\u00a0<\/strong><\/p>\n Ans. It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.<\/p>\n Ans. The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.<\/p>\n Ans.\u00a0\u00a0 The GST would replace the following taxes:<\/p>\n \n \n The GST Council shall make recommendations to the Union and States on the taxes, cesses and surcharges levied by\u00a0 the Centre, the States and the local bodies which may be subsumed in the GST.<\/p>\n Ans. The various Central, State and Local levies were examined to identify their possibility of being subsumed under GST. While identifying, the following principles were kept in mind:<\/p>\n \n Ans. Article 366(12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016 defines the Goods and Services tax (GST) as a tax on supply of goods or services or both, except supply of alcoholic liquor for human consumption. So alcohol for human consumption is kept out of GST by way of definition of GST in constitution. Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel have temporarily been kept out and GST Council shall decide the date from which they shall be included in GST. Furthermore, electricity has been kept out of GST.<\/p>\n \n Ans. The existing taxation system (VAT & Central Excise) will continue in respect of the above commodities.<\/p>\n \n Ans. Tobacco and tobacco products would be subject to GST. In addition, the Centre would have the power to levy Central Excise duty on these products.<\/p>\n Ans. It would be a dual GST with the Centre and States simultaneously levying it on a common tax base. The GST to be levied by the Centre on intra-State supply of goods and \/ or services would be called the Central GST (CGST) and that to be levied by the States\/ Union territory would be called the State GST (SGST)\/ UTGST. Similarly, Integrated GST (IGST) will be levied and administered by Centre on every inter-state supply of goods and services.<\/p>\n Ans. India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes\u00a0 through appropriate legislation.\u00a0 Both the\u00a0 l evels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.<\/p>\n Ans. Centre will levy and administer CGST & IGST while respective states \/UTs will levy and administer SGST\/ UTGST.<\/p>\n \n \n Currently, the fiscal powers between the Centre and the States are clearly demarcated in the Constitution with almost no overlap between the respective domains. The Centre has the powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the States have the powers to levy tax on the sale of goods. In the case of inter-State sales, the Centre has the power to levy a tax (the Central Sales Tax) but, the tax is collected and retained entirely by the States. As for services, it\u00a0 is \u00a0the\u00a0 Centre alone that is empowered to levy service tax.<\/p>\n Introduction of the GST required amendments in the Constitution so as to simultaneously empower the Centre and the States to levy and collect this tax. The Constitution of India has been amended by the Constitution (one hundred and first amendment) Act, 2016 for this purpose. Article 246A of the Constitution empowers the Centre and the States to levy and collect the GST.<\/p>\n Ans. The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of CENVAT. While the location of the supplier and the recipient within the country is immaterial for the purpose of CGST, SGST would be chargeable only when the supplier and the recipient are both located within the State.<\/p>\n \n Illustration I: Suppose hypothetically that the rate of CGST is 10% and that of SGST is 10%. When a wholesale dealer of\u00a0 steel\u00a0 in\u00a0 Uttar\u00a0 Pradesh supplies steel\u00a0 bars and rods to\u00a0 a construction company which is also located within the same State for, say Rs. 100, the dealer would charge CGST of Rs. 10 and SGST of Rs. 10 in addition to the basic price\u00a0 of the goods. He would be required to deposit the CGST component i n t o a C en t ra l \u00a0Go ver n men t \u00a0a c c o u n t w h i l e the SGST portion into the account of the concerned State Government. Of course, he need not actually pay Rs. 20 (Rs. 10 + Rs. 10) in cash as he would be entitled to set- off this liability against the CGST or SGST paid on his purchases (say, inputs). But for paying CGST he would be allowed to use only the credit of CGST paid on his purchases while for SGST he can utilize the credit of SGST alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST.