Introduction Of GST

 Introduction and Overview of GST

Introduction

Goods and services tax (GST) has been identified as one of the most important tax reforms post independence.  GST is a path breaking indirect tax reform which will create a common national market by removing inter-state trade barriers.GST has subsumed (absorbed or include) multiple indirect taxes imposed by central and state. 

GST subsumed the following

Central taxes	State taxes
Central excise duty Additional excise duty Service tax Surcharge and cess Central sales tax	Sate VAT Entertainment tax Entry tax Luxury Tax Purchase Tax

GST was first introduced in France in the year 1954. Within 62 years of its introduction about 160 countries across the world have adopted GST.  Generally GST is popular for single model but Canada and Brazil also have dual model of GST. India has adopted a dual GST which will be imposed concurrently by centre and states.

GENESIS OF GST IN INDIA

2004	The idea of GST was emerged in India from the recommendation of Kelkar Task Force.
2007	Union Finance Minister, Shri P. Chidambaram, while presenting the central Budget (2007-08) announced the GST would be introduced in India.
2014	NDA government tabled the Constitution (122nd Amendment) Bill
2016	It got assent of the president on 8th September, 2016 and became Constitution (101st amendment) Act, 2016, which paved the way for the introduction of GST in India.
2017 (March)	Central Goods and Services Tax Bill, 2017, Integrated Goods and Services Tax Bill, 2017, Union Territory Goods and Services Tax Bill, 2017 and Goods and Services Tax (Compensation to States) Bill, 2017 were introduced and passed these bills in Lok Sabha and receipt of President Assent on 12th April, 2007  became enacted. Subsequently State GST laws have been enacted by respective state Government.
2017 (July)	w.e.f 1st July 2017 GST has implemented across India

 CONSTITUTIONAL AMENDMENT FOR GST

Constitution (101^st amendment) Act, 2016 was enacted on 8.09.2016 for the following significant amendments.

(a) Concurrent (simultaneously) power on Parliament and State legislatures to make laws for imposing taxes on goods and services.

(b) GST will be levied on all supply of goods and services except alcoholic liquor for human consumption.

(c) Parliament has exclusive power to make laws with respect to goods and services tax of inter-state (from one state to another state) supply.

(d) Parliament shall decide principles for determining the place of supply and when supply takes place in course of inter-State trade and commerce.

(e) The explanation to Articles 269A of Constitution of India provides that the import of goods and services will be deemed as a supply takes place in course of inter-State trade and commerce.

(f) For the following items Central Excise duty will be imposed on their production and respective States will impose Sales tax the on their sales.

i) Petroleum crude

ii) High speed diesel

iii) Motor spirit (commonly known as petrol)

iv) Natural gas

v) Aviation turbine fuel

vi) Tobacco and tobacco products

(g) Article 279A of the Constitution of India empowers the president of India to Constitute Goods and Service tax Council (GST Council)  under the chairmanship of the Union Finance Minister to recommend about (Article 279A):

i) the GST rate

ii) Valuation and other fundamental rules

iii) Exemption

iv) Future changes

v) Return

vi) Registration

 Legislative Framework

There are total 35 GST Acts in India

§ 1- The Central Goods and service Tax Act, 2017 for imposing CGST on intra-State supply of goods and services.

§ 31- State Goods and service Tax Act, 2017 for imposing SGST by respective state on intra-State supply of goods and services.

§ 1 – The Union Territory Goods and Services Tax Act, 2017 for levying UTGST in 5 union Territories without State Legislatures on intra-Territory supply of goods and services. (Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh)

§ 1 – The Integrated Goods and Service Tax Act, 017 for levying IGST and

§ 1 – The Goods and services Tax (Compensation to states) Act, 2017 for levying GST Compensation Cess.

Benefits of GST

GST is a win-win situation for the entire country. It provides benefits to all the stakeholders of industry, Government and customers. It is expected that it will reduces cost of goods and services and make them globally competitive. The significant benefits of GST are discussed hereunder:

(a) Creation of unified national market: GST aims to make India a common market with common tax rates and compliances (procedures) and remove the economic barriers to form a integrated economy national level.

(b) Mitigation of ill effects of cascading: GST subsume most of the Central and states indirect Taxes into a single taxes and allow the credit of tax paid from the output tax for the transaction across the entire value chain process. Eradication of “tax on tax” gives the benefit to the industry.

(c) Boost to ‘Make in India ‘ initiative: GST will give major boost to the ‘Make in India ‘ initiative of government of India by making goods and services produced in India competitive in the national as well as international market.

(d) Increase in government revenue: GST is expected to increase the Government revenue by widening the tax base and improving the taxpayer compliances.