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Salient features of GST

Salient features of GST

Salient Features of GST

Subsuming of Central Taxes:

It is provided that GST shall subsume various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty commonly as Countervailing Duty, Special Additional Duty of Customs, and Central Surcharges and Cesses so far as they relate to the supply of goods and services.

Subsuming of State and Other Taxes:

It is provided that GST shall also subsume Taxes such as State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling; and State cesses and surcharges in so far as they relate to supply of goods and services.

Dispensing with the concept of ‘declared goods of special importance’: Clause 286(3) of the Bill has been omitted in the Bill in order to dispense with such concept. Earlier, this clause empowered the Parliament to restrict and provide such condition with respect to any state laws which sought to levy tax on sale and purchase of such goods declared as of special importance and/or a tax on sale or purchase concerning transactions of works contract, hire-purchase, and transfer of right to use any goods as specified in Article 366(29A) (b), (c), (d).

To know more details on GST read article on GST blog.

Integrated Goods and Services Tax (IGST):

Clause 269A of the Bill provides for levy of Goods and Services Tax on supplies in the course of inter-State trade or commerce. Such Tax shall be levied and collected by Government of India and thereafter shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Import of goods or services would be treated as inter-state supplies and thus it would be subject to IGST in addition to applicable custom duties. Exports would be zero rated.

Distribution of GST:

Clause 270(1A) of the Bill provides that the goods and services tax levied and collected by the Government of India, except the tax apportioned with the States under clause 269A (1) shall also be distributed between the Union and the States in the manner provided in clause 269A(2).

No Surcharge levy on GST:

Clause 271 of the Bill which empowers the Parliament to increase any duties or taxes by surcharge for the purpose of Union has been amended in the bill by providing an exception to Goods and Services tax under Clause 246A.

Scope of GST:

GST shall cover all goods and services, except alcoholic liquor for human consumption, for the levy of goods and services tax. In case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy of Goods and Services Tax till a date notified on the recommendation of the Goods and Services Tax Council.

Promulgation of GST Council: Proposed Article 279A of the Bill provides for constitution of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, exemption list and threshold limits. The Council shall function under the Chairmanship of the Union Finance Minister and will have the State Union Minister as its members.

(I) Working of GST Council:

  • It is further provided that every decision of the Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting. This has been illustrated in the Bill.
  • One half of the total number of Members of the Council shall constitute the quorum at its meetings.
  • While discharging the functions conferred by Article 279A, the GST Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.
  • The Council is also vested with some re-commendatory Powers in Article 279A (4).

Dispute Resolution Mechanism: The Present Bill empowers the GST Council to decide the modalities of resolving disputes arising out of its recommendations. This is a clear departure from previous proposal of having a separate GST Dispute Settlement Authority

Seventh Schedule of Constitution Amended: Since GST shall subsume various taxes accordingly major amendments in the said schedule are proposed substitution of Entry 84 of Union List (covering subject matter of excise) and Entry 54 of state List (Taxes on sale or purchase of goods). Entry 92C of Union List for Taxes on services which is not yet effective is omitted in the Bill

Additional tax on supply of goods : The following points worth mentioning in this regard are as under –

  • An additional tax on supply of goods, not exceeding one per cent, in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause 269A (1) of the Bill be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States.
  • The net proceeds of additional tax on supply of goods shall be assigned to the states from where the supply originates
  • Parliament may formulate principles for determining the place of origin from where supply of goods takes place
  • Central Government may, where it considers necessary in the public interest, exempt such goods from the levy of additional tax.

Salient features of GST

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