ASSIGNMENT

Submitted To : Gaurav Sir

Goods and Services

tax: An overview
GST is a tax applicable to the value added to goods and
services at each stage in the supply chain. There are four
types of GST, namely, CGST, SGST, IGST, and UTGST. Each
type features different taxation rates applicable at the
buyer’s end.

History of GST in India

The history of the Goods and Services Tax in India dates

back to the year 2000 and culminates in 2017 with four
bills relating to it becoming an Act. The GST Act aims to
streamline taxes for goods and services across India.
GST History
The implementation of the Goods and Services Tax (GST)
in India was a historical move, as it marked a significant
indirect tax reform in the country. The amalgamation of a
large number of taxes (levied at a central and state level)
into a single tax is expected to have big advantages.One
of the most important benefit of the move is the
mitigation of double taxation or the elimination of the
cascading effect of taxation. The initiative is now paving
the way for a common national market. Indian goods are
also expected to be more competitive in international
and domestic markets post GST implementation.
From the viewpoint of the consumer, there would be a
marked reduction in the overall tax burden that is
currently in the range of 25% to 30%. The GST, due to its
self-policing and transparent nature, is also easier to
administer on an overall scale.

INDIRECT TAX STRUCTURE IN INDIA

Indirect Taxes in India have been the most consistent and
largest revenue source for the government. The Indian
tax system has had multiple indirect taxes, some of these
are still operational:

a) Service Tax
b) Indian Excise Duty
c) Value Added Tax (VAT)
d) Customs Duty
e) Securities Transaction Tax (STT)
f) Stamp Duty
g) Entertainment Tax
Few of the indirect taxes in India like service tax, value-
added tax and excise duty have been removed for a large
number of goods and services. These taxes have been
replaced by a single Goods and Services Tax.
Customs duty tax applies to the goods being imported
into India from other countries, and in a few cases on the
goods being exported from India.
Securities Transaction Tax or STT applies to the
transactions involving an exchange of financial securities.
For example, equity stocks, mutual fund units, future and
options contracts. This tax is necessarily applied to
securities exchange transactions. However, you can also
pay Stamp duty and STT on securities changing hands
outside the exchange or over the counter.
STT allows the buyers and sellers of securities to benefit
from lower short and long-term capital gains taxes on the
exchange.
Stamp duty is a State Government levy on the transfer of
assets within their territory. It acts as legal proof of
ownership of the asset or security.
Entertainment tax in India is also a state subject and
applies to the transactions involving the entertainment
business in the country. Such businesses and activities
will include movie releases, sporting events, concerts,
amusement parks, theatres, etc.

INTRODUCTION TO GOODS AND

SERVICE TAX
Several countries have already established the Goods
and Services Tax. In Australia, the system was introduced
in 2000 to replace the Federal Wholesale Tax. GST was
implemented in New Zealand in 1986. A hidden
Manufacturer's Sales Tax was replaced by GST in Canada,
in the year 1991. In Singapore, GST was implemented in
1994. GST is a value-added tax in Malaysia that came into
effect in 2015.

Key features of the GST

The GST system is characterized by the following

features:
 GST is applicable on the "supply" of services or
goods as opposed to the earlier concept of taxation
 on goods manufacture, sale of goods, or service
provision.
 GST is a destination-based tax structure unlike the
origin-based structure that existed previously.
 CGST, IGST, and SGST/UTGST are levied at rates that
would be mutually agreed upon by the states and
Centre.
 GST will replace the central taxes mentioned below:
o Duties of Excise (medicinal and toilet needs)

o Central Excise Duty

o Additional Duties of Excise (Goods of Special

Importance)
o Additional Duties of Customs (CVD)

o Service Tax

o Special Additional Duty of Customs(SAD)

o Additional Duties of Excise (Textiles and Textile

Products)
o Cesses and surcharges

 GST will subsume the following state taxes:

o Central Sales Tax

o Entry Tax

o State VAT

o Luxury Tax

o Purchase Tax

o Entertainment Tax, except that levied by local

entities
 o Taxes on lotteries and gambling
o Taxes on advertisements

o State cesses and surcharges

 Taxpayers with annual turnover of Rs.20 lakh is

exempt from GST. For special category states, this
cut-off is Rs.10 lakh. An option of compounding is
available to small-scale taxpayers with annual
turnover of Rs.50 lakh or below. The choice of
threshold exemption and the compounding scheme
are optional.
 Input credit of CGST shall be used only for paying
CGST on the output. Similarly, input credit of
SGST/UTGST will be used only for the payment of
SGST/UTGST. Therefore, the two channels of input
tax credit cannot be cross-utilised, except for the
payment of IGST for inter-state supplies.
Phases of GST
1. Analysing impact on business
2. GST work
3. Transition to GST
4. Post implementation Report
GST COUNCIL
As per Article 279A (1) of the amended Constitution, the
GST Council has to be constituted by the President within
60 days of the commencement of Article 279A. The
notification for bringing into force Article 279A with
effect from 12th September, 2016 was issued on 10th
September, 2016.
As per Article 279A of the amended Constitution, the
GST Council which will be a joint forum of the Centre
and the States, shall consist of the following members: -
Union Finance Minister - Chairperson
 
