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Home Goods and Service Tax (GST)
Question 1.What is GST? How does it work?
Answer: GST is one indirect tax for the whole nation, which will make India one unified common market.GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
Question 2: What are the benefits of GST?
Answer: The benefits of GST can be summarized as under: ? For business and industry o Easy compliance o Uniformity of tax rates and structures o Removal of cascading o Improved competitiveness o Gain to manufacturers and exporters ? For Central and State Governments : o Simple and easy to administer o Better controls on leakage o Higher revenue efficiency ? For Consumers : o Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer. ? Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.
Question 3: How will GST benefit the common consumers?
Answer: As already mentioned earlier, with the introduction of GST, all the cascading effects of CENVAT and service tax will be more comprehensively removed with a continuous chain of set-off from the producer?s point to the retailer?s point than what was not possible under the prevailing CENVAT and VAT regime. Certain major Central and State taxes will also be subsumed in GST and CST will be phased out. Other things remaining the same, the burden of tax on goods would, in general, fall under GST and that would benefit the consumers.
Question 4: Which taxes at the Centre and State level are being subsumed into GST?
Answer: At the Central level, the following taxes are being subsumed: a. Central Excise Duty, b. Additional Excise Duty, c. Service Tax, d. Additional Customs Duty commonly known as Countervailing Duty, and e. Special Additional Duty of Customs. At the State level, the following taxes are being subsumed: a. Subsuming of State Value Added Tax/Sales Tax, b. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), c. Octroi and Entry tax, d. Purchase Tax, e. Luxury tax, and f. Taxes on lottery, betting and gambling
Question 5. Which are the COMMODITIES proposed to be kept outside the purview of GST?
Answer: Alcohol for human consumption, Petroleum Products like petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel and Electricity.
Question 6: What type of GST is proposed to be implemented?
Answer. It would be a dual GST with the Centre and States simultaneously levying it on a common tax base. The GST to be levied by the Centre on intra-State supply of goods and /or would be called Central GST { CGST} and that to be levied by the States would be called the State GST {SGST}. Similarly Integrated GST {IGST} will be levied and administrated by Centre on every inter-state supply of goods and services.
Question7.Why dual GST required?
Answer. India is a federal country where both the Central and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers described in the constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the constitutional requirements of fiscal federalism.
Question 8: Which authority will levy and administer GST?
Answer. The Centre will levy and administer CGST & IGST, while respective States will levy and administer SGST.
Question 9.How would GST be administered in India?
Answer: Keeping in mind the federal structure of India, there will be two components of GST ? Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.
Question10. What are the benefits which the Country will take you from GST?
Answer: Introduction of GST would be a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax and allowing set -off prior-stage taxes, it would mitigate the ill effects of cascading of taxes and pave the way for a common national market. For the consumers, the biggest game would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25 %-30%. Introduction of GST would also take our products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth. There may also be revenue gain for the Centre and the States due to widening of the tax base, increase in trade volumes and improved tax compliance. Last but not the least, this tax, because of its transparent character, would be easier to administer.