CA Chandrasekhar Yaragani

CA Chandrasekhar YaraganiIndia has adopted a dual GST system because of federal nature of our constitution where both centre and states will have the power to levy taxes on the sale of goods and services. GST is similar to VAT and can be termed as National level VAT on goods, with one difference, in GST not only goods but services are also included and rate of tax on both goods as well as services will be the same.

Key Features of GST in India

  • In India the GST will have two components one is levied by the centre, hereafter referred to as (CGST) central goods and service Tax and other is levied by the state hereafter referred to as (SGST) state goods and service tax.
  • Many taxes has been subsumed under GST which are as under
Central Indirect Taxes & Levies Central Excise Duty
Additional Excise Duties
Excise Duty levied under the Medicinal Preparations (Excise Duties) Act, 1955
Service Tax
Additional Customs Duty (CVD)
Special Additional Duty of Customs
Central Surcharges and Cesses
State Indirect Taxes & Levies VAT / Sales Tax
Entertainment tax (other than the tax levied by local bodies)
Central Sales Tax
Octroi and Entry Tax
Purchase Tax
Luxury Tax
Taxes on Lottery
Betting and Gambling
State Cesses and Surcharges
  • With the introduction of Constitution Amendment Bill in December 2014, the concept of ‘declared goods of special importance’ has been dispensed.
  • All goods and services, except alcoholic liquor for human consumption are covered for the levy of GST. In case of petroleum products i.e Crude Oil, High Speed Diesel, Motor Spirit, Natural Gas and Aviation Turbine Fuel, it has been provided that these goods shall not be subject to the levy of GST till a date notified on the recommendation of the GST Council.
  • Location based tax exemptions to Industrial units would be phased out (protected up to eligibility period but will be made GST compatible)
  • Intra State Transactions: In case of Intra State transactions, Seller collects both CGST & SGST from the buyer and CGST needs to be deposited with Central Govt and SGST with State Govt
  • Inter State Transactions: Integrated Goods and Service Tax (IGST) shall be levied on Inter State transactions of goods and services which is based on destination principlee Tax gets transferred to Importing state. More over it is proposed to levy an additional tax on supply of goods, not exceeding one percent, in the course of inter-state trade or commerce, to be collected by the Govt of India for a period of two years, and assigned to the States where the supply originates.

Valuation of stock transfers to be determined. Exports and Supplies to SEZ units will be zero rated.

  • Requirements of IGST Model
  • Uniform e-registration
  • Common e- Return for CGST, SGST & IGST
  • Common periodicity of Returns for a class of dealers
  • Uniform Cut-off date for filing of Returns
  • Mandatory reporting of sales and purchase invoice details prior to or along with filing of e-Return
  • System based verification of returns on monthly basis
  • System based validations / consistency checks on the ITC availed, utilized & Tax Payments
  • Credit of IGST, CGST & SGST: Setoff of IGST, CGST & SGST will be as follows in the below mentioned chronological order only
Credit of To be Adjusted with
IGST 1)   IGST
2)   CGST
3)   SGST
CGST 1)   CGST
2)   IGST
SGST 1)   SGST
2)   IGST
  • Determination of Place of Supply & Service Rules

Determining the place of supply of goods and services is important as it determines the taxing jurisdiction.

In case of goods, the place of supply is generally based on the delivery, physical location of the goods. Where goods are not removed, the place of supply could be deemed to be the place where the goods are located at the time when the supply takes place.

Determining the place of supply of services is complex. Supply of service is intangible; it can be continuous over a period of time; can be spread over many places; location of service recipient and place of consumption of service is often different. Rules for electronically transmitted services, banking, insurance, road & air transport service etc needs to be resolved.

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8 responses to “Key Features of GST as on date”

  1. CA pawan Jain says:

    Whether entry tax levied by Cantonment board will go? Because it is not entry tax levied by state GOVT. Also it is not included in the list which will be subsumed by the central GOVT. Please clarify because it is an head ache to the transporters and taxi drivers and busimen. It is just like octroi within the city. Central GOVT must abolish it.

  2. Pooja Mehta says:

    CGST and SGST would replace CVD and additional duties on imports.

  3. Pooja Mehta says:

    CGST and SGST would be substituting for CVD and additional duties.

  4. CA Chandrasekhar Yaragani says:

    In case of Imports, Basic Customs Duty will continue to be levied since it has been kept out of GST. However Additional Customs Duty (CVD) which is equivalent to Excise duty and Special Additional duty of customs which is being levied as on date would not be applicable since both will be subsumed by GST. Imports will be subjected to CGST and SGST in future after necessary constitutional amendments are done.

  5. CA Chandrasekhar Yaragani says:

    Seller collects IGST from buyer and deposits the same with Central Govt. Central Govt transfers the same to importing state based on destination principle

  6. Raj Kumar says:

    Dear CY

    what happened in case of stock transfer from one state to other state. please highlight.

    Regards,
    Raj Kumar
    9377801346

  7. nagaraja n says:

    A good analysis of GST. One clarification required. Who collects IGST and how the distribution happens ?

  8. Somnath Bhattacharya says:

    Dear Chandrasekhar,

    Kindly highlight what impact will be for import of material from abroad. Our company is
    importing some material from Brazil,Canada, and Russia which are raw material.The
    material are importing through Kolkata/Haldia Port. Our authorised agents are
    clearing the material and after paying the necessary customs duties the material
    being despatched to our various works. Presently no State Tax is being levied.
    Article 286 of Constitution no State Government are authorised to levy tax on
    import/export.

    Now after introduction of GST whether both the CGST & SGST will be applicable?
    Whether Customs Duties will be subsumed by GST? Kindly high light on the subject
    S.N.Bhattacharya

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