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By Admin
Currently, the Indirect tax structure in India comprises of several taxes and thus necessitates a number of
compliances. We would first analyse in a capsule form the major Central and the State laws under the present tax
regime:
Entry 83 of Seventh schedule confers the power to Central Government to levy Custom duty (Basic duty +
countervailing duty + Special Additional duty) on Import of goods in Indian Territory. Exports are presently
exempted from all the duties to promote foreign exchange earnings and to make locally produced goods competitive
in the export market.
Under the Constitution, Entry 84 of List I of Seventh schedule authorises the levy of Central Excise duty on
Manufacturing activities. The activities deemed to be manufacture also attract the Central Excise levy in view of
residual Entry 97 of Union List.
The levy of Service tax is imposed in exercise of the power conferred by Entry 97 of Union List of the Seventh
schedule of Constitution, which is a residuary power. Sec 66B of Finance Act, 1994 accedes levy of service tax on
all services except for those forming part of Negative list or specifically excluded by any exemption notification.
Central Sales Tax (CST) is imposed on sale or purchase of goods (other than newspapers) occurring in the course
of inter-state trade or commerce vide powers granted by Entry 92A of List I of Seventh schedule. No credit is
available of CST paid on inter-state purchases.
Value added tax (VAT) is imposed on all intra-state sale or purchase of goods. VAT laws are different in different
states leading to voluminous compliance and procedural requirements for the taxpayer.
The introduction of GST would mark a clear departure from the scheme of distribution of fiscal powers envisaged in
the Constitution.
Goods & Service tax (GST) is the most talked about topic in the field of indirect taxation today in India. It will be a
game changing reform for Indian economy by developing a common Indian market and reducing the cascading
effect of tax on the cost of goods and services. It will impact the Tax Structure, Tax Incidence, Tax Computation, Tax
Payment, Compliance, Credit Utilization and Reporting leading to a complete overhaul of the current indirect tax
system.
GST will simplify and harmonise the indirect tax regime in the country. It is expected to reduce cost of production
and inflation in the economy, thereby making the Indian trade and industry more competitive, domestically as well as
internationally. It is also expected that introduction of GST will foster a common or seamless Indian market and
contribute significantly to the growth of the economy.
A MIX OF ORIGIN BASED AND DESTINATION BASED TAXATION
GST is a consumption based tax. This implies that all SGST collected will ordinarily accrue to the State where the
consumer of the goods or services sold resides. On the other side, revenue from proposed levy of Additional tax on
inter-state supply of goods @ 1% will be assigned to States from where supply originates (exporting state). For this
purpose, Point of Origin Rules are also proposed to be framed. Hence, it will make GST law partly origin based and
partly destination based.
TYPES OF GST RATE
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Central Taxes
State Taxes
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Petroleum crude,
High speed diesel
Motor spirit
Natural gas
Aviation turbine fuel
Changes proposed in Power of Centre and State to levy tax under GST regime
CERTAIN TAXATION ENTRIES IN UNION LIST
LIST I : UNION LIST
Entry
Number
Item
Entry
Number
Item
84
84
a) Petroleum Crude
But including
d) Natural Gas
(Excise Duty)
92
92
Omitted
92C1501-2004
92C
Omitted
Entry
Number
Item
Entry
Number
Item
52
52
Omitted
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54
54
55
55
Omitted
62
GST NETWORK
GSTN would be incorporated as a limited company with strategic control remaining with the Government and
it would have a self-sustaining revenue model by collecting nominal user charges for services.
The GST common portal to be set up before the GST roll out would function as a pass through portal for GST
dealers and for submitting registration applications, filing returns, making payments, etc.
GSTN chairman Navin Kumar announced that Infosys, Indias second largest IT service exporter has been
selected to build Technology Infrastructure for GSTN.
DRAFT REPORTS JOINT COMMITTEE
Key excerpts from Draft Reports of Joint Committee on Business Processes for GST are mentioned below:
1) There will be a threshold of Gross Annual Turnover including exports and exempted supplies below which any
person engaged in supply of Goods or Services or both will not be required to take registration under GST.
2) Data will be collected from the registrant as number of fields in GST registration Form would be 120 which is
greater in number in comparision to the existing fields. Available data with the states and CBEC does not comply
with Metadata and Data standards of Government of India. Instead of migrating incorrect and incomplete data, fresh
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PAN
10
11
12
Entity Code
Blank
Check digit
13
14
15
Return
Purpose of Return
Cut-off Date
1.
GSTR 1
2.
GSTR 2
3.
GSTR 3
Monthly Return
4.
GSTR 8
Annual Return
5) It is envisaged that for each mode of payment, the Challan will be generated electronically at the GSTN and no
manual Challan will be used under any mode of payment. Other means of payment, such as payment by book
adjustment as is presently being allowed by Government of India to some departments / State Government would
not be allowed.
6) Refund of GST will be allowed in a number of cases :
(i) If tax payer has made excess payment by mistake or by inadvertence, which was actually not required to be paid.
(ii) If the GST Law does not debar suo-motto payments during investigation / audit process and ultimately no / less
demand arises, then amount already paid can be claimed as refund.
(iii) Refund on account of year end or volume based incentives provided by the supplier through credit notes would
be granted on submission of application along with a CA certificate certifying the fact of non-passing of the GST
burden by the taxpayer.
LEGISLATIVE COMPETENCE OF MUNICIPALITY OR PANCHAYATS TO COLLECT TAX ON ENTERTAINMENT
AND AMUSEMENTS
The local bodies in India are broadly classified into two categories. The local bodies constituted for local planning,
development and administration in the rural areas are referred as Rural Local Bodies (Panchayats) and the local
bodies, which are constituted for local planning, development and administration in the urban areas are referred as
Urban Local Bodies (Municipalities) and the Constitution of India gives protection to them through various articles:
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