Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 20-2-2017 Last Replied Date:- 1-3-2017 – Services contribute over 57 percent to Indian economy (GDP) which is the highest, followed by industry and agriculture. Services have been growing at the rate of 9-11 percent since last few years which is higher than the GDP growth itself which is growing @ 7-7.9 percent. The tax on services was introduced in India in 1994 with levy of Service Tax @ 5% on just three services which grew to over 120 services by 2012. It was in July, 2012 that India moved to negative list approach to levy Service Tax on all services except those which are covered in negative list or are specifically exempt. The present rate of Service Tax is 15 % including cesses Presently, services are defined very comprehensively under section 65B(44) of the Finance Act, 1994. Accordingly, the term Service has been defined in clause (44) of the new section 65B inserted by the Finance Act, 2012 as applicable w.e.f.
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nds to whole of India except the State of Jammu & Kashmir. Therefore, rendition of services in the State Jammu and Kashmir would also cover under the term 'supply' and accordingly, provisions of GST shall be applied to whole of India including the State of Jammu and Kashmir (J & K). Threshold Exemption Presently in Service Tax, there is a threshold exemption of ₹ 10 lakhs based on the aggregate turnover limit of ₹ 10 lakh and no Service Tax is payable in such cases. In the GST regime, the limit of threshold exemption will be enhanced to ₹ 20 lakh on all India basis except in case of North-eastern and hilly States (total 11 States) where it will be ₹ 10 lakhs. These States are Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Himachal Pradesh, Jammu & Kashmir and Uttarakhand. For this purpose, definition of 'aggregate turnover' has been provided in section 2(6) of the model GST law (version-II) which is
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increase of tax on supply of services will impact the service users and offset the benefit accruing due to lower rate on goods. If services are taxed at two different rates, say 12% and 18%, it may be some relief. In such case, industrial and luxury services may be taxed at a higher rate while other services may be taxed at 12 percent or lower rate. Relief from Double Taxation- Sale v. Service Presently, service providers find it difficult to identify what is service and what is a good facing tax disputes with both the tax Departments i.e., Service Tax and VAT /CST Departments. Service providers paying service tax do receive notices from VAT /CST Department and dealers who are paying VAT /CST get notices from service tax Department in case of overlapping transactions. With the introduction of one single tax i.e., GST on supply of goods and /or services including supplies as per Schedule-II of GST model law (version-II), GST is likely to put an end to the double taxation of services li
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