<\/p>\n Illustration II: Suppose, again hypothetically, that the rate of CGST is 10% and that of SGST is 10%. When an advertising company located in Mumbai supplies advertising services to a company manufacturing soap also located within the State of Maharashtra for, let\u00a0 us\u00a0 say Rs. 100, the\u00a0 ad company would charge\u00a0\u00a0 \u00a0CGST\u00a0 of<\/p>\n Rs. 10 as well as SGST of Rs. 10 to\u00a0 the basic value of\u00a0\u00a0\u00a0 \u00a0the service. He would be required to deposit the CGST component into a Central Government account while the SGST portion into the account of the concerned State Government. Of course, he need not again\u00a0 actually pay Rs. 20 (Rs. 10+Rs. 10) in cash as it would be entitled to set-off this liability against the CGST\u00a0 or\u00a0 SGST\u00a0 paid\u00a0 on his purchase (say, of inputs such as stationery, office equipment, services of an artist etc.). But for\u00a0 paying\u00a0 CGST he would be allowed to use only the credit of\u00a0 \u00a0CGST<\/p>\n \n paid on its purchase while for SGST he can utilise the credit of SGST alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST.<\/p>\n Ans. Introduction of GST would be a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax and allowing set-off of prior-stage taxes, it would mitigate the ill effects of cascading and pave the way for a common national market. For the consumers, the biggest gain would be in terms of a reduction in the overall tax burden on goods, which is currently estimated\u00a0 at\u00a0 25%-30%.\u00a0 Introduction of GST would also make our products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth. There may also be revenue gain for the Centre and the States due to widening of the tax base, increase in trade volumes and improved tax compliance. Last but not the least, this tax, because of its transparent character, would be easier to administer.<\/p>\n Ans. Under the GST regime, an Integrated GST (IGST) would be levied and collected by the Centre on inter-State supply of goods and services. Under Article 269A of the Constitution, the GST on supplies in the course of inter- State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.<\/p>\n Ans. The CGST and SGST would be levied at rates to be jointly decided by the Centre and States. The rates would be notified on the recommendations of the GST Council.<\/p>\n Ans. A GST Council would be constituted comprising the Union Finance Minister (who will be the Chairman of the Council), the Minister of State (Revenue) and the State Finance\/Taxation Ministers to make recommendations to the Union and the States on<\/p>\nQ 2. What exactly is the concept of destination based tax on consumption?<\/h2>\n
Q 3. Which of the existing taxes are proposed to be subsumed under GST?<\/h2>\n
\n
\n
\n
\n
\n
Q 4. What principles were adopted for\u00a0 subsuming the above taxes under GST?<\/h2>\n
\n
\n
Q 5. Which are the commodities proposed to be kept outside the purview of GST?<\/h2>\n
Q 6. What will be the status in respect of taxation of above commodities after introduction of GST?<\/h2>\n
Q 7.\u00a0\u00a0 What\u00a0 will\u00a0 be\u00a0 status\u00a0 of\u00a0 Tobacco\u00a0\u00a0 and\u00a0\u00a0 Tobacco products under the GST regime?<\/h2>\n
Q 8.\u00a0 \u00a0What\u00a0\u00a0\u00a0\u00a0\u00a0 type\u00a0\u00a0\u00a0\u00a0 of\u00a0\u00a0\u00a0\u00a0 GST\u00a0\u00a0\u00a0\u00a0 is\u00a0\u00a0\u00a0\u00a0\u00a0 proposed\u00a0\u00a0\u00a0\u00a0 to\u00a0\u00a0\u00a0\u00a0\u00a0 be implemented?<\/h2>\n
Q 9.\u00a0\u00a0 Why is Dual GST required?<\/h2>\n
Q 10. Which authority will levy\u00a0 and\u00a0 administer GST?<\/h2>\n
Q 11. Why was the Constitution of India amended recently in the context of GST?<\/h2>\n
Q 12. How a particular transaction\u00a0 of\u00a0 goods and services would be taxed simultaneously under Central GST (CGST) and State GST (SGST)?<\/h2>\n
Q 13.\u00a0\u00a0\u00a0 What are the benefits which the\u00a0 \u00a0Country will accrue from GST?<\/h2>\n
Q 14.\u00a0\u00a0\u00a0 What is IGST?
\n<\/strong><\/h2>\nQ 15.\u00a0\u00a0 Who will decide rates for levy of GST?<\/h2>\n
Q 15.\u00a0\u00a0 What would be the role of GST Council?
\n<\/strong><\/h2>\n