A Comparative View On Goods And Services Tax (Gst)
By: – Nagesh Bajaj
Goods and Services Tax – GST
Dated:- 2-8-2011
This comparison is based on the recommendations of the First Discussion Paper produced by the Empowered committee of states finance ministers (hereafter referred as EC) and the Report of the Task Force on GST constituted by the Thirteenth Finance commission.
Before going on discussion we should define GST and the Objective behind it.
What is GST?
GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the Producer's point and Service provider's point upto the retailer level. It is essentially a tax only on value addition at each stage and a supplier at each stage is permitted to set-off through a tax credit mechanism.
Under GST structure, all different stages of production and distribution can be interpreted as a mere tax pass through and the tax essentially sticks on final consumption within the taxing juri
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tax base should comprehensively extend over all goods and services upto final consumption point.
Also both are of the view that the GST should be structured on the destination principle. According to Task Force this will result in the shift from production to consumption whereby imports will be liable to both CGST and SGST and exports should be relieved of the burden of goods and services tax by zero rating. Consequently, revenues will accrue to the state in which the consumption takes place or is deemed to take place.
The Task Force on GST said the computation of CGST and SGST liability should be based on the Invoice credit method. i.e., allow credit for tax paid on all intermediate goods and services on the basis of invoices issued by the supplier. As a result, all different stages of production and distribution can be interpreted as a mere tax pass-through and the tax will effectively 'stick' on final consumption within the taxing jurisdiction. This will facilitate elimination of
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GST
The EC favoured the imposition of GST to be based on 'negative list' and for few exemptions if necessary but didn't provide any list of exemption. However, the Task Force also said that there shouldn't be any exemption from CGST and SGST but if for some reason, it is considered necessary to provide exemption, the centre and states should draw a common exemption which should be restricted to the following:
a. All public services of Government (Central, state and municipal/ panchayati raj) including civil-administration, health services and formal education services provided by Govt. schools and colleges, Defence, Para-military, Police, Intelligence and Government Departments. Public services will not include the following:
1) Railways;
2) Post and Telegraph;
3) Other commercial departments;
4) Public sector Enterprises;
5) Banks and Insurance;
6) Health and Education services.
b) Any service transactions between an employer and employee either as a service provider, recip
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