You are here: Home » Economy & Policy » News » GST
Business Standard

What is GST, how is it different from now: Decoding the indirect tax regime

Indivjal Dhasmana clears up some confusion about the indirect tax regime

Indivjal Dhasmana  |  New Delhi 

GST, tax
.

What is  

It is a proposed new indirect tax regime, where one commodity will have the same rate, pan-India. There could be exceptions based on local importance, in which case those would be exempt.

Input tax credit

for taxes paid on input. This would be done in each stage, so that there is no cascading

How is it different from now?

In GST, only two buckets will have to be created to get — one for State-and another for Central- Currently, if companies are selling in, say, seven states, they have to make seven buckets for taking in value added tax (VAT). Similarly, for excise duty, they have to make as many buckets as there are manufacturing units. For services, only one bucket is required. 

Filing of statements and returns

They will have to file a statement of outward supplies by the 10th of the next month of sale, statement of inward supplies or inputs by the 15th of the next month and returns by the 20th of the next month, matching inward and outward supplies and claims on

Which taxes will be subsumed in

Service tax, central excise duty, state level value added tax and local taxes such as octroi.

Council

A body to recommend any changes in GST, including rates. It will have the Union finance minister as chair and state finance ministers as members. 

Voting rights in Council

The Centre will have one-third vote and all states combined will have two-third. Each state will have equal voting power.

Requirement for approval by the Council

Every decision has to be passed with three-fourth voting. 

Does the Centre have a veto?

No, but the Centre alone can block a resolution. 

slabs  

Five slabs have been approved by the council. These are zero, 5%, 12%, 18% and 28%. There could be one more for bullion.

Will cess and surcharges be subsumed in

Yes, except for the cess on demerit, luxury and polluting items such as tobacco, luxury cars, aerated drinks and coal over the peak rate of 28%.

Use of this cess and its longevity

It would be used for compensating states for any revenue loss due to for the first five years of the rollout, slated from this July. It would be there for these five years only. 

What is not included in

Real estate, except for land leasing, alcohol and electricity. 

Is petroleum included?

Yes. But, it will be zero rated till the Council decides to impose on it. Till then, and state VAT will be imposed on it.

Have all the Bills been enacted for rolling out

Yes, except for state Bills, which will have to be passed in respective states. 

What is left now, beside state Bills?

Fitment of items in five rates, and finalisation of four rules — on input tax credit, composition, transition and valuation.

Have other rules been cleared by the Council?

Five rules have been cleared — invoice, payment, refunds, registration and returns. Rules on returns are yet to be made public.

How many returns are to be filed by companies under

Rules on returns are yet to be out, but the draft rules say it should be 13. One each month and then a final return. Currently, 13 returns are to be filed for state-level VAT, 13 for excise and two for supplies. So, for suppliers, it would be a less tedious task in the goods and services tax.

Do companies have to file for registration in every state they are selling, manufacturing or offering services?

Yes. Life will be a bit complicated for service providers currently they have to file only for a centralised registration.

Are e-commerce companies required to collect one per cent tax at source?

Yes.

RECOMMENDED FOR YOU

What is GST, how is it different from now: Decoding the indirect tax regime

Indivjal Dhasmana clears up some confusion about the indirect tax regime

Indivjal Dhasmana clears up some confusion about the indirect tax regime
What is  

It is a proposed new indirect tax regime, where one commodity will have the same rate, pan-India. There could be exceptions based on local importance, in which case those would be exempt.

Input tax credit

for taxes paid on input. This would be done in each stage, so that there is no cascading

How is it different from now?

In GST, only two buckets will have to be created to get — one for State-and another for Central- Currently, if companies are selling in, say, seven states, they have to make seven buckets for taking in value added tax (VAT). Similarly, for excise duty, they have to make as many buckets as there are manufacturing units. For services, only one bucket is required. 

Filing of statements and returns

They will have to file a statement of outward supplies by the 10th of the next month of sale, statement of inward supplies or inputs by the 15th of the next month and returns by the 20th of the next month, matching inward and outward supplies and claims on

Which taxes will be subsumed in

Service tax, central excise duty, state level value added tax and local taxes such as octroi.

Council

A body to recommend any changes in GST, including rates. It will have the Union finance minister as chair and state finance ministers as members. 

Voting rights in Council

The Centre will have one-third vote and all states combined will have two-third. Each state will have equal voting power.

Requirement for approval by the Council

Every decision has to be passed with three-fourth voting. 

Does the Centre have a veto?

