Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 21-9-2011 Last Replied Date:- 30-12-1899 – The First Discussion Paper produced by the Empowered Committee of state Finance Ministers has come out with an innovative way to deal with inter-state transaction of goods and services. The forthcoming GST will be dual in nature and will be levied on all transactions of goods and services. Centre will impose CGST while the state will impose SGST on the same transaction. IGST will be combination of these two, i.e., (CGST plus SGST). As per Indian constitution the taxation of interstate sales is possible only in the state where it was consumed. Unfortunately, this led some states to issue notices to dealers not resident within their jurisdictions to file returns. To remove this problem a law was enacted by the Parliament in 1956 authorizing the central government to levy a tax on interstate sales called the Central Sales Tax (CST). The centre delegated the power to administer the tax to
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nd the revenue accrues to the state where the final consumer is located. The Task Force has suggested that the success of every model depended on the following pre-requisite: a. E-filing of return every month with dealer wise transaction details. b. E-payment of taxes. c. National Portal for access to information by member states and dealers. d. National agency for overseeing the flow of information and taxes. e. Strong IT infrastructure for the above issues. f. The intra and inter-state rates of tax should be equal to avoid evasion and camouflaging the intra state transactions or inter-state transactions. If we will give a look on the IGST Model suggested by the First Discussion Paper, it fulfills the all abovesaid requirements. The scope of IGST Model is that centre would levy IGST which would be CGST plus SGST on all inter-state transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services. The inter-state seller will p
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ut addressing the fundamental concerns of IT infrastructure and information support system the adoption of IGST model would not be adequate. Hence they have suggested for Modified Bank Model instead of IGST Model. Conclusion: The model suggested by the First Discussion Paper is innovative in many ways. However, nothing has been said in the FDP in respect of stock transfer from one state to another. It is suggestive that stock transfers should also be taxed under IGST in the origin state and the credit of the same should be available in the destination state so that there shouldn't be any hindrance in the value chain. But the Empowered Committee of the State Finance Ministers should be appreciated for adopting such a model. LAWCRUX TEAM Import export trade, Custom duty, Central excise duty, GST, Indirect tax services, indirect tax, advance license, foreign trade policy, tax planning, e-book, EOU, SEZ, NEPZ, EPCG, DFRC, CBCC, DGFT, DEPB {http://www.lawcrux.com} Author: Nagesh Bajaj L
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