BASIC CONCEPTS OF GST (PART-4)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 23-1-2016
How do we compare the present indirect tax laws vis-à-vis proposed GST law regime ? In this part, an attempt is being made to list down the possible differences between the present tax laws and proposed provisions under GST. This comparison is not final and is only for academic purposes to understand the differences or deviations tax base, origin, structure, approach to tax goods and services, place of provision, powers to levy tax, export and import etc.
Comparison of Present Taxation and Proposed GST
S.No
Particulars
Present Taxation
Proposed GST
1.
Structural Architecture
• Two separate VAT systems operate simultaneously at two levels, Centre and State, and tax paid (input tax credit) under one is not available as set off against the other
• Tax on services is levied under separate legislation by Centre, i.e., Finance Act, 1994 which re
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evel
5.
Basic Customs Duty
Imposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is import
No change is proposed
6.
CVD/SAD
Imposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is import
To be subsumed in CGST; Taxable event will be import
7.
Service Tax
Imposed by Centre under separate Act (Finance Act, 1994). Taxable event is provision of service
To be subsumed in CGST & SGST; Taxable event will be provision of service
8.
Central Sales Tax
Imposed by Centre under CST Act, 1956. Collection assigned to States; Taxable event is movement of goods from one State to another
Is being phased out
9.
State VAT
Imposed by States; Taxable event is sale within the State
To be subsumed in SGST; Taxable event is sale within State
10.
Inter-State Transactions
Imposed on goods & services by the Centre (CST, Service Tax)
To be subsumed in GST and subject to SGST & CGST
11.
Tax on Manufacturing activity
As Excise Duty by
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nd Service tax : Cross set off allowed
No cross set-off between CGST and SGST will be allowed
19.
Cascading Effect
Allows cenvat tax credit between Excise Duty & Service Tax, but not with VAT (cross set off is not allowed)
Allows seamless tax credit amongst Excise Duty, Service Tax & VAT
20.
Non-Creditable Goods
Do exist
May exist depending upon negative list / exemptions etc
21.
Credit on Inputs used for Exempted Activities
Not allowed
May not be allowed
22.
Various
Exemptions -Excise Free Zone or VAT Exemption
Available
May be phased out
23.
Exemption for transit Inter-State Sale and High Seas Sale
Available
May be taxable
24.
Transactions against Declaration Forms
Allowed under the CST / VAT
Forms likely to be abolished
25.
Taxation on Govt. and Non-Profit Public Bodies
Partially taxed
May not change much
26.
Stamp Duty
Presently taxed concurrently by the Centre and State
Status not clear; If subsumed under GST, big relief to real esta
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es; very minimum; Central taxes are online
Extensive; It will be pre-requisite for implementation of GST
35.
Nature of Present Litigations
* Sale or Service
* Classification of goods
* Situs issue between States
* Interpretational issues
* Sale or works contract
* Valuation of composite
transactions, etc.
* Exemptions
* Suppression / limitation
Likely to be reduced provided GST legislations are properly drafted
(To be continued ………)
Reply By Ashok Aggarwal as =
Very good analysis and comparison between present situation and that after implementation of proposed GST law. Let us hope that the procedures will be simple and more system based to avoid harassment of trade & industry at the hands of those who enforce the law. If the trade will be running to tax departments of Central & State Governments even after GST is reality, the very purpose of bringing GST would be defeated.
At Sr N. 18 it is mentioned that no cross set off between CGST a
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