0Goods and Service Tax environment made Accountants inevitable to any organization. It is important that all accountants should be competent in GST Norm and Producedures. Here is a sample lesson to understand GST also to the list of topics to learn to become competent in GST environment.
i. What is GST?
GST, Goods and Services Tax is a tax which will be levied on the supply of taxable goods or services or both within India. It is a destination based tax on consumption of goods and services. It has been designed in a manner so that the tax is collected at every stage and the credit of tax paid on the previous stage is adjusted with the tax collected on the next stage. Simply, this eradicates “tax on tax” which results in “No Cascading Effect”.
- This tax has been introduced with the aim of creating a single indirect tax which will give benefit to corporates, government, economy and common public.
- This tax will lead to the abolition of all other taxes such as Central Excise Duty, Central Sales Tax, State Sales Tax, Service Tax, Octroi, Countervailing Duty etc.
- This tax will be imposed by both the Central and State governments on almost all goods and services supplied within India.
- This tax is levied at every stage of the production and distribution chain.
- This tax provides a seamless input credit to all from manufacturer to the final dealer till it reaches end user i.e. consumer.
- This tax is collected only on the value addition and burden of tax is to be borne by the final consumer.
ii. How GST is destination based tax?
GST will become revenue to the tax authorities of the place of consumption of such goods and services; hence it is a destination based tax.
iii. What are the salient features of GST?
- GST is the single biggest tax reform undertaken since independence to ease the tax compliance.
- GST is levied on the supply of goods and services at each stage of the supply chain. Though it is imposed at each level of the supply chain, it will not be the cost of the product as it provides seamless input credit at every stage.
- GST is one of the widely accepted indirect taxation system which is prevailing in more than 150 countries in the world.
- GST is a single tax system charged on the supply of goods and services made within India and also on the goods imported for foreign country.
- GST is a tax system on goods and services; hence manufacturers, wholesalers, retailers, distributors etc shall comply with single compliant which reduces their burden on tax compliances.
iv. What are the taxes that are subsumed under GST?
The following Central and State taxes are subsumed under GST.
Central Taxes:
- Central Excise Duty.
- Countervailing Duty (Additional Duty on Customs): CVD
- Special Additional Duty: SAD
- Central Sales Tax: CST
- Service Tax.
States Taxes:
- Value Added Tax / Commercial Tax.
- Entertainment Tax.
- Purchase Tax.
- Luxury Tax.
- Octroi and Entry Tax.
v. Who are all the existing tax payers subsumed under GST?
Naturally any Indirect tax payment will be subsumed under GST as they already dealt with supply of goods and services. The following persons are subsumed under GST by default:
- Any dealer registered under respective Value Added Tax regime.
- Any dealer registered under Central Sales Tax act 1956.
- Any manufacturer / dealer / distributor registered under Central Excise act 1944.
- Any person liable to pay Special Additional Duty, Countervailing Duty, Additional duty of Excise and Surcharges and Cess of Central Government etc.
- Any dealer registered under Service Tax act 1994.
- Any person liable to pay Entertainment tax to the respective government.
vi. What are the merits GST?
GST has several merits when compared to the previous taxes. The following are the important merits of GST:
- As most of the indirect taxes like Central Excise, Service Tax, State and Central sales taxes, Additional Customs Duties etc are amalgamated in to a single tax; users are allowed for set-off on taxes paid.
- As single tax is levied all over the nation, it may reduce the complications and statutory burdens to the tax payers.
- As it provides seamless input credit, it will avoid the cascading effect i.e. tax on tax
- As the dealers of GST enjoys the benefit seamless credit, it is expected that the cost of production and other overheads will be reduced to 20 to 30% which ultimately results in reduction in price of consumer goods.
- As the price of the products is expected to go down, instantly consumption of such products will go up and finally results in economic growth.
- As GST is very transparent and captures the activities of unregistered dealers easily, it is expected for less or no evasion that results in good revenue to the state as well as central.
- As GST process is automated, the procedures to be following upon registration, monthly return filing, quarterly return filing, annual return filing, payments, refunds etc are simplified.
