Salient Features of GST:
GST is applicable on “supply” of goods or services as against the concept of tax on manufacture of goods or on sale of goods or on provision of services.
GST is also a destination-based consumption Taxation as opposed to the origin based VAT system prior to the introduction of GST.
It is a dual GST with the Centre and the States simultaneously levying it on a common base. The GST levied by the Centre is called Central GST (central tax- CGST) and that levied by the States [including Union territories with legislature] is called State GST (state tax- SGST). Union territories without legislature levy Union territory GST (union territory tax- UTGST).
An Integrated GST (integrated tax- IGST) is levied on inter-State supply (including stock transfers) of goods or services. This is be collected by the Centre so that the credit chain is not disrupted.
Import of goods is treated as inter-State supplies and is subject to IGST in addition to the applicable customs duties.
Import of services is treated as inter-State supplies and is subject to IGST.
CGST, SGST /UTGST & IGST is levied at rates which are mutually agreed upon by the Centre and the States under the aegis of the GSTC.
GST applies to all goods and services except Alcohol for human consumption.
GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural gas) would be applicable from a date to be recommended by the Goods and Services Tax Council (GSTC).
A common threshold exemption applies to both CGST and SGST. Taxpayers with an annual turnover of `20 lakh (`10 lakh for special category States (except J&K) as specified in article 279A of the Constitution) would be exempt from GST. A composition scheme (i.e. to pay tax at a flat rate without credits) is available to small taxpayers (including to manufacturers other than specified category of manufacturers and service providers) having an annual turnover of up to `1 crore (`75 lakh for special category States (except J&K and Uttarakhand) enumerated in article 279A of the Constitution). As decided in the 23rd meeting of the GSTC, this limit shall be raised to `1.5 crore after necessary amendments in the Act. The threshold exemption and compounding scheme would be optional. All Exports and supplies to SEZs and SEZ units would be zero-rated.
Credit of CGST paid on inputs shall be used only for paying CGST on the output and the credit of SGST/UTGST paid on inputs shall be used only for paying SGST/ UTGST. In other words, the two streams of input tax credit (ITC) cannot be cross utilized, except in specified circumstances of inter-State supplies for payment of IGST. The credit is permitted to be utilized in the following manner:
a) ITC of CGST allowed for payment of CGST & IGST in that order;
b) ITC of SGST allowed for payment of SGST & IGST in that order;
c) ITC of UTGST allowed for payment of UTGST & IGST in that order;
d) ITC of IGST allowed for payment of IGST, CGST &SGST/UTGST in that
order.
ITC of CGST cannot be used for payment of SGST/UTGST and vice-versa. Input Tax Credit (ITC) to be broad based by making it available in respect of taxes paid on any supply of goods or services or both used or intended to be used in the course or furtherance of business.
Audit of registered persons to be conducted in order to verify compliance with the provisions of Act.
An anti-profiteering clause has been provided in order to ensure that business passes on the benefit of reduced tax incidence on goods or services or both to the consumers.
Four Laws namely CGST Act, UTGST Act, IGST Act and GST(Compensation to States) Act have been passed by the Parliament and since been notified on 12th April, 2017. All the other States (except J&K) and Union Territories with legislature have passed their respective SGST Acts. The economic integration of India was completed on 8th July 2017 when the State of J&K also passed the SGST Act and the Central Government also subsequently extended the CGST Act to J&K.