GHCL Digest JUNE 2018

An Overview of the Goods and Services Tax
The Goods and Services Tax (GST) is a landmark step taken by the Government
of India to boost the GDP and introduce a more effec ve tax regime.
It brings benefits to all the stakeholders of the industry, government and the
consumer. It will lower the cost of goods and services to give a boost to the
economy and make the products and services globally compe ve. By
Deepak Singhal
subsuming most of the central and state taxes into a single tax and by allowing (AGM Taxa on – Ahmedabad)
a set-off of prior-stage taxes for the transac ons across the en re value chain, it mi gates the ill effects
of cascading and improves compe veness and liquidity of the businesses.
GST is applicable to all dealers whose aggregate turnover in a financial year exceeds INR 20 lacs (INR 10
lacs in case of eleven special category states). Separate registra on is required in every state from
where a taxable supply of goods or services is made.
Mechanism for Administra on - GST is levied both by Central & State Governments. For transac ons
within a State, there are two components of GST - Central GST (CGST) and State GST (SGST) - levied on
the value of goods and services. Both the Centre and the States will simultaneously levy GST across the
value chain.
In the case of inter-State transac ons, the Centre would levy and collect the Integrated Goods and
Services Tax (IGST). The IGST would be roughly equal to CGST plus SGST.
A comprehensive IT system, GSTN, is established that allots universal GST numbers (similar to PAN) to
all manufacturers, traders, stockists, wholesalers and retailers. This will simplify the administra on of
indirect taxes and plug leakages. The government also plans to incen vise tax compliance by traders.
Interna onal Scenario - In the 1954, France became the first country to adopt the GST. More than 150
countries have introduced GST/Na onal VAT in some form. It has been a part of the tax system in
Europe for the past 50 years and is the preferred form of the indirect tax in the Asia-Pacific region.
There are different models of GST currently in force, each with its own peculiari es. While country
such as Singapore virtually taxes everything at a single rate, some countries have more than one rate
(a zero rate, certain exemp ons and higher and lower rates). Brazil and Canada follow a dual system
where both Union and State Governments levy GST. The standard GST rates in most of the countries
ranges between 15-20%.
Rates - GST is imposed at variable rates on variable items. The rate slabs fixed under GST are 5%, 12%,
18% & 28%. Rate of 0.125% to 3% are also fixed for some handful of items viz. jewellery, precious
stones. Some industries and products are exempted by the government and remain untaxed under
GST.
Goods Kept Outside the GST - Alcohol for human consump on, petrol and petroleum products viz.
Petroleum crude, High speed diesel, Motor Spirit (petrol), Natural gas, Avia on turbine fuel.
June 2018
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