CA Umesh Sharma

“Ganpati Bappa Moriy, Pudhcha Varshi GST Gheaun Ya”

Arjuna (Fictional Character): Krishna, we celebrate Ganpati festival with full of joy, enthusiasm. President of India as well as state government of many states has accepted the GST due to this it’s easier for GST to be implemented in our country. The last days of this festival are coming. By giving Ganpati bappa a send-off we say curiously in marathi “Ganpati Bappa Moriya Pudhcha Varshi Laukar Ya”. That means we pray lord Ganesha to come early next year with joy and blessings. Like this we pray Ganpati Bappa- “Ganpati Bappa Moriya Pudhcha Varshi GST Gheaun Ya”.

Krishna (Fictional Character): Arjuna, I agree with you. Because of GST there will be extreme changes in Taxation in our country. All the indirect taxes will come on equal platform. As everywhere movement in GST is seen, it is expected that GST will come soon. Understanding various concepts of GST is very important. We go at many place and see Ganpatis and different views, like that today we will see different views of GST.

ganeshaArjuna: Krishna, is GST necessary in India?

Krishna: Arjuna, In India there are many indirect taxes on goods and services which are levied at different stages right from Manufacture till final consumption. Indirect tax includes Excise, Customs, Service tax, Vat etc. In each law related to indirect taxes, there are different definitions and sections and the implementation of the same is done in different ways. Day by day the above things are increasing. That’s why it’s very difficult for common tax payer to know all such provisions and rules.  And the expenses for following these indirect tax law is also been increasing. That’s way GST is necessary in India. In many developed country there is one single tax like GST which is levied on goods and Services. To remain in Competition on International level, GST is necessary to be implemented in India.

There is a huge population in India but very few follow tax laws. Due to rigid tax structure, the government is unable to reach every tax payer thus there are many tax evaders. But the one who follows tax laws for them there are various strict provisions for collecting taxes. It is expected that due to GST the number of Tax payer will increase. Other than this there are many reasons for bringing GST.

Arjuna: Krishna, What is GST?

Krishna: Arjuna, GST law is applicable on products and services. It is a value added tax. Because of this, tax will be levied on each stage of value addition of the business transactions. The purchaser will get the set-off of GST paid at each stage at the time of purchase of goods and service. Eventually, the consumer of the goods or services will have to pay GST to the person from whom he has purchased. The definition of Supply is very much important now.

Arjuna: Krishna, what are the problems faced in the present taxation structure and how it will be resolved while implementing GST?

Krishna: Arjuna, Central Excise Duty was not levied on distribution part of manufactured goods thus at the time of sales, the traders couldn’t take set off of excise duty paid.  Same as above, in CENVAT there are many taxes like additional excise duty, Additional custom duty, surcharge which are not included. That’s way; they were unable to take set off.

GST will merge the set off of indirect taxes on goods and services. Thus the distribution of goods and service to the end consumer is important at the final stage which means at every stage of business right from manufacture to consumption; tax is to be paid on value addition.

And also the burden of CENVAT has not been yet reduced to states. There are many state taxes like Entertainment tax, Luxury tax etc. which are not included in VAT tax laws. Further VAT paid on goods was not getting set off of service tax paid on services. Also while doing interstate trading, the Central state tax (CST) was reduced from 4% to 2% but it is not fully abolished.

Because of GST the extra burden of CENVAT and service tax will be reduced and set off will be available from manufacturer to consumer. Because of this there will be no cascading effect. This is the main aim of GST. As different Taxes are merged in GST, the expenses of following tax laws will reduce.

Arjuna: Krishna, What are the benefits which Tax payer will get due to GST?

Krishna: Arjuna, The following are the benefits of GST

  1. Many taxation laws will be merged into one.
  2. Double taxation will not be there, for example VAT paid on excise will be removed. Tax will be applied on the actual value of goods.
  3. All tax provisions on export will be merged for exporters.
  4. One developed national market will be formed.
  5. Reduced number of methods in tax rates and benefits available, and clarification on difference between goods and services, the transactions will be simplified.

Arjuna: Krishna, what benefits will be received by Government?

Krishna: Arjuna, The following benefits will be received by Government

  1. Number of tax payers in India will be increased.
  2. Taxation structure will be simplified.
  3. Overall tax income will be increased.
  4. Efficiency in usage of available resources.

Arjuna: Krishna, what steps are required for implementing GST?

Krishna: Arjuna, The following important steps which need to be implemented in proper way.

  1. More usage of information technology and computerized systems will be done in government offices
  2. GST returns are to be filled through E-filling portals.
  3. E-payment is to be done for GST.
  4. Uniform taxation period.
  5. Arrangement to get complete information
  6. Government Employees should be trained.

Arjuna: Krishna, what tax payers should learn from this?

Krishna: Arjuna, Like we pray to lord Ganesha to remove all problems in our life in the same way tax payers pray to government that problems to be removed in GST. Its difficult to pay taxes in rigid tax structure but if its simplied than tax payers can easily pay. So let’s request to Ganeshji to take away old complicated rules and bring GST in next year from 1st April 2017 that means “Ganpati Bappa Morya, bring GST Next year.”

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