OVERVIEW OF TAXES THAT ARE SUBSUMED IN GST

GST update 05.01.2016

GST DAILY DOSE OF UPDATION:-

OVERVIEW OF TAXES THAT ARE SUBSUMED IN GST:-

GST law that is expected to be implemented by the mid of this year and is expected to revolutionarize the Indian Taxation Policy. At present, there are a number of taxes being levied by Central Government and State Governments. There are multiple taxations points like taxes are being levied on manufacture of goods, sale of goods, provision of services but under the proposed unified taxation GST, tax will be levied on ‘supply of goods and services’. Since India is a federal form of government wherein certain taxes are levied by Centre and certain taxes are being levied by State, ‘Dual GST’ form of taxation is proposed to be implemented so that Centre and States are able to simultaneously levy tax on supply of goods and services. There will be 4 types of taxes levied under the proposed GST regime being Central Goods & Service Tax (CGST) levied by Central Government, State Goods & Service Tax (SGST) levied by the State Government, Integrated Goods & Service Tax (IGST) levied by the Central Government on inter state trade, and 1% Additional tax which is non-cenvatable to compensate loss of manufacturing states during the initial stages of implementation of GST because GST will be destination based taxation wherein the consuming states would generate more revenue than manufacturing states.

GST will merge the following taxes presently being levied by the Central Government :-
1.     Central Excise duty
2.     Duties of Excise (Medicinal and Toilet Preparations)
3.     Additional Duties of Excise (Goods of Special Importance)
4.     Additional Duties of Excise (Textiles and Textile Products)
5.     Additional Duties of Customs (commonly known as CVD)
6.     Special Additional Duty of Customs (SAD)
7.     Service Tax
8.     Cesses and surcharges insofar as they relate to supply of goods or services

GST will subsume the following taxes presently being levied by the State Government:-
1.     State VAT
2.     Central Sales Tax
3.     Purchase Tax
4.     Luxury Tax
5.     Entry Tax (All forms)
6.     Entertainment Tax (not levied by the local bodies)
7.     Taxes on advertisements
8.     Taxes on lotteries, betting and gambling
9.     State cesses and surcharges insofar as they relate to supply of goods.

Since a number of taxes are being merged into a single uniform tax, it is important to appropriately fix the GST rate. Furthermore, the exemptions are proposed to be kept at minimum possible level so that the single rate arrives at a lower rate because grant of exemptions are directly proportional to the rate of GST. The higher are the exemptions, the higher will be the GST rate because government will have to compensate its loss of revenue from exemptions by fixing higher rate of GST. However, exports will continue to be tax free in the GST regime to promote and facilitate the ‘Make in India’ motto.

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GST update 05.01.2016

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