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How will the goods and sevices tax (GST) work in India? How is it any different than
the value added tax (VAT)?
How is the proposed GST framework different from the current scenario ? What are
the pros and cons of implementing it ? Why is there such fierce opposition to it
being implemented ?
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19 ANSWERS
Ankit Maheshwari, Clueless
301 upvotes by Anand Sengottuvelu, Quora User, Azhar Hussain, (more)
The GST framework could easily be one of the most important tax reforms
to be tabled for discussion in the parliament. It does bring with it some
problems, like division of taxation powers between the central government and
states. Not surprisingly, the Finance ministry has already missed three of its
deadlines to come out with an acceptable framework. In fact, most of the proposals
aren't even in the beta stage yet. But, most administrators and more importantly,
producers believe it would make the tax procedures more fair, transparent and
efficient.
An ideal tax system collects taxes at various stages of production, supply and retail.
It is based on the value that the producers, suppliers and retailers individually add
to the product. However, the current tax regime is unfairly skewed against most
producers. Let's outline and simplify the current system of taxes to see how it
operates:
Assume there is a soap manufacturer that procures raw materials at 500 lakhs per
batch. The manufacturer keeps his operating profits at 100 lakhs and encumbers a
processing cost of 50 lakhs. The flow would look something like this:

If we calculate the total tax that the producer has to pay in this case, it would
be 120 lakhs(50 lakhs on procurement and 70 lakhs on sales). Now if you have a
GST framework in place, the total tax that the producer pays is 70 lakhs. How?
The producer had initially paid an input tax of 50 lakhs. Now when he goes on to sell
his batch for 700 lakhs, he gets a tax credit of 50 lakhs. Thus, he pays 20 lakhs in
the form of taxes for the final transaction. This adds up to just 70 lakhs for the
producer. The GST hence, reduces the tax burden on producers. The biggest benefit
of such a system is that it would contain various indirect taxes currently levied on
various participants in the supply chain. Reducing such taxes would lower the
overall production cost and increase the output of the economy in the long run.

That sounds great, but, why GST when we already have VAT? Isn't the VAT
framework similar to that of GST? VAT regulations and rates generally vary
across states. There is a tendency, as has been observed, that states may resort to
undercutting of rates to attract more investors. This generally leads to a loss of
revenue to both the state and centre. GST would introduce uniform taxation laws
across states and different sectors. The taxes would be divided between the state
and centre, based on a formula that would be acceptable to both. Also, it would be
easier to supply goods and services uniformly across the country, as no additional
taxes would have to be paid across different states. Currently, no tax credits are
provided for interstate transactions.
So do we as consumers get goods at a cheaper price? Probably not, and it is here
that the GST has been attacked by the opposition. Since taxes are distributed across
the chain, the consumer prices are likely to rise to maintain the current tax revenue
levels. The government has justified this by saying it would provide tax cuts across
various brackets. This isn't entirely satisfactory. First, the tax paying population isn't
too significant a number to begin with and second, the tax payer is likely to get a
meager tax cut for the GST he would pay for all the goods or services he purchases.
GST is clearly a long term strategy, it would lead to a higher output, more
employment opportunities, and economic inclusion. Initially however, it is likely
cause high inflation rates, administrative costs, and face stiff oppositions from
states due to loss of autonomy.
Updated 18 Jan, 2013. 71,308 views.
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More Answers Below.
Related Questions

What are the good sides and the bad sides of GST (goods and services tax)?

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GST may subsume all entry taxes. By the new rule of central government in India.
How does GST works and how does it impact states revenue?

How will GST (Goods and Services Tax) affect wholesalers/distributors?

What is goods and services tax? What effects will nationalizing GST bring?
Arunkumar Lakshminarayanan, Jollymath
24 upvotes by Tanu Sharma, Azhar Hussain, Sanjay Kumar, (more)
We currently have 4 major indirect tax laws in India (not including Customs law):
1.
2.
3.
4.

