What is GST?

Goods and Service Tax (GST) is a biggest tax reform after independence of India. GST is a value added destination based Indirect Tax. Unified Taxation System across India.

  1. Legislative Evolution of GST
    Lok Sabha:In December, 2014, The Constitution (122nd Amendment) Bill 2014 was introduced in the Lok Sabha and was passed by Lok Sabha in May 2015.
    Rajya Sabha: The Bill was taken up in Rajya Sabha and was referred to the Joint Committee of the Rajya Sabha and the Lok Sabha in May, 2015.

    The Select Committee submitted its report in July, 2015. Thereafter, the Constitutional Amendment Bill was moved in August 2016 based on political consensus.

    The Bill was passed by the Rajya Sabha on 3rd August 2016 and by the Lok Sabha on 8th August 2016.

    After ratification by required number of State legislatures and assent of the President, the Constitutional amendment was notified as Constitution (101st Amendment) Act 2016 on 8th September, 2016.

    The Constitutional amendment paved way for introduction of Goods and Services Tax in India.

  2. GST Council:

    GST Council is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.

    As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, special provisions for certain States, etc.

    The GST Council was constituted w.e.f. 12-09-2016 by notification dated 10-09-2016.

    In June 2016, Model GST law was put in public domain inviting suggestions and the Revised Model GST Law in November 2016.

    The following bills were approved by GST Council after considering various representation received on model GST Laws

    • the Central Goods and Services Tax Bill 2017 (The CGST Bill),
    • the Integrated Goods and Services Tax Bill 2017 (The IGST Bill),
    • the Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill),
    • the Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill)

  3. Enactment:

    The Bills which has been approved by GST council as mentioned above were passed by the Lok Sabha on 29th March, 2017.

    The Rajya Sabha passed these Bills on 6th April, 2017 and were then enacted as Acts on 12th April, 2017.

    Thereafter, State Legislatures of each States have passed respective State Goods and Services Tax Bills. After the enactment of various GST laws, GST was launched with effect from 1st July 2017 by Sh.Narendra Modi, Hon’ble Prime Minister of India in the presence of Sh.Pranab Mukherjee, the then President of India in a mid-night function at the Central Hall of Parliament of India.

    GST was introduced w.e.f. 1st July, 2017 in whole of the India except Jammu & Kashmir through respective Central and states and as discussed above.

    In Jammu and Kashmir GST has been Implement from 8th July, 2017 through Constitution (Application to Jammu and Kashmir) Amendment Order, 2017, the Central Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017.

    The provisions relating to Administration, Composition levy and registration under GST were implemented with effect from 22-06-2017 and the remaining provisions except few (such as those pertaining to TDS & TCS) were implemented w.e.f. 01-07-2017.

  4. Taxes Subsumed in GST

    Under Central Taxes

    • Central excise duty
    • Additional duties of excise
    • Excise Duty under Medicinal and Toilet Preparation Act
    • Service Tax
    • Additional Customs Duty (CVD)
    • Special Additional Duty of Customs (SAD)
    • Central Surcharge and Cess

    Under State Taxes

    • State VAT/Sales Tax
    • Central Sales Tax [levied by Centre but collected by State]
    • Octroi
    • Entry Tax
    • Luxury Tax
    • Taxes on Lottery,
    • Tax Betting and Gambling
    • State Cess and Surcharge

  5. Taxes not Subsumed in GST
    • Basic Customs Duty
    • Electricity Duty
    • Taxes on alcoholic liquor for human consumption
    • Tax on Sale of land and Building
    • Tax on Securities
    • Fee chargeable under State laws like fee chargeable for sale of agriculture produce popularly known as Mandi fee.
  6. Taxes deferred to be included into GST

    Taxes on following items may be subsumed into GST at a later date:

    1. Duty of excise and tax on sale or purchase of
      • petroleum crude;
      • high speed diesel;
      • motor spirit (commonly known as petrol);
      • natural gas;
      • aviation turbine fuel;
    2. Taxes on entertainment which were earlier collected by State shall after GST be collected by local authorities like Panchayat or a Municipality or a Regional Council or a District Council

  7. Dual GST Model:

    Dual model of GST has been adopted in India being a federal economy and union of states wherein both central and state tax are charged concurrently on same base.

    CGST and SGST/ UTGST are charged for intra State supply of goods and/or services i.e. supply within the state

    IGST (Integrated Goods and Service Tax) is chargeable for following cases where supply is outside the state:

    • Inter-State supplies (supply between two different States),
    • Imports, and
    • Exports
  8. Fundamental Base Pillars of GST:
    For basis understanding of levy and chargeability of GST
    Particulars
    Provisions to be referred
    Section
    Tax to be charged on
    Supply
    Section 7 of the CGST Act, 2017
    When tax to be charged?
    Time of Supply
    Section 12 & 13 of the CGST Act, 2017
    What tax to be charged (for which state)?
    Place of Supply
    Section 10 to 13 of the IGST Act, 2017
    Tax to be charged on what Value ?
    Valuation
    Section 15 of the CGST Act, 2017
  9. Goods and Service Tax Network (GSTN):

    A non-profit company was constituted on 28-03-2013 to provide Information Technology infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST).