BASIC CONCEPTS OF GST (PART-1)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 12-1-2016
What is Goods and Services Tax (GST)?
GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. Its main objective is to consolidates all indirect tax levies into a single tax, except customs (excluding SAD) replacing multiple tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies in tax administration.
Simply put, goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods or services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GS
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the goods and services they sell and can claim credits for the most GST included in the price of goods and services they buy. The cost of GST is borne by the final consumer, who can't claim GST credits, i.e. input credit of the tax paid.
Example: A product whose base price is ₹ 100 and after levying excise duty @ 12%value of the product is ₹ 112. On sale of such goods VAT is levied @ 12.5% and value to the ultimate consumer is ₹ 126. In the proposed GST system on base price of ₹ 100 CGST and SGST both will be charged, say @ 8% each, and then the value to the ultimate consumer is ₹ 116. So, in such a case the industry can better compete in global environment.
Therefore, GST is a broad based and a single comprehensive tax levied on goods and services consumed in an economy.
In particular, it would replace the following indirect taxes as these will be subsumed in the proposed GST:
At Central level
* Central Excise Duty
* Service Tax
* Additional Exc
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Octroi)
Surcharges (e.g. national calamity contingent duty)
Purchase tax
Cesses (e.g., Cess on rubber, Cess on tea etc)
State Cesses
Central Sales tax (to be phased out)
State Surcharges
Taxes/Duties not likely to be subsumed in GST
Central Taxes/Levies
State Taxes/Levies
Basic Customs Duty
Taxes on Liquors
Excise Duty on Tobacco products
Toll Tax/ Road Tax
Export Duty
Environment Tax
Taxes on petroleum products
Property Tax
Stamp Duties
Purchase tax on food grains
Specific Central Cess like Oil Cess etc
Taxes on motor spirit & high speed diesel
Tax on Consumption or Sale of Electricity – Not certain
Stamp Duty – Not certain
(To be continued…………)
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Reply By DEEPAK BHARDWAJ as =
Part 1 in reference to Basic Concepts of GST is an excellent way to share the real concepts proposed in GST. I thank and hope that more such parts will be shared in the time to come.
Deepak Bhardwaj
Dated: 13-1-2016
Scholarly articles
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