Everything You Need to Know About the GST Amendment Bill

India’s decade-long wait for a national sales tax that will create one of the world’s biggest single markets is almost over.

The Rajya Sabha on Wednesday passed the Goods and Services Tax (GST) Constitutional Amendment Bill, which the Lok Sabha had already approved last year. The legislation was approved by the Rajya Sabha with 203 votes in favour and none against, in the 243-member House.

Understanding taxes is indeed a difficult job for people. This video by Bloomberg Quint will tell you everything you need to know about the GST Bill and how it will affect you.

What Is GST? How Does It Work?

GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer.

Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Which Taxes at the Centre and State Level Are Being Subsumed Into GST?

At the Central level, the following taxes are being subsumed:

a. Central Excise Duty
b. Additional Excise Duty
c. Service Tax
d. Additional Customs Duty commonly known as Countervailing Duty
e. Special Additional Duty of Customs

At the State level, the following taxes are being subsumed:

a. Subsuming of State Value Added Tax/Sales Tax
b. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States)
c. Octroi and Entry tax
d. Purchase Tax, 4
e. Luxury tax
f. Taxes on lottery, betting and gambling

How Would GST Be Administered in India?

Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain.

Tax will be levied on every supply of goods and services. Centre would levy and collect CGST, and States would levy and collect the SGST on all transactions within a State.

The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilisation of credit would be permitted.

How Will GST Impact Industries?

What Are the Major Features of the Constitution (122nd Amendment) Bill, 2014?

The salient features of the Bill are as follows: Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;

1. Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs

2. Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling

3. Dispensing with the concept of ‘declared goods of special importance’ under the Constitution

4. Levy of Integrated Goods and Services Tax on inter-State transactions of goods and services

5. GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council

6. Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years

7. Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.

Source: Government FAQ

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