GST is a uniform indirect tax levied on goods and services across a country.
Central Taxes GST would replace Central Excise Duty, Service Tax, Additional Duties of Excise & Customs, Special Additional Duty of Customs, and cesses and surcharges on supply of goods and services.
State Taxes GST would replace VAT, Central Sales Tax, Purchase Tax, Entry Tax, Entertainment Tax, taxes on advertisements, lotteries, betting and gambling, and state cesses and surcharges.
The main objectives of GST would be to eliminate excessive taxation. Central and state agencies often calculate taxes based not on the original cost of the product, but over and above the several layers of tax already levied on the product. This negatively affects the Gross Domestic Product of a nation.
Uniform tax rate
Gain to manufacturer and exporter
Relief from overall tax burden
Key Features –
• The GST shall have two components: one levied by the Center (hereinafter referred to as Central GST), and the other levied by the States (hereinafter referred to as State GST). Rates for Central GST and State GST would be prescribed appropriately, reflecting revenue considerations and acceptability.
• The Central GST and the State GST would be applicable to all transactions of goods and services made for a consideration except the exempted goods and services.
• Since the Central GST and State GST are to be treated separately, taxes paid against the State GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST.
• Ideally, the problem related to credit accumulation on account of refund of GST should be avoided by both the Centre and the States except in the cases such as exports, purchase of capital goods, input tax at higher rate than output tax etc. where, again refund/adjustment should be completed in a time bound manner.
• The administration of the Central GST to the Centre and for State GST to the States would be given. This would imply that the Center and the States would have concurrent jurisdiction for the entire value chain and for all taxpayers on the basis of thresholds for goods and services prescribed for the States and the Centre.
•GST shall subsume the following taxes in the times to come once the law is in force: