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GST at a Glance

It Is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid in previous stages available as setoff. In a nutshell, the only value addition will be taxed and burden of tax is to be borne by the final consumer.

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All About GST
  • India proposes to introduce a common system of indirect tax, i.e. Goods and Services Tax (GST). The introduction of a dual GST will be, in effect, an integration and rationalization of the existing regimes at both Federal and State levels. It is, however fundamentally different from the present regime in a variety of ways.

  • Businesses realize that they need considerable time to prepare for GST and have started gearing up for the same.

  • Therefore, the most awaited GST is all set up to be introduced w.e.f. 1st April 2017.

  • There will be no tax authorities to collect tax. All businesses have to pay GST tax by online.

  • GST would be payable on price actually paid or payable, termed as "transaction value", which will include packing cost, commission, and all other expenses incurred for sales. This tax will be payable at the final point of the consumption. The GST will have two components the Central GST and the State GST, thus, empowering both the State and Central government to legislate and administer their respective taxes.

  • The Ease of starting business: Any new business needs to have a VAT registration from sales tax department. A business operating in many States has to face a lot of issues regarding the different procedures and fees in each state. GST will bring about a uniformity in process and centralised registration that will make starting business and expanding in different States much simpler.

  • Higher exemptions to new businesses: As per the current structure, any business with a turnover of more than Rs five lakh has to get VAT registration and pay VAT. GST will make this limit higher, to upto Rs 10 lakh and, further to it, businesses with turnover between Rs 10 and 50 lakh will be taxed at a lower rates. This will bring respite from tax burdens to newly established businesses.

  • Simple taxation: Currently, a startup spends a lot of time and energy to manage the various taxes at various points. Adhering to different regulations at different States make the process very complex. GST will simplify the process by integrating all taxes, making the process of paying tax simpler.

  • Respite for businesses in both sales and services: Businesses like restaurants, which fall under both sales and service taxation, have to calculate the VAT and service tax on both items separately. This makes the calculations process very complex. GST will not distinguish between sales and services, and thus the tax calculation will be done on total.

  • Reduction in logistics cost and time across States: Many transport vehicles get delayed during movement across States due to small border tax and checkpost issues. Interstate movement will become cheaper and less time consuming, as these taxes will be eliminated. The whole Indian market opens up for manufacturers as interstate supply becomes tax-neutral. This will also bring down costs associated with maintaining high stocks, as there will be undisrupted movement of goods. As per a CRISIL analysis, GST can reduce logistics costs of companies producing non-bulk goods (comprising all goods besides the primary bulk commodities transported by railways - coal, iron ore, cement, steel, food grains, fertilizers) by as much as 20 percent.

    The GST would replace the following taxes:

  • Taxes currently levied and collected by the Centre:
    a. Central Excise duty
    b. Duties of Excise (Medicinal and Toilet Preparations)
    c. Additional Duties of Excise (Goods of Special Importance)
    d. Additional Duties of Excise (Textiles and Textile Products)
    e. Additional Duties of Customs (commonly known as CVD)
    f. Special Additional Duty of Customs (SAD)
    g. Service Tax
    h. Central Surcharges and Cesses so far as they relate to supply of goods and services


  • State taxes that would be subsumed under the GST are:
    a. State VAT
    b. Central Sales Tax
    c. Luxury Tax
    d. Entry Tax (all forms)
    e. Entertainment and Amusement Tax (except when levied by the local bodies)
    f. Taxes on advertisements
    g. Purchase Tax
    h. Taxes on lotteries, betting and gambling
    i. State Surcharges and Cesses so far as they relate to supply of goods and services

    The GST Council shall make recommendations to the Union and States on the taxes, cesses and urcharges levied by the Centre, the States and the local bodies which may be subsumed in the GST.
  • Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters.
  • Small taxpayers with an aggregate turnover in a financial year up to [Rs. 50 lakhs] shall be eligible for composition levy. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover during the year without the benefit of ITC. The floor rate of tax for CGST and SGST shall not be less than [1%]. A tax payer opting for composition levy shall not collect any tax from his customers. Tax payers making inter- state supplies or paying tax on reverse charge basis shall not be eligible for composition scheme.
    Registration under Goods and Service Tax (GST) regime will confer following advantages to the business:

  • Legally recognized as supplier of goods or services.

  • Proper accounting of taxes paid on the input goods or services which can be utilized for payment of GST due on supply of goods or services or both by the business.

  • Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.

  • No. A person without GST registration can neither collect GST from his customers nor claim any input tax credit of GST paid by him.
  • Any supplier who carries on any business at any place in India and whose aggregate turnover exceeds threshold limit as prescribed in a year is liable to get himself registered. However, certain categories of persons mentioned in Schedule III of MGL are liable to be registered irrespective of this threshold.

  • An agriculturist shall not be considered as a taxable person and shall not be liable to take registration. (As per section 9 (1) )
    As per paragraph 5 in Schedule III of MGL, the following categories of persons shall be required to be registered compulsorily irrespective of the threshold limit:

  • persons making any inter-State taxable supply;

  • casual taxable persons;

  • persons who are required to pay tax under reverse charge;

  • non-resident taxable persons;

  • persons who are required to deduct tax under section 37;

  • persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise;

  • input service distributor;

  • persons who supply goods and/or services, other than branded services, through electronic commerce operator;

  • every electronic commerce operator;

  • an aggregator who supplies services under his brand name or his trade name; and

  • such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.
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