State VAT - for sales within the state

Central Sales Tax (CST) - for interstate sales
Excise Duty - on manufacture
Service tax - on all service except exempt services

The "input tax adjustment with output tax" that mechanism Ankit descibes is
available in all the above tax laws except CST. GST aims to eliminate all four laws.
This means administrative convenience for the Government and the taxpayers. A
taxpayer to whom all four laws apply has to file four returns to 4 different
departments. This new law will be relief to the already tired taxpayer.
Politicians object it because that's what politicians do. GST is not going to cause an
inflation. In fact, it will curb the cascading effect of the unadjustable CST on inputs
cutting costs to the end consumer.
Written 2 Oct, 2012. 32,995 views.
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Quora User
27 upvotes by Vishal Kale, Mitesh Gangar, Ruchika Airy, (more)
Source : GST demystified: 10 things you should know | Floosted by NDTV
India
Please learn to Google !!

The goods and services tax (GST) is aimed at creating a single, unified market that
will benefit both corporates and the economy. Finance Minister P Chidambaram did
not spell out a roadmap for implementing GST in his Budget speech, but he expects
a draft Bill on the Constitutional amendment and a draft Bill on GST in the next few
months.
Here are 10 top takeaways on GST:

1. What is GST? It is an indirect tax that will lead to the abolition of all
other taxes such as octroi, central sales tax, state-level sales tax, excise
duty, service tax, and value-added tax (VAT). Both the state and the
central governments will impose GST on almost all goods and services
produced in India or imported into the country.
2. What categories are exempt from GST? Exports will not be subject to
GST. Direct taxes, such as income tax, corporate tax and capital gains tax
will not be affected.
3. How will GST benefit the economy? It will simplify India's tax
structure, broaden the tax base, and create a common market across
states. This will lead to increased compliance and increase India's tax-togross domestic product ratio. According to a report by the National
Council of Applied Economic Research, GST is expected to increase
economic growth by between 0.9 per cent and 1.7 per cent. Exports are
expected to increase by between 3.2 per cent and 6.3 per cent, while
imports will likely rise 2.4-4.7 per cent, the study found.
4. How will GST benefit corporates? It will be beneficial for India Inc. as
the average tax burden on companies will fall. Reducing production costs
will make exporters more competitive. "The most important reform for
India, whether it is for our group, for India generally, or for most
businesses, will be the goods and services tax. It will add about two
percentage points ... to India's GDP growth," Rahul Bajaj, chairman of the
Bajaj Group, told Reuters in November 2012.
5. Will goods and services become costly? The highest rate of taxation
under GST will be around 15 per cent in the first year, and eventually
come down to 12 per cent in the second year. By comparison, the current
rate of the various indirect taxes levied in India amounts to roughly 20
per cent. Goods deemed necessary or of basic importance will be taxed
at a lower rate.
6. Will state governments lose out? Some states fear that a uniform tax
rate, if lower than their existing rates, will dent collections. However, the
central government has said it will compensate states for the potential
revenue loss. Mr Chidambaram has set aside Rs. 9,000 crore towards the
first installment of the balance of central sales tax (CST) compensation.
Also, instead of an earlier proposal for a uniform GST rates across the
country, the Union Government has agreed to have a floor rate of
taxation with a narrow band.

7. Can states decide to opt out of GST? In a deviation from its earlier
stand, the government has agreed for a phased roll-out of GST. States will
also have the flexibility to opt out of GST.
8. What's the latest on GST? Three sub-committees have been formed to
resolve all outstanding differences and submit their reports in three
months. i) One will look at the issue of integrated GST for inter-state
movement of goods and VAT on imports. ii) The second will decide on a
revenue neutral rate on GST - one that is not too high for the traders and
not too low for states. iii) The third will look for a mechanism so that
traders have to coordinate only with one agency - centre or state. This
committee will also decide on a common exemption list and threshold for
levying GST.
9. What's the roadmap for GST? In his Budget speech of 2007-08,
Finance Minister P Chidambaram had announced the implementation of
GST from April 1, 2010. The second deadline for GST was April 2012.
Now, there are hopes that the GST regime will come into effect by 1 April
2014.
10.How will it become a reality? The GST can be implemented only
through a Constitutional Amendment Bill, which means it needs to be
approved by not less than two-thirds of the members present and voting
in each House of Parliament. The GST must also be ratified by the
legislatures of at least one-half of the states.
Written 21 Sep, 2013. 24,286 views.
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Jimeet Shah, Facebook Account Deleted!!!
3 upvotes by Aditya Prashar, Quora User, and Aanchal Garg.
In 2000, the Vajpayee government started discussion on GST by setting up an
empowered committee. It is considered to be a major improvement over the
existing indirect taxes consisting of central excise duty at the national level and the
sales tax system at the state level.
GST is a tax on goods and services with value addition at each stage
having comprehensive and continuous chain of set of benefits from the
producers / service providers point up to the retailers level where only
the final consumer should bear the tax.
First Discussion Paper on Goods and Services Tax in India was presented by the
Empowered Committee of State Finance Ministers dated Nov. 10th, 2009. The five
key features of the proposed plan of the Goods and Services Tax for the Indian
economy, approved by the Government of India and Empowered Committee of

