CA Umesh Sharma
Arjuna (Fictional Character): Krishna, Rio Olympic starts in Brazil. It’s the greatest festival of games. In India last week the Goods and Service Tax bill was passed at Rajya Sabha. Just like before Olympic flame, torch is burned and its relay starts and finishes at the place and date of Olympics, GST flame torch is enlighten. Let’s discuss today about GST in playful manner?
Krishna (Fictional Character): Arjuna, WOW. The Olympic flame represents the positive values that Man has always associated with fire. The purity of the flame is guaranteed by the way it is lit using the sun’s rays.Just now GST Flame torch run has started, It will that is, GST bill will pass to Lok Sabha, then to various states assembly’s, then GST Olympic may start from 1st April 2017. Lot of legal hurdles needs to be crossed by GST torch in its journey of Indian Tax world. GST is biggest tax reforms in India. And it is going to affect price of each and every product and service. The rules under this law, GST rates on products and service will be provided later. Business world will need lot of practice and efforts to win in GST Olympics. Its challenge for Tax authorities to conduct it best fashion and manner. Just like the Olympic organizing country prepares for it. Just now Model GST Law in published, it will take some time to finalized it. Then only the rules of GST game will be known. Still we can discuss it.
Arjuna: Krishna, what is GST? How it needs to be played?
Krishna: Arjuna, GST law is applicable on products and services. It is a value added tax. Because of this, tax will be levied on each stage of value addition of the business transactions. The purchaser will get the set-off of GST paid at each stage at the time of purchase of goods and service. Eventually, the consumer of the goods or services will have to pay GST to the person from whom he has purchased the goods or services.
Arjuna: Krishna, which tax laws will get subsumed in GST law? Which type of Sports are included in GST Olympic?
Krishna: Arjuna, the following tax laws will get subsumed in this law:
A] Central Taxes:
1) Central Excise Duty, 2) Additional Excise Duty, 3) Excise Duty levied as per Medicinal and Toilet Preparations Act, 4) Service Tax, 5) Additional Customs Duty, 6) Surcharge, 7) Cess.
B] State Taxes:
1) VAT, 2) Entertainment Tax, 3) Luxury Tax, 4) Tax on lottery, betting and gambling, 5) Entry Tax, 6) Cess and Surcharge.
Arjuna: Krishna, what are the salient features of GST Olympic?
Krishna: Arjuna, the features of GST are as follows:
1. GST is divided into two parts; a) Central GST imposed by Central Government and b) State GST imposed by State Government. But the provisions of GST law such as tax computation, tax applicability, the threshold limit for the taxpayer etc. will be the same.
2. GST will be applicable on each and every product and service except for the exempted goods, services and if the turnover is less than specified threshold limit.
3. While paying central GST, input tax credit of only central GST will be allowed. Similarly, while paying state GST, input tax credit of only state GST will be allowed.
4. Simply, the input tax credit of central and state GST cannot be adjusted against each other.
5. The way of collecting central and state GST will be kept as similar as possible.
6. Central GST will be administered by Central Government and State GST will be administered by State Government.
7. Taxpayers will have to file central and state GST returns after specified period.
8. Every taxpayer will have Taxpayer Identification Number of 13 to 14 numbers which will be linked with PAN. Due to this, information exchange between GST and income tax department will increase.
Arjuna: Krishna, how will the central and state GST be levied simultaneously?
Krishna: Arjuna, central and state GST will be leviable at all points in the supply chain except for some goods, services and threshold limit. Both of them will be levied on value of same rate of product or service. Similarly, the place of the supplier and the place of the purchaser in the country will not make a difference for applicability of Central GST(CGST). But State GST(SGST) will be applicable when the purchaser and seller of goods or service are in the same state. For example: Assuming the rate of CGST is 10% and of SGST is 10%, if a wholesaler sells goods of Rs.100 to a company of the same state, then the dealer will have to levy Rs.10 CGST and Rs.10 SGST on it. Also, while paying CGST, the taxpayer can take credit of the CGST paid on purchase of goods and services. Similarly, SGST will have to be paid by taking the credit of input SGST.
Arjuna: Krishna, how and when will the GST be levied on interstate transactions of goods and services?
Krishna: Arjuna, Integrated GST(IGST) will be levied on interstate transactions of goods or services. In GST, both Central and State Government will levy tax on goods and services. A person effecting interstate sale will have to pay IGST on the value addition made after taking set-off of input IGST, CGST, SGST.
Arjuna: Krishna, what should people learn from all these GST Torch run and Olympic of Tax?
Krishna: Arjuna, As in Olympic every player tries hard to win medal. Organizing body, country wants it to be successful. In same way Indian Government, Tax Authorities, etc is trying very hard for successful implementation of GST. It is expected that the GST will be applicable from 1st April 2017. So it is very important that every taxpayer understands the provisions of this law and analyze its effect on his business. It is very necessary that the taxpayer starts preparing for it from now. So that before the GST starts he will be ready to win in it. Honorable FM of India Shri. Arun Jaitley is firmly holding the GST Bill torch and hope it will reach its destination soon.Let’s see when the GST Olympic starts in India and who the rules of the game are framed.