GOODS AND SERVICES TAX (GST)

Goods and services tax is an indirect tax, levied in India on the supply of goods and services. It is a historic tax reform which came into effect from 1stJuly 2017. GST is the complete transform of indirect taxation in country. It involves both, centre and state and also administered by both, centre and state government.

Importance of GST

GST is the biggest tax reform since independence. It is ONE NATION – ONE TAX. It will benefit all stakeholders – Industry, Government and the Consumer. GST will lowers the cost of goods and services, gives boost to the economy, make the product and service globally competitive and give major boost to “MAKE IN INDIA INITIATIVE”. Due to GST, India become a market, with common tax rates and procedures and remove economic barriers. GST is expected to improve ease of doing business in India. Under GST, exporter is zero rated, while in previous indirect tax regime refund of some of the taxes does not take place due to fragmented nature of indirect taxes between centre and states.

Tax rate structure under GST is 0%, 5%, 12%, 18% and 28%.

Petroleum products, alcoholic drinks, electricity and real estate are tax separately by individual state governments.

There is a special rate of 0.25% on rough precious and semi precious stones and 3% on gold. In addition a cess of 22% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products.

GST replaced previous multiple cascading taxes levied by central and state governments.

Goods and Services Tax Council

It is a constitutional body for making recommendation to the union and state government on issues related to goods and service tax. The GST council is chaired by the union finance minister and other members are the union state minister of revenue or finance and ministers in – charge of finance or taxation of all the states.

The tax rates, rules and regulations are governed by the GST council which comprise finance minister of centre and state governments.

Features of GST

  • GST provides for the facility of auto populated monthly returns and annual returns.
  • GST envisages all transactions and process to be done only through electronic mode, to achieve non intrusive administration. This will minimise tax payer physical interaction with tax officials.
  • It also facilitates the taxpayer by prescribing grant of refund within 60 days and provisional release of 90% refund to within 7 days. Further, facilitation measures include interest payment if refund is not sanctioned in time and refund to be directly credited to banks accounts
  • Anti – profiteering provisions for protection of consumer’s rights.
  • Comprehensive transitional provisions for ensuring smooth transition of existing taxpayers to GST regime, credit for available stocks etc.

GOODS AND SERVICES TAX NETWORKS (GSTN)

“Goods and services tax network” (GSTN) is a non profit and non government organisation. The company has been set up primarily to provide IT infrastructure and services to the centre and the state governments, tax payers and other stock holders for implementation of goods and services tax (GST).

Why was GST established?

The GST established to subsume various indirect taxes levied at different levels, with idea of reducing red-tape, plugging leakages and paving the way for a transparent indirect tax regime.