State Finance Ministers comprises :

1. Two components: one levied by the Centre (Central GST), and the other levied
by the States (State GST), rates for which would be prescribed appropriately,
reflecting revenue considerations and acceptability.
2. The Central GST and the State GST would be applicable to all transactions of
goods and services made for a consideration except the exempted goods and
services, goods which are outside the purview of GST
3. The Empowered Committee has decided to adopt a two-rate structure -a lower
rate for necessary items and goods of basic importance and a standard rate for
goods in general. There will also be a special rate for precious metals and a list of
exempted items
4. The GST will be levied on import of goods and services into the country
5. The administration of the Central GST to the Centre and for State GST to the
States would be given. This would imply a reduction in unhealthy competition
among the centre and the states over tax revenue that was prevalent earlier and
an increase in harmonious functioning between them.

A single taxation point system can bring about more transparency and
accountability in the countrys tax regime. Accordingly, I have pointed out a few
points for justifying my statement of institution of GST for better revenue
prospects for the government.
Justification for the Central level
1. At present excise duty paid on raw material consumed is being allowed as
input credit only. For other taxes and duty paid for post manufacturing
expenses, there is no mechanism for input tax credit under the Central
Excise Duty Act.
2. Credit for service tax paid is being allowed by the manufacturer or
service provider to a limited extent. In order to give the credit of service
tax paid in respect of services consumed, it is of utmost necessity of an
existence of comprehensive tax system under both the goods and
services are covered.
3. At present service tax is levied on a few items only. With government
realizing Negative List from time to time in which the listed services will
be out of the purview of service tax.
Justification for the State level
1. A major defect under the State VAT is that the State is charging VAT on
the excise duty paid to the Central Government, which goes against the
principle of not levying tax on taxes.
2. The present State VAT scheme, CENVAT allowed on goods remain
included in the value of goods to be taxed which is cascading effect on
account of CENVAT element.
3. Many states are still continuing with various types of indirect taxes.
4. As tax is being levied on inter-state transfer of goods, there is no
provision for taking input credit on CST leading to additional burden on
dealers.
The New Indian Express in their article GST SO NEAR YET TOO FAR have pointed
out the fact that India will gain an estimated $15 billion by the implementation of
GST. With a simpler and sophisticated indirect tax model, there will be an ease in
understanding between the revenue officials and the tax payers.
Written 29 Apr. 4,319 views.
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Meenakshi Mittal, IAS aspirant
13 upvotes by Rohit Shinde, Anonymous, Quora User, (more)
GST( Goods and Service tax) is a comprehensive tax levy on manufacture,
consumption and sale of goods and services at a national level.The basic philosophy

of GST is to tax every goods and services in such a manner that the producer at
each stage of the value chain can credit for tax paid on his inputs.The system allows
the set-off of GST paid on the procurement of goods and services against the GST
which is payable on the supply of goods or services. However, the end consumer
bears this tax as he is the last person in the supply chain.
TYPE OF GST PROPOSED FOR INDIA:
India will implement a dual GST system. A Central Good and Service Tax and a State
Goods and Service Tax will be levied on taxable value of transaction. All goods and
services barring few like alcohol, tobacco and petroleum will be brought into the
GST base. There will be no distinction between goods and services.
It will not be an additional tax. CGST will include central excise duty (Cenvat),
service tax, and additional duties of customs at the central level; and value-added
tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity
duty, state surcharges related to supply of goods and services and purchase tax at
the State level.
Written 13 Jul, 2014. 23,759 views.
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Palkesh Asawa, Chartered Accountant (AIR-16) and Blogger
44 upvotes by Quora User, Pallav Gujarathi, Sandy Ranka, (more)
Goods and Service Tax in India - How it works? by Palkesh Asawa on For the
Inquisitive Readers
I'm reproducing the blog-post I had made regarding GST. Hope this helps.
One might take 10 minutes to read and understand this answer, but I
believe this will explain all the basics of GST and exactly how it will
operate in India. So, here you go -

The need for GST

We begin by elaborating on the important concept of cascading effect of taxes. It
is also, logically, referred to as taxes on taxes. It is simple to illustrate say A sells
goods to B after charging sales tax, and then B re-sells those goods to C after
charging sales tax. While B was computing his sales tax liability, he also included
the sales tax paid on previous purchase, which is how it becomes a tax on tax.

