Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 29-7-2008 Last Replied Date:- 28-8-2016 – The introduction of goods and services tax (GST) from April 2010 was announced by Finance Minister in 2006-07 Budget. Union Budget 2007-08 reconfirmed the proposal and moved a step ahead in announcing that the empowered committee of State Finance Ministers will work with the Union Government to prepare a road map for introducing a national level goods and services tax with effect from April 1, 2010. Union Budget 2008-09 has reported that there is considerable progress in preparing a road map for introducing the goods and service tax with effect from April 1, 2010. After value added tax, if implemented, GST shall be the most significant fiscal initiative of independent India and shall boost the economic development. Need for a common tax Why do we need GST today? In today's Indian economy, where service sector contributes over 55%, separate taxation of goods and services is n
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With GST, uniformity of levy of indirect taxes will be ensured across the country. Tax Reforms and GST Dr. Vijay Kelkar headed Task Force on implementation of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 recently submitted its report in July 2004 to the Government. The report outlines the fiscal strategy needed to meet the objectives of the FRBM. The task force has recommended the following strategy for tax reforms: widening the tax basefew rates, lower rates – enhancing equity of the tax system – vertical as well as horizontal equity – shift to non-distortionary consumption taxes to increase efficiency in production and enhance international competitiveness of Indian goods and services. The destination based VAT on all goods and services is the best method of eliminating distortions and taxing consumptions. – enhancing the neutrality between present consumption and future consumption. – enhancing neutrality of the tax system to the form of organisation. – enhancin
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services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods or services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GST is just like State level VAT which is levied as tax on sale of goods. In India, GST may be a national level value added tax applicable on goods and services alongwith state land GST. A major change in administering GST is that tax incidence is at the point of sale as against the present system of point of origin. Preparing for Goods and Services Tax (GST) Proposed Goods and Services Tax (GST) as an alternative to excise duties on manufacturer and service tax on services should be aimed as a major indirect tax reform which evolves as an efficient and harmonized consumption tax (indirect tax) in India. This is goin
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service tax into one integrated tax called Goods and Services Tax (GST) is a welcome ambition but also a huge challenge at all fronts-political as well as psychological, administrative and technological. In fact, VAT took India over a decade and if India wants GST to happen, a beginning has to be made. It may achieve 2010 deadline or not but atleast a beginning should be made. GST shall be aimed to make for an efficient, transparent system of taxation which is imperative for Indian industry to compete at global and domestic fronts. Pre-requisites for GST Following are the pre-requisites for entering into a GST regime Setting up of empowered committee for GST (like VAT) which can steer the road map into action – Broaden the tax base for excise duty (presently 40% comes from petroleum products) – Finishing area based and product based exemptions – Rationalization of concessions and exemptions including that on exports – Expanding service tax to almost all services – Common/unified tax r
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them to avail Cenvat credit on inputs and input services, besides eliminating other small taxes, making compliance cheaper and simpler. In an ideal GST regime, all indirect taxes should be convatable against one another. GST shall achieve economies of scale by creating a common market and help India become a global market. All states and centre will have to work for this unified goal. In European Union (EU), VAT has been fully harmonized since 1993, while in Mexico, unified VAT was implemented in 1980 to replace 30 federal excise taxes and 400 plus state and municipal taxes with revenue sharing. In Brazil, federal VAT was introduced way back in 1967. Steps involved Following steps are needed on political, administrative and technological fronts Arriving at common/general consensus including political agreement. – Setting up a high level committee for monitoring the project of GST – Preparing a blue print/road map for GST – Creating a conducive environment for GST – Centre-state coordi
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t and effective GST regime. The phasing out of CST has since been announced in Union Budget 2007 and implemented and it is expected that by 2010 it shall be completely abolished. The empowered committee (to be set up) should also try to integrate the recommendations of Govinda Rao and Vijay Kelkar Committees. There will be a need to follow a gradual approach rather than one go stand. It may be noted that Finance Minister has in his Budget speech (2007) announced that empowered committee of VAT shall help the Centre in implementation of GST also. During Budget Speech for 2008-09, it was indicated that substantial progress has been made in moving towards GST. Union Budget 2006-07 (and reconfirmed in Budget 2007-08 and 2008-09) has proposed a date, i.e., 1st April, 2010 for introduction of GST in the country. Whether it can happen has to be seen. – Reply By amit goyal – The Reply = I WANT TO KNOW ABOUT GST % ON VAT – Reply By anand srivastava – The Reply = hello sir, i m accountant.iwan t
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