Goods and Service Tax – GST – By: – CA. Chitresh Gupta – 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 the nature of indirect taxes, either on the supply of goods or o
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y, 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 Services Tax ( GST ) before the lower house of Parliament on December 19, 2014. On analysis of the Bill, the Bill contains the following treatment
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t 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 these products from this notified date, or whether the transition would be gradual. The Bill however also states that these products can be subjected to an excise duty
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