This was the case with the sales tax few years ago. At that time, a VAT system was
introduced whereby every next stage dealer used to get credit of the tax paid at
earlier stage against his tax liability. This reduced an overall liability of many traders
and also helped to reduce inflationary impact this had on the prices.
Similar concept came in the duty on manufacture The Central Excise Duty much
before it came for sales tax. The CENVAT credit scheme (earlier known as MODVAT)
was also a welcome move by trade and industry where credit of excise duty paid at
the input stages was allowed to be set-off against the liability of excise on removal
of goods. With effect from 2004, this system was extended to Service Tax also.
Moreover, cross utilisation of credit between excise duty and service tax was also
permitted. To a huge extent, the problem of cascading effect of taxes is resolved by
these measures.
However, there are still problems with the system that have not been solved till
date. We shall talk about these problems now. The credit of Input VAT is available
against Output VAT. In the same manner, the credit of input excise/service tax is
available for set-off against output liability of excise/service tax. However, the credit
of VAT is not available against excise and vice versa. We all know that VAT is
computed on a value which includes excise duty. In the same manner, CENVAT
credit is allowed only for the Excise duty paid on inputs, and not on the VAT paid on
the input raw material. This shows that there is a tax on tax!
Excise duty and service tax are levied by the Central Government, while the VAT is
levied by the State Government, which is one of the reasons why such a crossutilisation of credits was not allowed. However, this does not constitute a valid
reason that justifies the cascading effect of taxes. For the people, it makes no
difference if a tax is levied by the Centre or the State a tax is a tax, and there is a
tax on tax. The GST is introduced to combat this problem, among many others.
The Present System of Indirect Taxes
Let us first understand the various indirect taxes that are presently being levied by
the Central & State Governments.

(* CVD Countervailing Duty; SAD Special Additional Duty)

The GST shall subsume all the above taxes, except the Basic Customs Duty that will
continue to be charged even after the introduction of GST. Other indirect taxes, such
as stamp duties etc shall also continue. India shall adopt a Dual GST model,
meaning that the GST would be administered both by the Central and the State
Governments. This makes it the first tax of its kind in India!
The Dual GST Model
We begin by stating the dual GST model and the taxes levied on each kind of
transaction. See these abbreviations before we understand themSGST State GST, collected by the State Govt.
CGST Central GST, collected by the Central Govt.
IGST Integrated GST, collected by the Central Govt.
(The names may change in the actual law; our purpose is only to understand their
nature)
Now look at the chart that follows:

It is worth mentioning here that the levy of Excise or Service Tax was not dependent
on the levy of VAT/CST, as they were governed by different laws.

These are the taxes that shall be levied under the new system of GST. How this shall
operate, and how can we have cross utilisation of credits can be seen in the
discussion that follows
How GST operates?
Case 1: Sale in one state, resale in the same state
In the example illustrated below, goods are moving from Mumbai to Pune. Since it is
a sale within a state, CGST and SGST will be levied. The collection goes to the
Central Government and the State Government as pointed out in the diagram. Then
the goods are resold from Pune to Nagpur. This is again a sale within a state, so
CGST and SGST will be levied. Sale price is increased so tax liability will also
increase. In the case of resale, the credit of input CGST and input IGST (Rs. 8) is
claimed as shown; and the remaining taxes go to the respective governments.

Case 2: Sale in one state, resale in another state

In this case, goods are moving from Indore to Bhopal. Since it is a sale within a
state, CGST and SGST will be levied. The collection goes to the Central Government
and the State Government as pointed out in the diagram. Later the goods are resold
from Bhopal to Lucknow (outside the state). Therefore, IGST will be levied. Whole
IGST goes to the central goverment.
Against IGST, both the input taxes are taken as credit. But we see that SGST never
went to the central government, still the credit is claimed. This is the crux of GST.
Since this amounts to a loss to the Central Government, the state government
compensates the central government by transferring the credit to the central
government.

