Overview of Goods and Services Tax (GST)

Launched On

A historic nation-wide tax reform, Goods and Services Tax (GST), came into effect from the midnight of 30th June-1st Ju 2017.
The President, The Vice President, The Prime Minister, The Speaker of Lok Sabha and The Union Finance Minister were present during the occasion held at the Central Hall of Parliament.


Bills Passed

On 29th March 2017, the Finance Minister of India presented four Goods and Services Tax (GST) Bills, for passage in the Lok Sabha.
  • The Central Goods and Services Tax (CGST) Bill, 2017 
  • The Integrated Goods and Services Tax (IGST) Bill, 2017 
  • The Union Territories Goods and Services Tax (UTGST) Bill, 2017 
  • 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.

Introduction

  • In the current system, the tax is levied at each stage separately by the Central government and the State Government at varying rates, on the full value of the goods. But under the GST system, tax will be levied only on the value added at each stage. 
  • Hence in the GST system, the final consumer will only bear the GST , which is charged by the last dealer in the supply chain. 

CGST and SGST

  • For transactions within a State, there will be two components of GST - Central GST (CGST), levied and collected by the Central government and State GST (SGST) by the state government - levied on the value of goods and services. 
  • In the case of Inter-State transactions, the Centre will levy and collect the Integrated Goods and Services Tax (IGST). The IGST would be approximately equal to the total of CGST and SGST. 

Final Structure of GST

  • The threshold limit for exemption from GST is Rs. 20 lakh for the State and Rs 10 Lakh for the special category states. 
  • 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, in addition to the GST rate of 28% .This would be used for payment of compensation to the states. (A cess is a tax that is levied by the government to raise funds for a specific purpose) 
  • The threshold for availing the Composition scheme is Rs. 75 lakh. (Rs.50 lakh for special category states) and they are required to file quarterly returns only. 
  • Certain categories of manufacturers, service providers (except restaurants) can not avail the Composition Scheme. 

GST Network (GSTN)

  • GSTN has been created to function as a common Pass-through portal for taxpayers. On this common portal, taxpayers will submit their registration applications, file the returns, make their tax payments, claim their refunds etc. 
  • All filings under GST will be done electronically and the network will provide interface to 80 lakh taxpayers of the country and thousands of tax officials. At the back end of the network, the IT systems of CBEC (Central Board of Excise and Customs ) and different states interface with the GST network to provide an efficient processing of tax returns for the taxpayers. 
  • Registration of existing taxpayers of the State tax administrations and the CBEC to the GST system started on 8th November 2016. More than 66 lakh taxpayers of our country have activated their account in the GST portal. 
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