All you need to know about Goods and Services Tax

Raj Kamal Rao

As the Union Government holds a historic event to commemorate the implementation of the Goods and Services Tax regime, we will look into the historic journey of the tax reform that subsumes all indirect taxes into one – making India a “One Nation – One Tax” country.

Prime Minister Narendra Modi reviewing the status of GST, which is to be implemented from July 01, in New Delhi on Monday. Finance Minister Arun Jaitley is also seen.

Prime Minister Narendra Modi reviewing the status of GST, which is to be implemented from July 01, in New Delhi on Monday. Finance Minister Arun Jaitley is also seen.

To commemorate the historic occasion, a function will be held in the Central Hall of Parliament on the mid-night of 30th June – 1st July, 2017.

The occasion will be graced by the President Pranab Mukherjee, Vice President Hamid An sari, Prime Minister Narendra Modi, Lok Sabha Speaker Sumitra Mahajan along with Union Finance Minister Arun Jaitley.

Why is GST so important?

The biggest tax reform since independence – GST – will pave the way for realization of the goal of One Nation – One Tax – One Market.

It will lower the cost of goods and services and will give a boost to ‘Make in India’ initiative.

Under the GST regime, exports will be zero-rated in entirety unlike the present system where refund of some of the taxes does not take place due to fragmented nature of indirect taxes between the Centre and the States.

GST will make India a common market with common tax rates & procedures and remove economic barriers.

GST is largely technology driven and will reduce the human interface to a great extent. GST is expected to improve ease of doing business in India.

Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi on Thursday.

Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi

Journey of GST

After the assent of the President of India on 8th September, 2016, the 101th Constitutional Amendment Act, 2016 came into existence. The GST Council was constituted on 15 September 2016.

GST Council headed by Union Finance Minister Arun Jaitley held 18 meetings.

GST council has cleared GST laws, GST Rules, Tax rate structure including Compensation Cess, Classification of goods and services into different rate slabs, exemptions, thresholds, structure for tax administration, etc.

All the decisions of Council were taken with consensus.

Four subordinate legislation CGST Bill, 2017, IGST Bill, 2017, UTGST Bill, 2017 and the GST (Compensation to States) Bill, 2017. They were passed by the Lok Sabha on 29th March, 2017 and by the Rajya Sabha on 6th April, 2017.

Structure of GST as decided by the Council

  • The threshold limit for exemption from levy of GST is Rs. 20 lakhfor the States except for the Special Category, where it is Rs 10 Lakh.
  • A four slab tax rate structure of 5%12%18%and 28% has been adopted for GST.
  • A cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28%for payment of compensation to the states.
  • The threshold for availing the Composition scheme is Rs. 75 lakh except for special category States where it is Rs. 50 lakh and they are required to file quarterly returns only. Certain categories of manufacturers, service providers (except restaurants) are out of the Composition Scheme.

 Important Features of GST

  • GST minimises tax payers physical interaction with the tax officials by envisaging all transactions and processes to be done only through electronic mode
  • It provides for the facility of auto-populated monthly returns and annual return.
  • It also facilitates the taxpayers by prescribing grant of refund within 60 days, and provisional release of 90% refund to exporters within 7 days.

Role of GST Network (GSTN) – IT backbone of GST

The Goods and Service Tax Network has been created as a section 25 private limited company with Strategic Control with the Government, to function as a common Pass-through portal for taxpayers.

On this portal, taxpayers can submit their registration applications, file returns, make tax payments, claim refunds etc.

GSTN has been provided with a robust IT platform and it will provide interface to 80 lakh taxpayers and thousands of tax officials.

25 banks have been integrated with the GST Common portal and will be providing e-payment facilities.