TYPES OF GST: DUAL GST

GST Update 07.01.2016

GST DAILY DOSE OF UPDATION:-

TYPES OF GST: DUAL GST:-

Dual GST refers to the arrangement wherein both the Centre as well as the States levy tax on the same set of transaction. Thus, two rates of GST are prevalent in case of dual GST. There are two models of Dual GST:-

CONCURRENT MODEL:-

In this model, both Centre and State have independent rates for levying GST. Though the rates are different, yet the basis of determining the rates is similar. Since the same set of transaction is leviable to tax by both Centre and State, it obviously needs a high level of co-ordination between the two. Further, the cost of administering the tax is also high in this model. Also, the inter-state movement of goods and services has to be given special consideration and proper provisions are needed to be inserted in the law itself in order to avoid conflicts due to different jurisdictions.

NON-CONCURRENT MODEL:-

In this model of dual GST, the State levies tax only on the goods while the Centre levy the tax only on the services. Since only one governing body is there in each case the problems related to interstate supply will not be there. Further, the cascading effect can be eliminated if the States agrees to allow input credit of tax levied on services by the Centre and if the Centre agrees to allow input credit of tax levied on goods by the States. However, in our view this method cannot be said to be free from complications since if the Centre allows input credit of tax levied by States, the chances of fraudulent credit will be much higher as it will not have any right or power to verify the correctness of this input tax which is being levied and collected by some other authority. Same problem will be there with the States. Further, there are some debates under existing scenario where it is not possible to determine whether a particular transaction is goods or service and whether it is subject to levy of service tax or excise duty. Some such examples are software, sim cards, etc. which are under litigation in present circumstances. These classification-related disputes will continue to be there in GST if the non concurrent model of GST is adopted.

GST MODEL PROPOSED IN INDIA:-

In India it is being proposed to implement this concurrent model of dual GST. This is also the model which was recommended by Kelkar Committee in its report submitted in the year 2002. As stated while discussing this model, special concerns are to be given while framing provisions on inter-state supply. The 1% additional levy proposed in this respect on inter-state movement of goods and services is one of the three reasons behind non approval of GST by the opposition.

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GST Update 07.01.2016

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