Tuesday, January 03, 2017

Banking Awareness 2017 - All About Goods and Services Tax


Hello and welcome to exampundit. So here is an article on Goods & Services Tax under our Banking Awareness 2017 Series.

Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into single system of taxation. It was introduced by The Constitution (One Hundred and First Amendment) Act 2016.

"Goods and Services Tax" would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the central and state governments. 

Features:
  • GST is one indirect tax for the whole nation, which will make India one unified common market.
  • GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
  • GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes.



Which taxes at the Centre and State level are being subsumed into GST?

At the Central level, the following taxes are being subsumed:
I. Central Excise Duty,
II. Additional Excise Duty,
III. Service Tax,
IV. Additional Customs Duty commonly known as Countervailing Duty, and
V. Special Additional Duty of Customs.

At the State level, the following taxes are being subsumed:
I. Subsuming of State Value Added Tax/Sales Tax,
II. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
III. Octroi and Entry tax,
IV. Purchase Tax,
V. Luxury tax, and
VI. Taxes on lottery, betting and gambling.


The GST council on 3 November 2016 approved four tier tax structure of 5, 12, 18 and 28 percent under the proposed Goods and Services Tax (GST). There will be two standard tax rates- 12 percent and 18 percent under the GST. Under the tax structure of 5, 12, 18 and 28 percent, the lower rates will be applicable for essential items and the highest for luxury and de-merits goods that will also attract an additional cess.

Main Highlights
  1. Essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate.
  2. The lowest rate of 5 percent will be for common use items while there will be two standard rates of 12 and 18 percent under the Goods and Services Tax (GST) regime.
  3. Most white goods like washing machines, air conditioners, refrigerators, shampoo, shaving stuff and soap will be taxed at 28 percent (with riders).
  4. The highest tax slab will be applicable to items which are currently taxed at 30-31 percent (excise duty plus VAT).
  5. Demerit goods or sin goods such as luxury cars, pan masala, aerated drinks, and tobacco and tobacco products, will invite a tax of 28 percent plus the cess which could vary between 40 percent and 65 percent.
  6. There has been no consensus yet on tax rate for gold.
  7. The collection from this cess as well as that of the clean energy cess will create a revenue pool which will be used for compensating states for any loss of revenue during the first five years of implementation of GST.
  8. The cess will be lapsable after five years.
  9. GST threshold was set at ₹10 lakh for the north-east and hill states and ₹20 lakh for other states in the first GST council meet
  10. Centre and states agreed that assessee up to ₹1.5 crore will be assessed by states and above that will be assessed by centre and states.


The Act was passed in accordance with the provisions of Article 368 of the Constitution, and has been ratified by more than half of the State Legislatures, as required under Clause (2) of the said article. 

On 12 August 2016, Assam became the first state to ratify the bill, when the Assam Legislative Assembly unanimously approved it.

State Legislatures that ratified the amendment are listed below:
  1. Assam (12 August)
  2. Bihar (16 August)
  3. Jharkhand (17 August)
  4. Himachal Pradesh (22 August)
  5. Chhattisgarh (22 August)
  6. Gujarat (23 August)
  7. Madhya Pradesh (24 August)
  8. Delhi (24 August)
  9. Nagaland (26 August)
  10. Maharashtra (29 August)
  11. Haryana (29 August)[
  12. Telangana (30 August)
  13. Sikkim (30 August)
  14. Mizoram (30 August)
  15. Goa (31 August)
  16. Odisha (1 September)
  17. Puducherry (2 September)
  18. Rajasthan (2 September)
  19. Andhra Pradesh (8 September)
  20. Arunachal Pradesh (8 September)
  21. Meghalaya (9 September)
  22. Punjab (12 September)
  23. Tripura (26 September)



Did not ratify:
  1. Jammu and Kashmir
  2. Karnataka
  3. Kerala
  4. Manipur
  5. Tamil Nadu
  6. Uttar Pradesh
  7. Uttarakhand
  8. West Bengal



Goods and Services Tax Network (GSTN), the company which was tasked to set up IT infrastructure for the GST, said that by January it will start training around 60,000 state government officials to equip them to handle GST roll out. The non-profit organisation said that the Centre agreed to pay around Rs 500 crore every year on behalf of the tax payers as service charge.


  Click here for the Banking Awareness 2017 Page (COMING SOON)






Sponsored



Regards



Team ExamPundit

Share this

Get free quizzes and news related to SBI PO, IBPS PO and all other exams.

0 Comment to "Banking Awareness 2017 - All About Goods and Services Tax"

Post a Comment