Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 23-1-2016 Last Replied Date:- 27-1-2016 – 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 regulates service tax &bu
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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 Centre No such powers under GST regime 12. Powers to levy Tax on Sa
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owed 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 estate industry : to claim input tax 27. Excise Duty Threshold Limit Presently ₹ 1.5 crores Rs.10 lacs to 20 lacs (Turnover of
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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 – The Reply = 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 and SGST would be allowed against present Excise duty and Service tax. It may be noted that cross set off at present is allowed only between Central Excise duty and Service Tax and this position w
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