Case 3: Sale outside the state, resale in that state

In this case, goods are moving from Delhi to Jaipur. Since it is an interstate sale,
IGST will be levied. The collection goes to the Central Government. Later the goods
are resold from Jaipur to Jodhpur (within the state). Therefore, CGST and IGST will be
levied.
Against CGST and SGST, 50% of the IGST, that is Rs. 8 is taken as a credit. But we
see that IGST never went to the state government, still the credit is claimed against
SGST. Since this amounts to a loss to the State Government,
the Central government compensates the State government by transferring the
credit to the State government.

Advantages of GST
Apart from full allowance of credit, there are several other advantages of
introducing a GST in India:

Reduction in prices: Due to full and seamless credit, manufacturers or

traders do not have to include taxes as a part of their cost of production,
which is a very big reason to say that we can see a reduction in prices.
However, if the government seeks to introduce GST with a higher rate,
this might be lost.

Increase in Government Revenues: This might seem to be a little vague.

However, even at the time of introduction of VAT, the public revenues
actually went up instead of falling because many people resorted to
paying taxes rather than evading the same. However, the government
may wish to introduce GST at a Revenue Neutral Rate, in which case the
revenues might not see a significant increase in the short run.

Less compliance and procedural cost: Instead of maintaining big records,

returns and reporting under various different statutes, all assessees will
find comfortable under GST as the compliance cost will be reduced. It
should be noted that the assessees are, nevertheless, required to keep
record of CGST, SGST and IGST separately.

Move towards a Unified GST: Internationally, the GST is always preferred

in a unified form (that is, one single GST for the whole nation, instead of
the dual GST format). Although India is adopting Dual GST looking into the
federal structure, it is still a good move towards a Unified GST which is
regarded as the best method of Indirect Taxes.

Points to Ponder: Food for Thought

The GST is a very good type of tax. However, for the successful implementation of
the same, we must be cautious about a few aspects. Following are some of the
factors that must be kept in mind about GST:

Firstly, it is really required that all the states implement the

GSTtogether and that too at the same rates. Otherwise, it will be really
cumbersome for businesses to comply with the provisions of the law.
Further, GST will be very advantageous if the rates are same, because in
that case taxes will not be a factor in investment location decisions, and
people will be able to focus on profitability.

For smooth functioning, it is important that the GST clearly sets out
thetaxable event. Presently, the CENVAT credit rules, the Point of
Taxation Rules are amended/ introduced for this purpose only. However,
the rules should be more refined and free from ambiguity.

The GST is a destination based tax, not the origin one. In such
circumstances, it should be clearly identifiable as to where the goods are
going. This shall be difficult in case of services, because it is not easy to

identify where a service is provided, thus this should be properly dealt

with.

More awareness about GST and its advantages have to be made, and
professionals like us really have to take the onus to assume this
responsibility.

GST: Way Forward!

Presently, lot of speculations are going as to when the GST will actually be
applicable in India. Looking into the political environment of India, it seems that a
little more time will be required to ensure that everybody is satisfied. The states are
confused as to whether the GST will hamper their revenues. Although the Central
Government has assured the states about compensation in case the revenue falls
down, still a little mistrust can be a severe drawback!
Sooner or later, the GST will surely knock the doors of India. And when that
happens, we as future torch bearers of the profession are required to be prepared
and fully equipped with our knowledge regarding GST. Forewarned is
forearmed.Thus, we must be ready to deal with GST and many other changes that
are going to take place in India. Slowly, India shall move to join the world wide
standards in taxation, corporate laws and managerial practices and be among the
leaders in these fields.
To know more, please visit Everything you should know about GST (the original post)
For the Inquisitive Readers! on Blogspot
For the Inquisitive Readers on Quora
Thanks!
Updated 2d ago. 5,689 views.
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Sandesh Yadav, Life is Good...
Lets keep it as short as Possible.
In GST , The consumer pays the final tax but an efficient input tax credit system
ensures that there is no cascading of taxes .GST is levied only on the value-added at
every stage of production.
EXAMPLE:
Lets say GST is kept at 15%.
then for Company XYZ pvt ltd ,following scene arises.

Hence Double taxation was avoided for XYZ ptd ltd.

Why is it better ?
It will club almost all Indirect taxes levied by central as well as State like
excise duty, service tax, countervailing duty, special additional duty on customs, all
cesses and surcharges and state taxes including value added tax(VAT), sales tax,
entertainment tax, luxury tax, tax on lottery, betting and gambling, entry tax and
state cesses and surcharges.
Hence Taxation simplified and compliance improved = better revenues.
Model of GST ?
In India Dual model of GST will be applicable wherein both centre and state would
be able to levy GST just like Brazil and Canada.
GST rate ?
13th finance commission recommended a rate of 12%. State says they will not
settle for anything below 15% .However governement would settle between 14%16% . According to Governement there would be two Slabs:
one a lower rate slab for essential items and another effective rate for most items.
Some goods will be exempted and a lower rate by 1% for precious metals such as
gold, platinum, silver.
More than 140 countries have implmented GST.
Why are states like Maharashtra , harayana , punjab are Unhappy ?
The replacement of the existing taxes with the GST will lead to a revenue loss for
the states. The states want compensation for this and the matter is how they will
be compensated. So there are efforts to arrive at a formula that is acceptable to
the states.

Source:
Goods and service tax and its implications
Why India Inc wants GST so badly: FAQ
Written 24 Apr. 1,677 views.
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Chaand Chopra
5 upvotes by Quora User, Bharath Kumar, Shiva Prakash, (more)

Dear Sir/Madam
We have developed following web sites on Goods and Services Tax, which is
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gstbharat.co.in
gstbharat.in
gstbharat.net.in
gstindiaco
You can visit any of our web site which is absolutely free and has been developed
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We hope that you will find our web sites informative and interesting. If you like our
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If you feel some improvement has to be made and if you wish any of your article be
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Thanks and Regards
Vijay Kumar
M +91 9891540080
Written 26 Jan, 2014. 11,216 views.
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Ramesh Kumar
1 upvote by Shubham Narula.
Just read this articles and you will get the answer
http://theindianeconomist.com/th...
Written 19 Jun, 2014. 7,399 views.
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Anonymous
GST will be used instead of Vat and Service tax. One Combined indirect tax
Written 30 Jul, 2014. 6,187 views.
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Malik Sumrani
One of the greatest and the most significant impacts would be on real estate. I read
an interesting piece on this on apartmentADDA
Written 7 Feb. 3,358 views.
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Manish Rai
GST is same as the old tax system, VAT was a more structured idea, Only GST is
uniform for both center and state, its only better for government not for people.
Square root Quiz
Written 28 Feb. 2,597 views.
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Aakash Singh
2 upvotes by Thakur Gurjot Singh and Aadya Sharma.
Goods and Service Tax: Understanding the changing Tax regime (Source:(no title))
Everyone, by now, is sure that the Goods and Service Tax will, in two years or so, be
implemented in India. The back-end work on implementing the GST and the
infrastructure required for the same, are all being worked upon extensively.
Ask them, what is GST? Youll get a simple reply- This tax will replace Service Tax,
VAT and Excise Duty etc. This will be a combination of all of them and the process of
depositing tax and filing returns will then become a lot easier.
In the nutshell, this answer is correct. Following are excerpts from a few articles
published in the ASSOCHAMs monthly magazine, which will give a clear picture of
the proposed mechanism of GST:

I Excerpts from the Article by Shri Sumit Dutt Majumder, Ex-Chairman

CBEC
What has been decided is that there will be a two-channel GST. That
means the CGST (Central GST) will be administered by the central
government and the SGST (State GST) will be administered by the
respective state governments.
Then, for inter-state movement of goods there will be IGST (Integrated
GST). That is where now you are paying CST, it will be IGST. The main
difference is that IGST is destination based whereas CST is origin
based.
There are concerns about the small scale industries. Measures are
being taken to simplify the procedures. But, philosophically, nobody
wants to remain small. Everybody wants to become big at the end of
the day. So, even the small scale industries, if we put them outside the
GST net, they will not be able to sell their goods to the bigger market
because they will be outside the credit chain.
Measures to alleviate the problems of the small scale sector. On
the front-end of that GST net, you will be filing one return, you will be
filing an application for registration and the payment also will be in one
go. At the back-end, it will split into two parts; one for the center and the
other for the respective states. That way the administrative difficulties
that are encountered because of double agencies will be alleviated to a
great extent so far as it is a clean transaction.
In a perfect GST there should be no exemptions, there should be no item
outside the net, there should be no cut-off and no threshold cut. But we
cannot do that in one go in India.

GST cannot come if it is not supported by a robust infrastructure.

It is but obvious, that GST cant work unless there is total consensus
among the 28 plus states and between the states and center.
II Excerpts from the Article by Dr. Parthasarathy Shome
The center taxes only up to manufacturing as of now. The state of course
picks from manufacturing. When the state begins to tax from
manufacturing,the central excise remains in the manufacturing value, that
base. So the states actually impose the VAT with the central excise in the
base. So there is cascading even when under the full chain of the center
and the full chain of the state will go away. So from the producers and
distributors point of view again you will be benefited under the
GST because the cascading will move away from the state level
VAT chain.

The whole point of GST is that you have a seamless treatment between
goods and services.
III Amendment Bill on Goods and Services Tax (GST): Proposal approved
on 17th December 2014
Proposed Articles: A new Article 246A is proposed which will confer
simultaneous power to Union and State legislatures to legislate on GST. A
newArticle 279A is proposed for the creation of a Goods & Services
Tax Councilwhich will be a joint forum of the Center and the States

Proposed Policies: GST rates will be uniform across the country.

However, to give some fiscal autonomy to the States and Center, there
will a provision of a narrow tax band over and above the floor rates of
CGST and SGST.

Center will compensate States for the loss of revenue arising on account
of implementation of the GST for a period up to five years. A provision in
this regard has been made in the Amendment Bill (The compensation will
be on a tapering basis, i.e., 100% for first three years, 75% in the fourth
year and 50% in the fifth year)

It is proposed to levy a non-vat-able additional tax of not more than 1% on

supply of goods in the course of inter-State trade or commerce. This tax
will be for a period not exceeding 2 years, or such period as
recommended by the GST Council. This additional tax on supply of goods
shall be assigned to the States from where such supplies originate.
Well, as the saying goes, Change is always welcomed. Lets wait for the change,
then only will we decide whether to welcome it or not!

Written 9 Mar. 2,488 views.

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Arjun Patel
Let me explain in lay man's terms:
Putting up GST would remove all the government related departments like
VAT,CST,ETC. GST tax would be the only tax to be paid by the
manufacturers/traders/retailers.
There would be no slabs in the tax system. Lets say a company a company with a
turnover of 100 crore would pay the same GST as compared to a company with a
turnover of 10 lakhs(considering both the companies are in the same line of
manufacturing).
This is my understanding of GST from what i have heard and read.
Written 28 Apr. 701 views.
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Anonymous
1 upvote by Tejas Harchekar.
Finance Minister Arun Jaitley held discussions with state finance ministers over the
last two days in a determined bid to seal a deal on goods & services tax (GST) that
his ministry officials said is as close as it has ever been. The Modi government
wants to ensure that this key element of its economic reforms agenda can be put in
place by April 1, 2016, as part of efforts to speed up growth.

Finance Minister Arun Jaitley, committing to push the GDP growth rate to 6-6.5 per
cent in the 2015-16 financial year, on Friday said the government was working
overtime to push reforms, especially in sectors like insurance, coal and the Goods
and Services Tax (GST).
So what is this all-important GST?
It is a single, comprehensive value-added tax on goods and services that is levied at
every stage of a transaction. The person paying the tax can offset it as an input
cost. Thus, tax is levied only on the value added during a particular stage of
transaction.
It really shifts the burden of tax to the point of final consumption. But the tax
burden on the final consumer will be less than it is now because taxes paid earlier
have been set off.
Why a GST
It will do away with cascading of taxes or the tax-on-tax phenomenon where the tax
paid at one stage gets added on to the price of a good on which tax is levied at the
next stage. So it will reduce the tax burden on goods and services for the final
consumer.
GST will also end the multiplicity of taxes that make compliance with, and
administration of, indirect taxes a nightmare. It will improve indirect tax collections
by broadening the tax base, making evasion less attractive (you can get tax credit
only if you have paid tax earlier).
Above all, it will create a common market in India, since the rate will be uniform
across the country and taxes paid in one state can be offset for transactions done in
another.
But wasnt VAT supposed to do all this?
Yes, and it did, to an extent. Sales tax, which preceded VAT, was a cascading type of
tax. Besides, states levied several other taxes, all of which not only made things
difficult for manufacturers and traders but also increased prices. With VAT being
introduced in 2005, people at various points of a transaction chain could set off the
taxes they paid on previous transactions. Most of the other taxes were also
subsumed into VAT.
However, VAT has some shortcomings. It does not include all taxes/levies at the
central and state level, which it should have. Whats more, some of these taxes
cannot be set off as input tax credit. Also, VAT applied only to goods.
There was a separate service tax, which got added on since the production of goods
involves some services as well. VAT also did not cover inter-state transactions. So,
though cascading was reduced significantly, it was not eliminated altogether.
The National Council for Applied Economic Research (NCAER) has estimated that the
implementation of GST will boost GDP by between 0.9 per cent and 1.7 per cent.
The history of GST in India
The initiative for GST started soon after the implementation of VAT in 2005. Then
Finance Minister P. Chidambaram announced, in his Budget speech in February
2007, that GST would be implemented from April 2010.
The Empowered Committee of State Finance Ministers started work on drawing up a
roadmap. A broad agreement was arrived at on GST being a dual taxa central and
state GST; barring a few agreed exemptions, all goods and services will be brought
under GST through a common legislation; there would be no distinction between
goods and services.
A Constitution amendment bill was tabled in 2011 to enable GST. This was required
because the Constitution does not allow states to tax services and the Centre to tax