b) The Union Minister of State, in-charge of Revenue of
finance - Member
 
C ) The Minister In-charge of finance or taxation or any
other Minister nominated by each State Government –
Members
As per Article 279A (4), the Council will make
recommendations to the Union and the States on
important issues related to GST, like the goods and
services that may be subjected or exempted from GST,
model GST Laws, principles that govern Place of Supply,
threshold limits, GST rates including the floor rates with
bands, special rates for raising additional resources
during natural calamities/disasters, special provisions for
certain States, etc.
The Union Cabinet under the Chairmanship of Prime
Minister Shri Narendra Modi approved setting up of GST
Council on 12th September, 2016 and also setting up its
Secretariat as per the following details:
(a) Creation of the GST Council as per Article 279A of
the amended Constitution;
b) Creation of the GST Council Secretariat, with its
office at New Delhi;
(c) Appointment of the Secretary (Revenue) as the Ex-
officio Secretary to the GST Council;
(d) Inclusion of the Chairperson, Central Board of
Excise and Customs (CBEC), as a permanent invitee
(non-voting) to all proceedings of the GST Council;
 
(e) Create one post of Additional Secretary to the GST
Council in the GST Council Secretariat (at the level of
Additional Secretary to the Government of India), and
four posts of Commissioner in the GST Council
Secretariat (at the level of Joint Secretary to the
Government of India). The Cabinet also decided to
provide for adequate funds for meeting the recurring
and non-recurring expenses of the GST Council
Secretariat, the entire cost for which shall be borne by
the Central Government. The GST Council Secretariat
shall be manned by officers taken on deputation from
both the Central and State Governments.

Taxes under GST

1. Integrated Goods and Services Tax (IGST)

2. State Goods and Services Tax (SGST)
3. Central Goods and Services Tax (CGST)
4. Union Territory Goods and Services Tax (UTGST)
1. Integrated Goods and Services Tax or IGST
The Integrated Goods and Services Tax or IGST is a tax
under the GST regime that is applied on the interstate
(between 2 states) supply of goods and/or services as
well as on imports and exports.
The IGST is governed by the IGST Act. Under IGST, the
body responsible for collecting the taxes is the Central
Government. After the collection of taxes, it is further
divided among the respective states by the Central
Government.
For instance, if a trader from West Bengal has sold goods
to a customer in Karnataka worth Rs.5,000, then IGST will
be applicable as the transaction is an interstate
transaction. If the rate of GST charged on the goods is
18%, the trader will charge Rs.5,900 for the goods. The
IGST collected is Rs.900, which will be going to the
Central Government.
2. State Goods and Services Tax or SGST
The State Goods and Services Tax or SGST is a tax under
the GST regime that is applicable on intrastate (within
the same state) transactions. In the case of an intrastate
supply of goods and/or services, both State GST and
Central GST are levied.
However, the State GST or SGST is levied by the state on
the goods and/or services that are purchased or sold
within the state. It is governed by the SGST Act. The
revenue earned through SGST is solely claimed by the
respective state government.
For instance, if a trader from West Bengal has sold goods
to a customer in West Bengal worth Rs.5,000, then the
GST applicable on the transaction will be partly CGST and
partly SGST. If the rate of GST charged is 18%, it will be
divided equally in the form of 9% CGST and 9% SGST. The
total amount to be charged by the trader, in this case,
will be Rs.5,900. Out of the revenue earned from GST
under the head of SGST, i.e. Rs.450, will go to the West
Bengal state government in the form of SGST.
3. Central Goods and Services Tax or CGST
Just like State GST, the Central Goods and Services Tax of
CGST is a tax under the GST regime that is applicable on
intrastate (within the same state) transactions. The CGST
is governed by the CGST Act. The revenue earned from
CGST is collected by the Central Government.
As mentioned in the above instance, if a trader from
West Bengal has sold goods to a customer in West
Bengal worth Rs.5,000, then the GST applicable on the
transaction will be partly CGST and partly SGST. If the
rate of GST charged is 18%, it will be divided equally in
the form of 9% CGST and 9% SGST. The total amount to
be charged by the trader, in this case, will be Rs.5,900.
Out of the revenue earned from GST under the head of
CGST, i.e. Rs.450, will go to the Central Government in
the form of CGST.
4. Union Territory Goods and Services Tax or UTGST
The Union Territory Goods and Services Tax or UTGST is
the counterpart of State Goods and Services Tax (SGST)
which is levied on the supply of goods and/or services in
the Union Territories (UTs) of India.
The UTGST is applicable on the supply of goods and/or
services in Andaman and Nicobar Islands, Chandigarh,
Daman Diu, Dadra, and Nagar Haveli, and Lakshadweep.
The UTGST is governed by the UTGST Act. The revenue
earned from UTGST is collected by the Union Territory
government. The UTGST is a replacement for the SGST in
Union Territories. Thus, the UTGST will be levied in
addition to the CGST in Union Territories.

CESS

A cess is a form of tax levied by the government on tax

with specific purposes till the time the government gets
enough money for that purpose. Different from the usual
taxes and duties like excise and personal income tax, a
cess is imposed as an additional tax besides the existing
tax (tax on tax). For example, the Swachh Bharat cess is
levied by the government for cleanliness activities that it
is undertaking across India.
 
A cess, generally paid by everyday public, is added to
their basic tax liability paid as part of total tax paid.