INTRODUCTION AND APPLICABILITY

 

Introduction

Goods and Services Tax (GST) has been identified as one of most important tax reforms post-independence. It is a tax trigger, which will lead to business transformation for all major industries.

Major step was to have the constitution amended which was done in the form of 101st Constitution Amendment Act, 2016 for GST in the Parliament on 8th August, 2016 and thereafter four GST Bills also got clearance from the Lok Sabha on 29th March, 2017 and from Rajya Sabha on 6th April, 2017. On 12th April, 2017 fours Acts are assented and notified. These are following:

• Central Goods and Services Tax Act, 2017

• Integrated Goods and Services Tax Act, 2017

• Union Territory Goods and Services Tax Act, 2017, and

• Goods and Services Tax (Compensation to States) Act, 2017.

Government as per its schedule and plan implemented the Goods and Services Tax with effect from 1-7-2017.

The act extends to whole of India except the State of Jammu and Kashmir to which it was extended w.e.f. 8-7-2017. The act was amended thereafter from time to time.

Every State Government has passed corresponding State Goods and Services Act, 2017 and they have been amended time and again as per the GST Council recommendation in line with the Central Goods & Services Tax, Act

Rules issued till date are as under:

Sr. No.	Rule Name	Number of Rules
	Preliminary	Rules 1 to 2
2	Composition	Rules 3 to 7
3	Registration	Rules 8 to 26
4	Determination of Value of Supply	Rules 27 to 35
5	Input Tax Credit	Rules 36 to 45
6	Tax Invoice, Credit and Debit Note	Rules 46 to 55A
7	Accounts and Records	Rules 56 to 58
8	Returns	Rules 59 to 84
9	Payment of Tax	Rules 85 to 88B
10	Refund	Rules 89 to 97A
11	Assessment and Audit	Rules 98 to 102
12	Advance Ruling	Rules 103 to 107A
13	Appeals and Revision	Rules 108 to 116
14	Transitional Provisions	Rules 117 to 121
15	Anti-Profiteering	Rules 122 to 137
16	E-Way Bill Rules	Rules 138 to 138E
17	Inspection, Search and Seizure	Rules 139 to 141
18	Demands and Recovery	Rules 142 to 161
19	Offences and Penalties	Rule 162

GST in India and its coverage

GST is a destination-based consumption tax that replaced the erstwhile Central taxes and duties such as Excise Duty, Service Tax, Countervailing Duty (CVD), Special Additional Duty of Customs (SAD), Central charges and cesses and local State taxes, i.e., Value Added Tax (VAT), Central Sales Tax (CST), Octroi, Entry Tax, Purchase Tax, Luxury Tax, Taxes on lottery, betting and gambling, State cesses and surcharges and Entertainment tax (other than the tax levied by the local bodies).

India has adopted dual GST levy with State/Union Territory GST and Central GST. Moreover, inter-State supplies attracts an Integrated GST, which would be the sum total of CGST and SGST/UTGST.

Petroleum products, i.e., petroleum crude, high speed diesel, motor spirit, aviation turbine fuel, natural gas will be brought under the ambit of GST from such date as may be notified by the Government on recommendation of the Council. Alcohol for human consumption has been kept outside the purview of GST.

Consensus between Central and State Governments has been reached majorly on four-tier rate structure viz., 5%; 12%; 18% and 28%.

Benefits of GST

GST has been envisaged as a more efficient tax system, neutral in its application and attractive in distribution. The advantages of GST are:

• Wider tax base, necessarily for lowering the tax rates and eliminating classification disputes

• Elimination of multiplicity of taxes and their cascading effects

• Rationalization of tax structure and simplification of compliance procedures

• Harmonization of Centre and State tax administrations, which would reduce duplication and compliance costs

• Automation of compliance procedures to reduce errors and increase efficiency.

Destination principle

The GST structure follows the destination principle. Accordingly, imports are subject to GST, while exports are zero-rated. In the case of inter-State transactions within India, the State tax would apply in the State of destination as opposed to that of origin.

Taxes to be subsumed

GST replaced most indirect taxes existed erstwhile such as:

Central Taxes	State Taxes
Central Excise Duty [including additional excise duties, excise duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955] Service tax Additional Customs Duty (CVD) Special Additional Duty of Customs (SAD)	Value Added Tax  Octroi and Entry Tax  Purchase Tax  Luxury Tax  Taxes on lottery, betting & gambling  State cesses and surcharges  Entertainment tax (other than the tax levied by  the local bodies)

Roadmap Ahead

• Lot of glitches are still there in GSTN even after 5 years, from the implementation of GST and those needs to be resolved at earliest..
• Many clarifications are needed from the Government so as to remove the ambiguities in the law.