sales of goods. The Parliamentary Standing Committee on Finance submitted its

report on the bill in 2013. A revised bill is to be tabled by the present government.
Who stands to lose
Not all states are keen on GST. With one single tax and rate, they will have to give
up their freedom to levy taxes, an important element of fiscal autonomy. States
own taxes form a significant chunk of their revenues.
Right now, they levy a number of taxes (entry tax/octroi, luxury tax, entertainment
tax, taxes on lottery/gambling, purchase tax) and these would get incorporated into
GST. This, they fear, will be detrimental to state finances.
State governments want to be compensated for losses they suffer due to GST and
an independent compensation system to be institutionalised so that the Centre will
not be able to shortchange them. Many also want certain items like petroleum
products, items containing alcohol and tobacco products to be kept out of GST.
However, economists have said that GST would be meaningless if this was done.
Everything will now depend on the revenue-neutral rate (the rate at which there will
be no revenue loss to states) that will be fixed as well as the compensation amount
and mechanism for it.
International experience
India is coming to the game pretty late. Nearly 140 countries have a GST system in
place, though the models may vary. These include Canada, China, New Zealand,
Singapore, Japan and the Scandinavian countries. The European Union has a single
rate VAT system that applies to all its members.
Each country gets to keep the VAT levied on purchases within its area. Countries
with GST have seen a rise in revenues after its adoption.
Written 28 Apr. 1,031 views.
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Dm Jha
1 upvote by Vanya Gargya.
After implementation of GST, allmost all indirect taxes will be abolished and there
will be unifrom rate of GST across the country. At present, there is different state tax
structures for different states but after implementation of GST, there will be uniform
rate across the country. Further, there will be the provision of claiming the credit of
tax which has been paid by the intermediaries at different levels and hence it will
remove the problems of double taxation.
Written 7h ago. 35 views.
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Kishor Shah, Common Man

GST is a combined Value Added Tax i.e. compunded of Cenvat, Service Tax, State
level VAT etc.
Written 4d ago. 178 views.
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Shubham Deva, Co-Founder, CTO, Passion Connect
3 upvotes by Vandana Painuly, Rishabh Duggal, and Mohsin HM.
We have been hearing alot about GST for a past few years. Every few months this
term pops up and we see some news being flashed regarding this. So, lets first
understand what this GST is.
At present on each and every item two types of taxes are levied central excise tax
and state sales tax. Moreover, the items are divided into two categories of goods
and services with different taxation rules. This creates a lot of confusion as a single
firm manufacturing a product has to divide its revenue into two separate categories
of goods and services. This leads to unnecessary confusion. The firms many times
try to manipulate the system to benefit them. Also taxes have to be collected at
different points. The more number of points leads to high chances of tax
mismanagement and corruption.
read the rest here Goods and Services Tax (GST)
Written 22 Oct, 2013. 6,898 views.
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Chaitanya Talegaonkar
The perivious answers have adressed this question quite admirably. I will though
add that GST can ease the burden of the taxes on cunsumers as well but its totally
subjective, anyways I will prefer GST over VAT if govt only excercise one
homogenious tax rate throughout the country which is suerly not going to happen,
but it may ease up the differences in final selling price of products across the
country.
Written 2 Oct, 2012. 4,706 views.
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