BATTLE ON GST : STATES V/S CENTRE – Goods and Service Tax – GST – By: – Pradeep Jain – Dated:- 12-10-2015 – INTRODUCTION:- Goods and Services Tax (GST), the 122nd Constitutional Amendment Bill, 2014 tabled by Finance Minister Arun Jaitley has already passed in the Lok Sabha. However, due to conflicts between the States and Centre and the reason that the Centre is not having majority in Rajya Sabha; GST bill is lying on the tables of Rajya Sabha since past few months, awaiting the clearance therefrom. What are the reasons of conflicts between the States and Centre? What steps are taken by the Centre to make the States affirmative to GST implementation? Why the states are taking so much time to give green signals to GST bill? This article is an attempt to find answers to some of these questions. TAXING POWERS OF CENTRE & STATES – PRESENT STATUS:- Under present scenario, Centre is empowered to levy and collect following Indirect taxes:- Central Excise Duty – On manufacture of goods Cu
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
usly on the same set of transaction from the stage of manufacture till consumption. The taxable event will no longer be manufacture or sale of goods; rather it will be supply of goods/ services against a consideration. States will also receive revenue from transactions related to provision of services. Presently, states are not empowered to collect any amount in respect of provision of services. Centre will also receive revenue from supply of goods post manufacture. Presently, Centre is not empowered to collect any tax on any post manufacture activity. Taxes levied by local bodies like Purchase tax, entertainment tax, octroi, luxury tax, etc. will not be subsumed in GST, thus, these will continue to be collected by local bodies working under direct control of respective States. GST on petroleum crude and products will be levied on some future date as decided by GST Council. Till then, VAT will continue to be levied by States on sale of petroleum and products. 1% additional levy propose
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
between the Centre and States. Central Sales tax (CST) which is levied on interstate trade @ 2% is a major source of revenue of States. In the GST Regime, CST is to be replaced by 1% additional levy which will be levied for initial two years of implementation of GST. This period can be increased if the GST council decides. There is direct loss due to decrease in rate by 1% besides other projected losses. Tamil Nadu, for example, estimates its losses from scrapping CST as ₹ 3,500 crore annually. The GST bill proposes that there will be dual GST structure where the Centre and the States will administer independently the CGST and SGST, respectively. Since the same set of transactions will be subject to control by both authorities, it is feared by States that the Centre will be the dominating authority. NO SUCH HUGE LOSS TO STATES – CENTRE S VERDICT:- On the one hand, States are worried and opposing GST on the grounds that it will take them to the ocean of huge Revenue losses; on th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rview of GST in some future date as decided by GST council. Till then, the States will continue to charge VAT on the same. COMPENSATION OF LOSSES FOR 5 YEARS – A STEP TO SEEK YES OF STATES:- It has been assured by Finance Minister that States will not suffer much loss due to implementation of GST. The reasons for this assurance have already been discussed in the forgoing para. However, if there is any loss anyhow, the Centre has promised to compensate the same for first five years. The compensation will be as follows:- For first 3 years – 100% In fourth year – 75% In fifth year – 50%. This assurance is said to be the most important step taken to make the States agree for implementation of GST. However, it is expected by Centre that all states may not require compensation for five years; particularly the Consuming states; which will enjoy the revenue increase with the implementation of GST. While parting:- Introduction of GST have the drastic impact on the present taxation system of our
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =