GOODS AND SERVICE TAX - SEEMA SHARMA

CS SEEMA SHARMA
9830790075

GOODS & SERVICES TAX
Friends! As far as I can see it, GST will be a pivotal point for the Indian economy at large. After independence, it can be considered to be one of the greatest move which can indubitiously provide a significant boost to the investment & growth of our economy. The first country to introduce GST was France and now everyone is following suit.
GST will have a material impact on almost all aspects of businesses operating in the country, including the supply chain, sourcing and distribution decisions, inventory costs and cash flows, pricing policy, accounting and IT systems and transactions management.
In order to prepare for the GST, we need to understand its full implications, make and test the system changes and prepare a roadmap for a smooth transition to GST.
While the important dimensions of the new tax structure are being put under the scanner, the time is ripe for the businesses to start making preparations for a successful changeover and implementation.

WHAT IS GST?
The indirect tax regime in India is proposed to be replaced by a comprehensive dual GST with Central GST and State GST to be levied concurrently by the Centre and the States.
GST would replace most indirect taxes currently in place. The tax base is anticipated to be comprehensive, including virtually all goods and services, with minimum exemptions.
Following the destination principle, GST structure would include imports while exports would be zero-rated. For inter-State transactions in India, the State tax would apply in the State of destination as opposed to that of origin.
Full input credit system would operate in parallel for CGST and SGST, however, cross utilization of input tax credit between CGST and SGST would not be permitted.
GST will have a far reaching impact on virtually all aspects of businesses operating in the country, for instance, pricing of products and services; supply chain optimization; IT, accounting and tax compliance systems.
As the nomenclature denotes the goods and service tax is integrated in GST for set off benefit of input tax credit.
The prime reason for the introduction of GST is to avoid the cascading effect of taxes in India.
Benefits of GST
1. GST provide comprehensive and wider coverage of input credit setoff, you can use service tax credit for the payment of tax on sale of goods etc.
2. CST will be removed and need not pay. At present there is no input tax creditavailable for CST.
3. Many indirect taxes in state and central level subsumed by GST, You need to pay a single GST instead of all.
4. Uniformity of tax rates across the states
5. Ensure better compliance due to aggregate tax rate reduces.
6. By reducing the tax burden the competitiveness of Indian products in international market is expected to increase and there by development of the nation.
7. Prices of goods are expected to reduce in the long run as the benefits of less tax burden would be passed on to the consumer.
8. Overall tax compliance cost will reduce for government and can concentrate on GST.
On application of the GST, it is recommended that the following Central Taxes should be, to begin with, subsumed under the Goods and Services Tax:
(i) Central Excise Duty
(ii) Additional Excise Duties
(iii) The Excise Duty levied under the Medicinal and Toiletries Preparation Act
(iv)Service Tax
(v) Additional Customs Duty, commonly known as Countervailing Duty (CVD)
(vi)Special Additional Duty of Customs - 4% (SAD)
(vii) Surcharges, and
(viii) Cesses.

Following State taxes and levies would be, to begin with, subsumed under GST:
(i) VAT / Sales tax
(ii) Entertainment tax (unless it is levied by the local
bodies).
(iii) Luxury tax
(iv) Taxes on lottery, betting and gambling.
(v) State Cesses and Surcharges in so far as they
relate to supply of goods and services.
(vi) Entry tax not in lieu of Octroi.


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