2rance was the first country to introduce GST system in *3+/.
Will this be an extra tax?
!t will not be an additional tax. (GST will include central excise duty &(envat', service tax, and additional duties of customs at the central level4 and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the State level.
What will be the rate of GST?
The combined GST rate is being discussed by government. The rate is expected around */-*5 per cent. .fter the total GST rate is arrived at, the States and the (entre will decide on the (GST and SGST rates. (urrently, services are taxed at *0 per cent and the combined charge indirect taxes on most goods is around 60 per cent.
Will goods and services cost more after this tax comes into force?
The prices are expected to fall in the long term as dealers might pass on the benefits of the reduced tax to consumers.
Why are some States against GST will they lose money?
The governments of 1adhya 7radesh, (hhattisgarh and Tamil 8adu say that the information technology systems and the administrative infrastructure will not be ready by .pril 60*0 to implement GST. States have sought assurances that their existing revenues will be protected. The central government has offered to compensate States in case of a loss in revenues. Some States fear that if the uniform tax rate is lower than their existing rates, it will hit their tax itty. The government believes that dual GST will lead to better revenue collection for States. However, bac ward and less-developed States could see a fall in tax collections. GST could see better revenue collection for some States as the consumption of goods and services will rise.
How will GST be implemented?
The empowered committee is li ely to finali%e the details of GST by .ugust. ,ut States have to sort out several issues li e agreement on GST rates, constitutional amendments and holding tal s with industry associations. Experts feel the drafting of legislation and the implementation of law will ta e time.
What are the items on which GST may not be applied?
.lcohol, tobacco, petroleum products are li ely to be out of the GST regime.
The implementation of GST will lead to the abolition of other taxes such as octroi, (entral Sales Tax, State-level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on
consumption or sale of electricity, taxes on transportation of goods and services, et cetera, thus avoiding multiple layers of taxation that currently exist in !ndia.
doc_706288852.doc
GOODS & SERVICE TAX
What is GST?
G
oods and Services Tax -- GST -- is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain. The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. Experts say that GST is li ely to improve tax collections and boost !ndia"s economic development by brea ing tax barriers between States and integrating !ndia through a uniform tax rate.
What are the benefits of GST?
#
nder GST, the taxation burden will be divided e$uitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimi%ing exemptions. !t is expected to help build a transparent and corruption-free tax administration. GST will be is levied only at the destination point, and not at various points &from manufacturing to retail outlets'. (urrently, a manufacturer needs to pay tax when a finished product moves out from a factory, and it is again taxed at the retail outlet when sold.
How will it benefit the Centre and the States?
!t is estimated that !ndia will gain )*+ billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. !t will divide the tax burden e$uitably between manufacturing and services.
What are the benefits of GST for individuals and companies?
!n the GST system, both (entral and State taxes will be collected at the point of sale. ,oth components &the (entral and State GST' will be charged on the manufacturing cost. This will benefit individuals as prices are li ely to come down. -ower prices will lead to more consumption, thereby helping companies.
What type of GST is proposed for India?
!
ndia is planning to implement a dual GST system. #nder dual GST, a (entral Goods and Services Tax &(GST' and a State Goods and Services Tax &SGST' will be levied on the taxable value of a transaction. .ll goods and services, barring a few exceptions, will be brought into the GST base. There will be no distinction between goods and services.
Which other nations have a similar tax structure?
.lmost */0 countries have already implemented the GST. 1ost of the countries have a unified GST system. ,ra%il and (anada follow a dual system where GST is levied by both the #nion and the State governments. 2rance was the first country to introduce GST system in *3+/.
Will this be an extra tax?
!t will not be an additional tax. (GST will include central excise duty &(envat', service tax, and additional duties of customs at the central level4 and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the State level.
What will be the rate of GST?
The combined GST rate is being discussed by government. The rate is expected around */-*5 per cent. .fter the total GST rate is arrived at, the States and the (entre will decide on the (GST and SGST rates. (urrently, services are taxed at *0 per cent and the combined charge indirect taxes on most goods is around 60 per cent.
Will goods and services cost more after this tax comes into force?
The prices are expected to fall in the long term as dealers might pass on the benefits of the reduced tax to consumers.
Why are some States against GST will they lose money?
The governments of 1adhya 7radesh, (hhattisgarh and Tamil 8adu say that the information technology systems and the administrative infrastructure will not be ready by .pril 60*0 to implement GST. States have sought assurances that their existing revenues will be protected. The central government has offered to compensate States in case of a loss in revenues. Some States fear that if the uniform tax rate is lower than their existing rates, it will hit their tax itty. The government believes that dual GST will lead to better revenue collection for States. However, bac ward and less-developed States could see a fall in tax collections. GST could see better revenue collection for some States as the consumption of goods and services will rise.
How will GST be implemented?
The empowered committee is li ely to finali%e the details of GST by .ugust. ,ut States have to sort out several issues li e agreement on GST rates, constitutional amendments and holding tal s with industry associations. Experts feel the drafting of legislation and the implementation of law will ta e time.
What are the items on which GST may not be applied?
.lcohol, tobacco, petroleum products are li ely to be out of the GST regime.
The implementation of GST will lead to the abolition of other taxes such as octroi, (entral Sales Tax, State-level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on
consumption or sale of electricity, taxes on transportation of goods and services, et cetera, thus avoiding multiple layers of taxation that currently exist in !ndia.
doc_706288852.doc