Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 13-2-2016 – Systems of GST / VAT Internationally, there are three systems of Goods & Services Tax (GST) / Value Added Tax (VAT) in vogue in different countries, viz, Invoice System Payment System Hybrid System Invoice System: In the invoice system, the GST (Input) is claimed on the basis of invoice and it is claimed when the invoice is received, it is immaterial whether payment is made or not. Further the GST (Output) is accounted for when invoice is raised. Here also the time of receipt of payment is immaterial. One may treat it as mercantile system of accounting. In India the present system of sales tax on goods is an invoice system of VAT and here it is immaterial whether the taxpayer is following the cash basis of accounting or mercantile basis of accounting. The advantage of invoice system is that the input credit can be claimed without making the payment. The disadvantage of the invoice system is that the GST
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e basis of invoice and GST (Output) is accounted for on the basis of payment, if allowed by the law. In some countries the dealers have to put their option for this system or for a reversal of this system before adopting the same. GST and Present System of VAT In principle, there is no difference between present tax structure under VAT and GST as far as the tax on goods is concerned because GST is also a form of VAT on Goods and services. Here at present the sales tax, with an exception of CST, is a VAT system and in case of service tax the system also has the Cenvat credit system hence both sales tax and service tax are under VAT system in our country. At present, the goods and services are taxed separately but in GST, this difference will not exist and all goods and services shall be taxed alike as per the provisions of law. All the states have their own VAT Laws comprising VAT acts and VAT rules and these acts and rules are formulated on the basis of White Paper on VAT issued by the
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T calls for effecting widespread amendments in the Constitution and the various constitutional entries relating to taxation. In the current scenario, it is difficult to visualize constitutional amendments of such far reaching implications going through, more so in view of the fact that sharing of legislative powers is such an essential element of our federal polity. Another issue concerned is the appropriate designing and structuring of GST in India. The issue involved includes, how the issue of inter-state movement of goods and services may be addressed, taxes on services originating in one state and being consumed in other state etc. Another contentious issue that is bound to crop up in this regard is the manner of sharing of resources between the Centre and the states. Finally, apart from all these, there has to be a robust and integrated Management Information System dedicated to the task of tracking flow of goods and services across the country and rendering accurate accounting of
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