Part B- First Discussion Paper on GST- 1st Segment
By: – Deepak Aggarwal
Goods and Services Tax – GST
Dated:- 6-2-2015
GST……Goods and Services Tax
Part-B
First Discussion Paper on GST- 1st Segment
* First Segment of First Discussion Paper on GST explains a brief reference to the process of introduction of VAT in the Centre and in the States and also areas where needs further improvements i.e. justification for GST.
Introduction of VAT
* In India, VAT was introduced at the Central level for a selected number of commodities in terms of MODVAT w.e.f March, 1986 and later it is extended to all commodities in terms of CENVAT w.e.f. 2002-03.
* Later on Service tax was added to CENVAT w.e.f. 2004-05.
* Vat
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ate level have some shortcomings.
Shortcomings- at Central level
– Non-inclusion of several Central taxes e.g. additional customs duty, surcharges etc.
– Non-inclusion of value added chain in the distribution trade below the manufacturing level
Shortcomings- at State level
-Non-inclusion of several state taxes e.g. luxury tax, entertainment tax etc.
-Cascading effect on account of Cenvat element i.e. excise duty on the goods remains included in the value of goods to be taxed under state VAT
– No credit of input services at state level
* After introduction of GST, all shortcomings at Central and State level will be removed.
At Central level
-GST will provide comprehensively more indirect central taxes
-Integrate goods and service
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