Hello Friends, This article has divided into two parts i.e.
1. History of GST in INDIA
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.
In 2015 – The Constitution 122th amendment bill passed in Loksabha for levy of GST on 6th May 2015.
In 2016 – The Constitution 122th amendment bill passed in Rajyasabha for levy of GST on 3rd Aug 2016. Further, 8th Aug 2016, in Loksabha, unanimously passed the 122nd Constitutional Amendment Bill as amended by the Rajyasabha with all 443 members voting in favour.
2. Introduction of GST
♠ GST purposes to bring uniform indirect tax regime in the country by subsuming central and state indirect taxes into single indirect tax.
♠ The following central taxes which are currently levied and collected will be subsumed under the GST regime :-
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 (Textiles and Textile Products)
5) Additional Duties of Customs (commonly known as CVD)
6) Special Additional Duty of Customs (SAD)
7) Service Tax
8) Cess and surcharges insofar as far as they relate to supply of goods or services
♠ The following state taxes which are currently levied and collected will be subsumed under the GST regime :-
1) State VAT
2) Central Sales Tax
3) Purchase Tax
4) Luxury Tax
5) Entry Tax(Entry tax will be subsumed however entry tax levied by municipal bodies on goods entering into local area will not be subsumed)
6) Entertainment Tax (Entertainment tax levied by Panchayat /municipality or district council will not be subsumed )
7) Taxes on advertisements
8) Taxes on lotteries, betting and gambling
9) State cess and surcharges insofar as far as they relate to supply of goods or services.
♠ There are few other indirect taxes that will not be subsumed under the GST regime:
1) Stamp Duty
2) Vehicle Tax
3) Electricity Duty
4) Custom Duty
♠ Following products are out of GST regime :-
1) Petroleum products
2) Alcoholic products
♠ Comparative Illustration between Existing Tax System & GST Tax System
|Manufacturer to Wholesaler|
|Cost Of Production||100,000||100,000|
|Add: Excise Duty @ 12%||13,200||–|
|Add: State VAT @12 %||14,784||–|
|Add: SGST @12 %||–||13,200|
|Add: CGST @12 %||–||13,200|
|Wholesaler to Retailer ( Note 1)|
|Cost for Wholesaler||123,200||110,000|
|Add: Profit @10%||12,320||11,000|
|Add: State VAT @12 %||16,262||–|
|Add: SGST @12 %||–||14,520|
|Add: CGST @12 %||–||14,520|
|Retailer to consumer (Note 2)|
|Cost for Retailer||135,520||121,000|
|Add: Profit @10%||13,552||12,100|
|Add: State VAT @12 %||17,889||–|
|Add: SGST @12 %||–||15,972|
|Add: CGST @12 %||–||15,972|
|INVOICE VALUE Note 3||166,961||165,044|
Note 1 – Input Tax Credit is available in the hand of Wholesaler is Rs. 14,784 and Rs. 26,400 in case of existing Tax System and GST respectively.
Note 2– Input Tax Credit is available in the hand of Retailer is Rs. 16,262 and Rs. 29,040 in case of existing Tax System and GST respectively.
Note 3 – Net Saving in the Hand of Consumer is Rs.1,917/-
With the Help of this illustration, it is clear that GST is beneficial for all i.e. Wholesaler, Retailer & Consumer.
♠ Concept of IGST/CGST/SGST
1. In India, GST will be levied both by the Centre and the states. CGST(Central GST) is to be levied by central and SGST (State GST) is to be charged by State. Further IGST will be levied in case of inter-state supply of goods and services.
2. Cross utilization of CGST and SGST will not be permitted i.e. for the payment of SGST, input of CGST is not available and vice-a-versa.
3. For the payment of CGST, first input of CGST to be used then input IGST to be used.
4. For the payment of SGST, first input of SGST to be used then input IGST to be used.
5. For the payment of IGST, first input of IGST to be used then input CGST and then input of SGST to be used.
6. For Example :- if an assesses is having IGST input credit of Rs. 10000, CGST input credit of Rs. 5000 and SGST input credit of Rs. 2,000 then
Illustration 1 :- Output IGST liability of Rs. 20,000 then input credit of Rs. 10,000 , Rs. 5000 and Rs. 2,000 can be utilized in the account of IGST, CGST and SGST respectively and the final IGST liability is Rs. 3,000 ( 20,000- 10,000-5,000-2000).
Illustration 2:- Output IGST liability of Rs. 13,000 then input credit of Rs. 10,000 and Rs. 3,000 can be utilized in the account of IGST and CGST respectively and the final IGST liability is nil (13000-10000-3000) and balance CGST input credit of Rs. 2000 and SGST input credit of Rs. 2,000.
Illustration 3- Output CGST liability of Rs. 12,000 then input credit of Rs. 5,000 and Rs. 7,000 can be utilized in the account of CGST and IGST respectively and the final CGST liability is nil (12,000-5,000-7,000) and balance IGST input credit of Rs. 3,000 and SGST input credit of Rs. 2,000.
Illustration 4 – Output SGST liability of Rs. 9,000 then input credit of Rs. 2,000 and Rs. 7,000 can be utilized in the account of SGST and IGST respectively and the final SGST liability is nil (9,000-2,000-7,000) and balance IGST input credit of Rs. 3,000 and CGST input credit of Rs. 5,000.
7. Finally we understand about the IGST input credit Utilization mechanism :-‘
♠ In the 2014 bill, it is very popular provision that an additional tax of up to 1% on the supply of goods will be levied by centre in the course of inter-state trade or commerce. However in 2016 amendment bill, such provision has been deleted.
♠ In 2014 Bill, Parliament may, by law, provide for compensation to states for any loss of revenues, for a period which may extend to five years. This would be based on the recommendations of the GST Council. This implies that Parliament may decide (i) whether it wants to provide compensation; (ii) the time period for which it can provide such compensation, up to five years. However in 2016 amendments, Parliament shall, by law, provide for compensation to states for any loss of revenues, for a period of five years. This would be based on the recommendations of the GST Council. This implies that compensation must be provided for a full five-year period.
(Author- CA Rishi Goyal , Mobile-+91-9827647654, Email-carishi.rg@gmail.Com)