No, but the Centre alone can block a resolution. 

slabs  

Five slabs have been approved by the council. These are zero, 5%, 12%, 18% and 28%. There could be one more for bullion.

Will cess and surcharges be subsumed in

Yes, except for the cess on demerit, luxury and polluting items such as tobacco, luxury cars, aerated drinks and coal over the peak rate of 28%.

Use of this cess and its longevity

It would be used for compensating states for any revenue loss due to for the first five years of the rollout, slated from this July. It would be there for these five years only. 

What is not included in

Real estate, except for land leasing, alcohol and electricity. 

Is petroleum included?

Yes. But, it will be zero rated till the Council decides to impose on it. Till then, and state VAT will be imposed on it.

Have all the Bills been enacted for rolling out

Yes, except for state Bills, which will have to be passed in respective states. 

What is left now, beside state Bills?

Fitment of items in five rates, and finalisation of four rules — on input tax credit, composition, transition and valuation.

Have other rules been cleared by the Council?

Five rules have been cleared — invoice, payment, refunds, registration and returns. Rules on returns are yet to be made public.

How many returns are to be filed by companies under

Rules on returns are yet to be out, but the draft rules say it should be 13. One each month and then a final return. Currently, 13 returns are to be filed for state-level VAT, 13 for excise and two for supplies. So, for suppliers, it would be a less tedious task in the goods and services tax.

Do companies have to file for registration in every state they are selling, manufacturing or offering services?

Yes. Life will be a bit complicated for service providers currently they have to file only for a centralised registration.

Are e-commerce companies required to collect one per cent tax at source?

Yes.
image
Business Standard
177 22

What is GST, how is it different from now: Decoding the indirect tax regime

Indivjal Dhasmana clears up some confusion about the indirect tax regime

What is  

It is a proposed new indirect tax regime, where one commodity will have the same rate, pan-India. There could be exceptions based on local importance, in which case those would be exempt.

Input tax credit

for taxes paid on input. This would be done in each stage, so that there is no cascading

How is it different from now?

In GST, only two buckets will have to be created to get — one for State-and another for Central- Currently, if companies are selling in, say, seven states, they have to make seven buckets for taking in value added tax (VAT). Similarly, for excise duty, they have to make as many buckets as there are manufacturing units. For services, only one bucket is required. 

Filing of statements and returns

They will have to file a statement of outward supplies by the 10th of the next month of sale, statement of inward supplies or inputs by the 15th of the next month and returns by the 20th of the next month, matching inward and outward supplies and claims on

Which taxes will be subsumed in

Service tax, central excise duty, state level value added tax and local taxes such as octroi.

Council

A body to recommend any changes in GST, including rates. It will have the Union finance minister as chair and state finance ministers as members. 

Voting rights in Council

The Centre will have one-third vote and all states combined will have two-third. Each state will have equal voting power.

Requirement for approval by the Council

Every decision has to be passed with three-fourth voting. 

Does the Centre have a veto?

No, but the Centre alone can block a resolution. 

slabs  

Five slabs have been approved by the council. These are zero, 5%, 12%, 18% and 28%. There could be one more for bullion.

Will cess and surcharges be subsumed in

Yes, except for the cess on demerit, luxury and polluting items such as tobacco, luxury cars, aerated drinks and coal over the peak rate of 28%.

Use of this cess and its longevity

It would be used for compensating states for any revenue loss due to for the first five years of the rollout, slated from this July. It would be there for these five years only. 

What is not included in

Real estate, except for land leasing, alcohol and electricity. 

Is petroleum included?

Yes. But, it will be zero rated till the Council decides to impose on it. Till then, and state VAT will be imposed on it.

Have all the Bills been enacted for rolling out

Yes, except for state Bills, which will have to be passed in respective states. 

What is left now, beside state Bills?

Fitment of items in five rates, and finalisation of four rules — on input tax credit, composition, transition and valuation.

Have other rules been cleared by the Council?

Five rules have been cleared — invoice, payment, refunds, registration and returns. Rules on returns are yet to be made public.

How many returns are to be filed by companies under

Rules on returns are yet to be out, but the draft rules say it should be 13. One each month and then a final return. Currently, 13 returns are to be filed for state-level VAT, 13 for excise and two for supplies. So, for suppliers, it would be a less tedious task in the goods and services tax.

Do companies have to file for registration in every state they are selling, manufacturing or offering services?

Yes. Life will be a bit complicated for service providers currently they have to file only for a centralised registration.

Are e-commerce companies required to collect one per cent tax at source?

Yes.

image
Business Standard
177 22