1- The introduction of Goods And Services tax ( GST ) in India ( except Jammu & Kashmir) on Ist July, 2017 marks the biggest reform in the indirect taxes after independence and envisages One Nation One Tax concept . It is pertinent to note that GST has been adopted even by the State of Jammu & Kashmir on 5th July , 2017 .
2- This innovative taxation system envisages uniform law and procedures across the breadth and length of the country and provides not only uniform level market both for the goods and services but also ensures their seamless movement.
3- GST subsumes many existing taxes such as Central Excise , CENVAT , Various related Cesses , Value Added Tax , Services Tax , Entertainment Tax , Luxury Tax and envisages single window taxation in the form of Goods and Services Tax.
4- Now neither the States will be at liberty to make changes in rate of tax according to their suitability nor they will be in a position to amend any law or related procedure on their own . Any such change shall be possible only on the recommendation of GST Council which is the highest Constitutional Body to deal with GST . The Union Finance Minister is the Chairman of this Council and each State is represented by its Finance Minister as the member of the Council . Three fourth majority is required to make any recommendation by the Council . It is pertinent to note that the value of Central Government’s vote is one third whereas all the States together have the value of remaining two third votes . Thus it is quite evident that to attain three fourth majority on any recommendation the Central Government’s consent is now necessary simply because its vote share is one third of the total votes .
5- GST is a consumer based taxation system which envisages taxation at every point of supply till it reaches the consumer point . The input tax credit is available at every stage of supply . Input tax credit (ITC) signifies the set off of the tax paid in respect of inward supplies or purchases from the output tax liability i.e. from the tax leviable on the sale or supply of related goods . It can be understood from the following example : Suppose A purchases certain goods valuing Rs. 10,000/- which are taxable at the rate of 12% and thus pays tax on such purchases of Rs. 1200 /- . Such taxable person A subsequently sells these goods for Rs. 12,000/- and charges tax at the rate of 12% which is equal to Rs. 1440/- . Such person will get the set-off of Rs. 1200/- paid on the purchases of such goods and will be liable to pay only 1440– 1200 = 240/- .
6- In this taxation system the taxable person gets the benefit of input tax credit immediately after making the purchases or inward supplies and such person is not required to wait for the time of related supplies of such goods or services as the case may be . As and when such supplies take place the benefit of tax paid in respect of related purchases or inward supplies is adjusted against the output tax liability and the concerned taxable person is only required to pay the differential amount of tax . That is why another significant feature of the GST is that the stock does not carry the burden of tax in this system simply because the tax paid in respect of such goods in stock is claimed as input tax credit immediately after making their purchases.
7- It is reiterated that the facility of input tax credit is now available both for the goods as well as services in GST regime .
8- In GST regime , the tax rates are precisely 5% , 12% , 18% and 28% . Gold , Silver, Diamond etc. and the ornaments made from them are to be subjected to 3% rate of tax . The food grain , rice , pulses , cereals , flours etc have been exempted from tax liability and the day to day consumable goods have been kept at lower rates . The luxury items such as cars , air-conditioners , washing machines , cigarettes etc. have been kept at 28% slab .
9- The small dealers / suppliers have been kept out of the ambit of GST . With certain exceptions only such persons have been made liable to registration and to pay tax whose annual turnover is more than Rs. 20 lakhs . Also such taxable persons whose aggregate of supplies during last financial year has been less than 75 lakh rupees have been provided the facility to opt for composition in the GST regime . Such persons shall be required to pay a lump sum amount ( upto the turnover of Rs. 75 Lakhs ) at the rate of 1% (for traders) ; at the rate of 2% (for manufacturers) and at the rate of 5% (for supplies of food etc.) of their turnover . The facility of composition has been envisaged to the aforesaid taxable persons to keep them out of the other processes and procedures of GST .
10- This innovative taxation system is based on on-line applications and because of this it is more transparent , user friendly and fully computerized system . Once one gets acquainted with the system , the compliance shall become extremely easy and the taxable persons shall not be required to contact the officials or the office frequently. Such interface shall be extremely reduced .
11- The GST regime marks the end of check-post system thus paving way for seamless movement of goods without any hindrances . It provides better opportunities and atmosphere for conducting business .
12- The GST regime provides for strict provisions regarding self-assessment. Now regular assessment shall be possible in only following situations and conditions :
(i) where due tax has not been paid .
(ii) where tax has been short paid .
(iii) input tax credit has been wrongly availed or utilized .
(iv) refund has been wrongly obtained or utilized.
13- Thus GST is the milestone in the ongoing fiscal reforms in the country after independence . Whereas the GDP growth of 1-2% is expected because of this innovative taxation system , there is every possibility of a far more wider competitive level market with immense positivity for the business world which is bound to fulfill their aspirations in the time to come .