BASIC CONCEPTS OF GST (PART-4)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 23-1-2016<\/p>\n
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.
\nComparison of Present Taxation and Proposed GST
\nS.No
\nParticulars
\nPresent Taxation
\nProposed GST
\n\t1.
\nStructural Architecture
\n • 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
\n • Tax on services is levied under separate legislation by Centre, i.e., Finance Act, 1994 which re<\/p>\n
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\n\t5.
\nBasic Customs Duty
\nImposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is import
\nNo change is proposed
\n\t6.
\nCVD\/SAD
\nImposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is import
\nTo be subsumed in CGST; Taxable event will be import
\n\t7.
\nService Tax
\nImposed by Centre under separate Act (Finance Act, 1994). Taxable event is provision of service
\nTo be subsumed in CGST & SGST; Taxable event will be provision of service
\n\t8.
\nCentral Sales Tax
\nImposed by Centre under CST Act, 1956. Collection assigned to States; Taxable event is movement of goods from one State to another
\nIs being phased out
\n\t9.
\nState VAT
\nImposed by States; Taxable event is sale within the State
\nTo be subsumed in SGST; Taxable event is sale within State
\n\t10.
\nInter-State Transactions
\n Imposed on goods & services by the Centre (CST, Service Tax)
\nTo be subsumed in GST and subject to SGST & CGST
\n\t11.
\nTax on Manufacturing activity
\n As Excise Duty by<\/p>\n
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\nNo cross set-off between CGST and SGST will be allowed
\n\t19.
\nCascading Effect
\nAllows cenvat tax credit between Excise Duty & Service Tax, but not with VAT (cross set off is not allowed)
\nAllows seamless tax credit amongst Excise Duty, Service Tax & VAT
\n\t20.
\nNon-Creditable Goods
\n Do exist
\nMay exist depending upon negative list \/ exemptions etc
\n\t21.
\nCredit on Inputs used for Exempted Activities
\n Not allowed
\nMay not be allowed
\n\t22.
\nVarious
\nExemptions -Excise Free Zone or VAT Exemption
\n Available
\nMay be phased out
\n\t23.
\nExemption for transit Inter-State Sale and High Seas Sale
\n Available
\nMay be taxable
\n\t24.
\nTransactions against Declaration Forms
\n Allowed under the CST \/ VAT
\nForms likely to be abolished
\n\t25.
\nTaxation on Govt. and Non-Profit Public Bodies
\n Partially taxed
\nMay not change much
\n\t26.
\nStamp Duty
\nPresently taxed concurrently by the Centre and State
\nStatus not clear; If subsumed under GST, big relief to real esta<\/p>\n
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\nExtensive; It will be pre-requisite for implementation of GST
\n\t35.
\nNature of Present Litigations
\n * Sale or Service
\n * Classification of goods
\n * Situs issue between States
\n * Interpretational issues
\n * Sale or works contract
\n * Valuation of composite
\n\ttransactions, etc.
\n * Exemptions
\n * Suppression \/ limitation
\nLikely to be reduced provided GST legislations are properly drafted
\n(To be continued ………)
\n Reply By Ashok Aggarwal as =
\nVery 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.
\nAt Sr N. 18 it is mentioned that no cross set off between CGST a<\/p>\n
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