An integrated Tax on Goods & Services replacing a plethora of indirect taxes currently in vogue.
Features :
1. Dual Rate : It will be a Two rate Levy . Central GST (CGST) & State GST (SGST)
2. Destination based : Tax will finally accrue at the time of consumption by the ultimate consumer
Taxes to be replaced by GST :
a) Central Excise b) Service Tax c) CST d) VAT e) Entertainment Tax f) Luxury Tax g) Octroi
Taxes NOT replaced by GST :
a) Income Tax b) Stamp duty
Products out of Purview of GST :
a) Petrolium Products b) Liquor c) Tobacco
Scheme of Taxation :
CGST & SGST will be charged on all Intra State Transactions (Transactions within a state)
IGST will be charged on all Inter state Transactions (Transactions between one state & another)
IGST will be total of CGST & SGST.
CGST & IGST will go to centre. SGST will go to State.
Input Credit :
Input credit will be allowed for IGST, CGST & SGST subject to the restriction that CGST & SGST will not be set off mutually i.e. CGST credit will not be allowed to be set off against SGST liability & vice versa.
Seperate payments have to be made for IGST, CGST & SGST. An electronic Ledger will be maintained for every assessee to maintain records of all input, output & Taxes paid.
IGST will be split up into its components i.e. CGST & SGST.
Monthly Returns :
1.Invoice wise (and may be, item wise) Return of outward supplies to be submitted by 10th of succeeding month
Details have to be sent to respective Receivers (Customers) for their information & verification.
2. Invoice wise (and may be, item wise) Return of Inward supplies to be submitted by 15th of succeeding month
3. Combined Return of Inward supplies, outward supplies, Input, Output & Tax paid etc to be submitted by 20th of succeeding month
Penalty of Rs 100 per day (subject to maximum Rs 5000/=) for delay in filing of return.
Matching of Input & Output :
Each Input claimed by a Purchasing dealer will be matched against output declared by the corresponding selling dealer . In case of discrepancy, input will be disallowed.
Annual Return :
One Annual Return to be filed by 31st Dec for each FY ended 31st march. Dealers having TO exceeding a specified limit have to get an Audit Report by a CA along with statement of reconciliation of Book TO with TO reported.
Records : Records to be maintained for 60 months from date of filing of Annual return.
Annual Information Return :
Certain categories like Banks, Registrars, electricity dept, Company Registrar, Income Tax reqd to file Annual Information Return in respect of specified transactions of all persons.
Misc.:
> Regn will be PAN based. 13/15 digit GSTIN to be allotted to each assessee
> Persons having annual TO up to 50 Lacs to be exempted from GST. Instead 1% flat rate of tax to apply to them. They will not be eligible for input credit nor the tax charged by them will be eligible for input credit.
> Stock as at cut off date will be eligible for Input credit under GST.
Rate :
Combined Rate is expected to be between 18 - 23% split up between CGST & SGST.
States are demanding a rate of 27% but FM considers it too high.
Globally, average rate is 18%
Road Map :
* Rajya Sabha to pass bill with 2/3rd majority
* Minimum 15 states to ratify it in legislative assebly
* Then President Gives assent to bill
* GST council to give finishing touches to bill
* GST network , Information Technology bone of GST, to be set up to facilitate online regn, payment of taxes and submission of returns
Challenges for business :
> GST means transparency in all business transactions
> There will be close monitoring of all business transactions from multiple platforms with cross matching of all returns & claims
> Greater responsibility & liability on Transporters of goods
> Strong powers to officers including power to arrest
> Setting up of a Information Technology system for reporting of all transactions in details, in time and accurately.
Unanswered question :
With petrolium products out of purview of GST, what will be the status of companies like ONGC & Reliance Industries ?
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