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GST – Current Tax Structure and proposed GST Regime

GST – Current Tax Structure and proposed GST Regime

1. Structural Difference

a)Central Taxes:-Central Excise/Custom Duty, Central Sales Tax on Goods and Service Tax charged on Services, Surcharge & Cess

b)State Taxes-State Vat, Sales Tax Deducted at Source, WCT, Luxury Tax, Entertainment Tax, Tax on Lottery, Surcharge & Cess

GST Scenario

A dual layered tax system with both Central and State GST levied on same base on all the goods and services except  Petroleum ,High Speed Diesel, Motor spirit and Natural Gas to be brought at a later date, subject to recommendation of GST Council.

2. Basis of Levy

Current Scenario – Taxable at the place of

  • a)Manufacture/Sale of goods,
  • b)Rendering of services

GST Scenario –  Taxable at the place of Consumption, a destination based tax

3. Registration

Current Scenario – Decentralised registration under Central and State Authorities.

GST Scenario –  Uniform E-Registration process based on PAN of Entity

4. Procedures for Collection of Tax and Filing of Returns

Current Scenario – Central Excise and Service Tax-Uniform, VAT-Varies from State to State and

GST Scenario –  Uniform process and common dates for collection/deposit of tax and filing of returns

5. Validation and of Challan/Returns, Input Credit and Payment of Tax

Current Scenario – Part validation by system, full verification subject to assessments by relevant Central/State authorities

GST Scenario – System based validation and consistency checks on Input Credit availed, utilisation and Tax Payments

5. Excise Duty

Current Scenario – Excise Duty charged up to the point of Manufacturing

GST Scenario – Replaced by CGST (Central Goods and Service Tax, to be charged up to Retail Level

6. Basic Customs Duty

Current Scenario – In case of Import, taxed by Centre under separate act

GST Scenario – No Change

7. Countervailing Duty/Special Additional Duty

Current Scenario – In case of Import, taxed by Centre, separately

GST Scenario – To be subsumed under GST (CGST)

8. Service Tax

Current Scenario – Charged by Centre on list of Services under Finance Act on Payment/Provision Basis

GST Scenario – To be subsumed under SGST (State Goods and Service Tax), based upon Place of Supply Rules

9. Central Sales Tax (CST)

Current Scenario – Applicable at concessional rate of 2% on inter-state transfers against C-Forms, otherwise full rate  i.e. 5% to 14.5%

GST Scenario – To be subsumed in IGST (Integrated Goods and Service Tax)

10. State VAT

Current Scenario – Except exempt items, all goods are taxed

GST Scenario – Subsumed in SGST (State Goods and Service Tax)

11. Entry Tax 

Current Scenario – Currently being charged by selected states for interstate transfers, held as import in local area

GST Scenario – No entry tax, Additional 1% of Tax to be levied on inter-state supply of selected goods, list yet to be finalised

12. Tax on Export of Goods and Services

Current Scenario – Exempt/Zero rated

GST Scenario – No Change

13. Tax on Inter State Transfer of Goods to Branch or Agent

Current Scenario – Exempt against Form F

GST Scenario – To be taxable but full credit available to dealers

14. Tax on Transfer of Goods to Branch or Agent within State

Current Scenario – Generally Exempt; Depends Upon State Procedures

GST Scenario – Might Be taxable , Unless TIN of Transferor and Transferee is same

15. Cascading Effect

Current Scenario – Credit between Excise Duty & Service Tax available, but no set-off against VAT on Excise Duty

GST Scenario – Credit available on the full amount of taxes up to retailer

16. Cross Set-Off of Levy

Current Scenario – Currently set-off of Excise duty and Service tax is allowed

GST Scenario – No cross Set-off between CGST and SGST

17. Disallowance of Credit on selected items

Current Scenario – There are certain non-creditable goods and services under both VAT & CENVAT Rules

GST Scenario – No such disallowance, unless specified by GST Council

18. Disallowance of inputs/input services used in  Exempted Goods /Services

Current Scenario –  Not Allowed

GST Scenario – No such disallowance, unless falling under the Negative List which is yet to be finalised by GST Council

19. Exemptions –Excise Free Zone, VAT Remissions

Current Scenario – Some areas enjoy status of Excise/Vat Exemptions i.e. North East, Himachal

GST Scenario – No such Exemptions, Investment Refund Scheme (IRS) may be introduced for existing zones based upon recommendations of GST Council

20. Levy of Tax on Government Bodies, NGOs

Current Scenario – Certain Govt. bodies, PSUs and Non-for-profit bodies covered

GST Scenario – Not Changed

21. Threshold Limits for levy of Tax

Current Scenario –

a)Central Excise-1.5 Crores
b)VAT-Varies from Rs. 5 to 20 Lacs from state to state
c)Service Tax- Rs.10 Lacs

GST – Current Tax Structure and proposed GST Regime

Gujarat VAT department has issued circular

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