Arjuna (Fictional Character): Krishna, In India, the colourful festival of holi is celebrated with lots of joy and excitement. Children are waiting for this festival eagerly. So is the finance world waiting for GST. Let’s discuss about these beautiful and knowledgeable topic GST and Holi.
Krishna (Fictional Character): Arjuna, Truly holi as a festival is an occasion full of merriment. In this festival, people let go of the bad qualities burn and imbibe good qualities. Same are the qualities of the provisional law of GST. Because the old complicated laws are going to be replaced by the simple GST law. The GST color has been made by mixing many exciting colors of different Indirect Tax laws.
Arjuna: Krishna, How is the Color of GST?
Krishna: Arjuna, GST law is created by mixing the existing colours of Indirect Tax laws which are VAT, Service tax, Excise duty, Custom Duty etc. Today, these laws have their individual colors. In other words, the levy, implementation, collection and structure of these taxes are different from each other. GST law is like one Nation one tax but multiple colors of existing laws are mixed to get the color of GST. That is why the color of GST in holi is “Chaurangi” (Mixture of four colors).
Arjuna: Krishna, what is the difference between the colors of VAT & GST?
Krishna: Arjuna, the color of VAT will be predominantly seen in the GST color. Like in Holi, pink color is seen much more commonly than other colors, similarly quite a lot of VAT law will be included in GST. VAT is levied on sale of goods. GST is the law where tax will be levied on the supply of goods. In Maharashtra and several other states the main components of VAT laws such as input tax credit, Match mismatch report, Cross checking will be used to ensure that in GST law, the tax evaders should not get input tax credit. VAT will be replaced by S.G.S.T while doing intra state transaction and will be collected by the state government. In simple terms, like VAT is collected by state government, the State G.S.T will be allocated to state government. In GST the inter-state supply I.G.S.T will be levied while intra state supply S.G.S.T and C.G.S.T both will be applied. Thus, in the color of GST more of the prominent pink of VAT will be seen.
Arjuna: Krishna, what is the difference between colors of Service tax & GST?
Krishna: Arjuna, Service tax is levied on supply of services. Central government administers service tax procedures like collection of tax etc. The principles of service tax provisions and “Service” in GST are more or less same. If we consider that color of service tax is Green, then the same green colored provisions will be included in GST. The Service tax will be replaced by I.G.S.T in case of inter-state transactions and S.G.S.T and C.G.S.T in case of intra state transactions. Revenue on Services in GST will be shared within state and center government.
Arjuna: Krishna, what is the difference between the color of Excise & GST?
Krishna: Arjuna, excise duty is levied on manufacture of goods and the manufacturer has to pay the excise duty. The manufacturer then sells the goods to distributor but the credit of excise duty cannot be taken by the distributor. GST will be levied on supply of goods and not on manufacture of goods, this is the one of the biggest change in GST. Excise duty is collected by the central government. In GST when the goods will be sold by the manufacturer to the wholesaler, wholesaler to the shopkeeper, and shopkeeper to consumer, CGST and SGST on intra state transaction will be levied and then credit can be taken at each stage. In GST I.G.S.T will be levied on interstate transaction and CGST and SGST will be levied on intrastate transaction. Suppose the color of Excise duty is yellow, it might appear faded in G.S.T because in G.S.T more focus is on the supply side than the manufacturing side.
Arjuna: Krishna, what is the difference between color of Custom duty & GST?
Krishna: Arjuna, Custom duty is levied on imports. Custom duty is very complicated and has very harsh penal provisions. Custom Duty is levied and collected by the central government. In GST, the basic custom duty will remain the same. I.G.S.T will also be levied on import. In GST, the credit of IGST will be available and the provisions of custom duty will remain more or less the same. Due to such harsh penal provisions like confiscation of Goods, etc., the color of custom duty is given black. Thus the black color penal provisions are going to stay in GST, its effect will be seen in GST.
Arjuna: Krishna, What should taxpayers learn from the Chaurangi (four colors) Holi of GST?
Krishna: Arjuna, Even though GST is expected to be “One Nation One Tax”, there are many types of taxes levied like State GST (S.G.S.T), Central C.G.S.T, Integrated I.G.S.T, U.T.G.S.T (union territory). Due to different Indirect Tax laws, Tax evaders were not detected, on one transaction whether VAT is being paid or not and on same Excise duty is being paid or not, etc. Like while playing holi, pink color disappears when darker colors are applied. Earlier finding the tax evaders was difficult. Many people traded but didn’t pay any taxes, similar to people who remain colorless during Holi. Now in GST there will be many colors and its mandatory for everyone to play the holi of GST having turnover above Rs. 20 Lakhs. Even with G.S.T tax law implementation, problems will be faced in its initial period, similar to the “Shouting i.e, Bomba-Bomb” in holi. But later GST will benefit all. Everyone should ensure that they play holi with respect, use less water, don’t use harmful chemicals and colors so as to have a safe and colorful holi. Likewise no one should play with the laws and evade tax.