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GST - Get...Set....Take-off

Here I am with an update on what is happening on GST (Goods & Services Tax). 

What is GST?


GST stands for Goods & Services Tax. It will replace Excise Duty, Customs Duty, Sales Tax, VAT, Services Tax, Luxury Tax, Entertainment tax, Cesses charged by States, etc.,). Stamp Duty, Toll Fee, Passenger Tax, Road Tax are not part of the GST. It will be a simplified tax, which can be easy to administer across the states in India.


As you know that the Government is keen in rolling out the GST with effect from 1-Apr-2010, all the teams are working towards the same.Here are the some high level points on the recommendations by the Empowered Committee of the State Finance Ministers (EC):
  • Dual GST - Central GST (CGST) & State GST (SGST) - an agreement reached.
  • Dual GST Rates agreed :
    • Standard rate would be in the range of 8% to 9%
    • Essential Commodities - 4% to 5%
    • Precious metals (Special rate) - 1%
    • Few products - exempted from GST
      • Special treatments:
        • Tobacco products subject to GST and Centre to levey excise duty over & above the GST
        • Alcoholic beverages & Petroleum products kept out of the GST purview
    • Inter-State GST
      • It is known as IGST (Integrated GST) - taxable for all inter-state sales including branch transfers & consignment goods
      • Centre will be taxing these transactions
      • Input credits of IGST, CGST & SGST will be available for offset.
      • Central agency to act as a clearing house for IGST funds among States.
  • Central Govt agreed to compensate the State for any revenue loss
  • GST paid on imports are available as input tax credits
  • Place of supply determines the State in which the SGST on Import payable.
  • Services to be charged in the state of consumption
  • Supply rule determines the place of consumption for cross-border services
  • State GST - Charged based on the location of the recipient of services
  • Thresholds for the GST applicability:
    • For SGST - Gross Annual Turnover of Rs.10,00,000 (both for Goods & Services)
    • For CGST - Gross Annual Turnover of Rs.150,00,000 (for goods) and for services it may be slightly higher. This is in line with the basic exemption duty from Central Excise.
  • For a better monitoring purposes, a PAN-linked Tax Payer Id with 13/15 digits will be allotted.
A Joint Working Group (JWG) to prepare paper on:
    • Rules and Procedures
    • Legal & Constitutional changes required
It is expected that the required Constitutional amendments (required for Centre & State sharing the revenue etc.,) would be made in the winter session of the Parliament (Let us hope it get through)
 
The Information Technology (IT) infrastructure is expected to operational by end-Jan 2010.

Let us hope for the best!!! The above is the gist of EC recommendations.

We will see in the next post on the latest developments.

Cheers,
Gopal

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