GST KNOWLEDGE SERIES #5: TAXES TO BE SUBSUMED IN GST
By: – Chitresh Gupta
Goods and Services Tax – GST
Dated:- 7-9-2015
GST is commonly described as indirect, comprehensive, broad based consumption Tax. The Dual GST which would be implemented in India will subsume many consumption taxes. The objective is to remove the multiplicity of tax levies thereby reducing the complexity and remove the effect of Tax Cascading. The objective is to subsume all those taxes that are currently levied on the sale of goods or provision of services by either Central or State Government. Subsumation of large number of taxes and other levies will allow free flow of larger pool of tax credits at both Central and State level.
1. PRINCIPLES OF TAX SUBSUMATION
The various Central, State and Local levies were examined to identify their possibility of being subsumed under GST. While identifying, the following principles were kept in mind:
* Taxes or levies to be subsumed should be primarily in
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nal and Toiletries Preparations (Excise Duties) Act 1955
* Service Tax
* Additional Customs Duty, commonly known as Countervailing Duty (CVD)
* Special Additional Duty of Customs – 4% (SAD)
* Surcharges and Cesses levied by Centre are also likely to be subsumed wherever they are in the nature of taxes on goods or services. This may include cess on rubber, tea, coffee, national calamity contingent duty etc.
* Central Sales Tax to be phased out.
3. STATE TAXES TO BE SUBSUMED IN GST
Following State taxes and levies would be, to begin with, subsumed under GST:
* VAT / Sales tax
* Entertainment tax (unless it is levied by the local bodies)
* Luxury tax
* Taxes on lottery, betting and gambling
* State Cesses and Surcharges in so far as they relate to supply of goods and services
* Octroi and Entry Tax
* Purchase Tax
4. TREATMENT OF SPECIFIC GOODS
The Central Government tabled the 122nd Constitution Amendment Bill, 2014 ('Bill') on the introduction of Goods and Ser
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
a future date would require another constitutional amendment. CST on inter-state sales of alcohol would also continue. It therefore appears that the empowerment of States to tax alcohol products is intended to remain unaltered in the near future.
4.2 TAX ON TOBACCO PRODUCTS
Tobacco and tobacco products would be subjected to GST. However, it can be subjected to a separate excise duty by the Centre.
4.3 TAX ON PETROLEUM CRUDE/ HIGH SPEED DIESEL/ MOTOR SPIRIT/ NATURAL GAS/ AVIATION TURBINE FUEL
The States would continue as per the current laws to impose Value Added Tax (VAT) on Petroleum Crude/ High Speed Diesel/ Motor Spirit/ Natural Gas/ Aviation Turbine Fuel on intra-state sales while inter-state sales would continue to attract Central Sales Tax (CST). These products would be transitioned into the GST regime from a future date to be notified by the GST Council. It is currently unclear from the schematics of the Bill whether States would fully discontinue collecting VAT/ CST on thes
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =