1. What is the Goods and Services Tax (GST) and how does it work? How does it function?
GST is a single tax that applies to all goods and services, from the maker to the end user. GST is basically a tax on value addition at each level since credits for input taxes paid at each stage are available in the future stage of value addition. With set-off benefits at all earlier levels, the ultimate customer will only pay the GST levied by the last dealer in the supply chain.
2.What are the advantages of the GST?
The following are some of the GST's advantages:
● The GST regime in India would be built on a solid and comprehensive IT system. As a result, all tax payer services will be available online, including registrations, returns, payments, and so on, making compliance simple and transparent.
● In the long run, lowering transaction costs will improve commerce and industry's competitiveness.
● The GST's inclusion of main federal and state taxes, as well as the complete and thorough set-off of input products and services and the phase-out of the Central Sales Tax, will benefit manufacturers and exporters (CST).
● GST is simple and straightforward to administer, as it replaces multiple indirect taxes at the federal and state levels.
● The seamless transfer of input tax credit from one level to another in the chain of value addition is an in-built mechanism in the GST architecture that would incentivize tax compliance by merchants.
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3.Which federal and state taxes are being absorbed into the GST?
The following taxes are being merged at the federal level:
● Excise Duty at the Central Level,
● Service Tax, which is a type of tax that is levied on
● Countervailing Duty,
● Customs' Extraordinary Additional Duty.
The following taxes are being merged at the state level:
● The state's value-added tax and sales tax are combined.
● Entertainment Tax (other than local government taxes), and Central Sales Tax.
● Octroi and Entrance Tax
● Purchase Taxes,
● A luxury tax,
● Lotteries, betting, and gambling taxes.
4.What are the important events in the timeline that led to the implementation of GST?
After a 13-year journey since it was originally mentioned in the Kelkar Task Force report on indirect taxes, GST is finally being implemented in the country.
● The Kelkar Task Force on Indirect Tax proposed a comprehensive and GST based on the VAT principle .
● A proposal to implement a national GST.
●Empowered Committee of State Finance Ministers was tasked with developing a design and road map for the implementation of GST (EC).
● First Discussion Paper on GST in India, based on inputs from the Indian government and states.
● Constitution (115th Amendment) Bill was introduced in the Lok Sabha to amend the Constitution to allow for the introduction of GST.
●After a thorough examination of the GST design, including the Constitution (115th) Amendment Bill, the committee issued its report.
● The Empowered Committee decided to form three officer committees to discuss and report on various aspects of GST, as follows:
● Committee on Revenue Neutral Rates and Place of Supply Rules;
● Dual Control, Threshold, and Exemptions Committee;
● The IGST and GST on Imports Committee.
●The majority of the Empowered Committee's and Parliamentary Standing Committee's suggestions were adopted
●Empowered Committee received the final draught Constitutional Amendment Bill,
● Amended draught was given to the Empowered Committee for review.
●Cabinet approved the proposal for the introduction of a Bill in Parliament to amend the Constitution of India to facilitate the introduction of the GST in the country, based on a broad consensus reached with the Empowered Committee on the Bill's contours.
5.How will the GST be implemented in India?
GST would be divided into two parts, based on India's federal structure: Central GST (CGST) and State GST (SGST). Both the Centre and the States will levy GST across the value chain at the same time. Taxation will be applied to all products and services provided. The Centre would impose and collect the Central Goods and Services Tax (CGST) on all transactions inside a State, while the States would tax and collect the State Goods and Services Tax (SGST).
6.How would a goods-and-services transaction be taxed concurrently under the Central GST (CGST) and the State GST (SGST)?
The Central GST and the State GST will be levied simultaneously on every transaction of supply of goods and services, with the exception of exempted products and services, things outside the scope of GST, and transactions that are below the prescribed threshold constraints.
Furthermore, unlike State VAT, which is based on the item's worth plus Central Excise, both taxes would be based on the same price or value.
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7.Will cross-crediting between goods and services be permitted under the GST regime?
The use of CGST credit for both products and services would be permitted. In the event of SGST, the opportunity of credit cross-utilization will also be accessible. Cross-utilization of CGST and SGST will be forbidden under the IGST model, save in the case of inter-State supply of goods and services.
8.In terms of the IGST approach, how will inter-state transactions of goods and services be taxed under GST?
All inter-State supplies of goods and services would be subject to the Integrated Goods and Services Tax (IGST), which will be imposed and collected by the Centre under Article 269A (1) of the Constitution. The IGST is calculated by multiplying the CGST with the SGST. The IGST method was created to make it simple to transfer input tax credits from one state to the next.
9.What role will technology play in GST implementation?
GSTN is working to build a cutting-edge IT infrastructure that will include a common GST portal that will provide frontend services to all taxpayers, such as registration, returns, and payments, as well as backend IT modules for individual States that will process returns, registrations, audits, assessments, and appeals, among other things.
10.Under the GST, how will imports be taxed?
The current import duties of Additional Duty of Excise (CVD) and Special Additional Duty (SAD) will be absorbed into the GST. IGST shall be taxed on all imports into India's territory, according to the Constitution's interpretation to clause (1). Unlike under the current scheme, the States that consume imported goods will now benefit from the IGST paid on imported commodities.
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