Goods and Services Tax
Primary object of GST is to remove the cascading effect of taxes. Prior to July 2017, due to different indirect taxes i.e. Central Excise, Service Tax, VAT etc. the taxpayers were not able to set off the tax credits of one tax against the other, now in the GST regime it contributed to the seamless flow of input tax credits across both goods and services.
Prior to GST regime Central Excise Duty was levied on manufacture and Service Tax was levied on services provided to the person. VAT was levied on sale of goods.
Now it is a single tax, imposed on the transactions namely Supply of the goods and services, right from the manufacturer to the customer.
GST is based on the principle of destination-based consumption taxation as against the previous principle of origin-based taxation.
GST is a tax levied on all India basis, including J&K across goods and services. It is a tax which has replaced many indirect taxes in India such as the Excise Duty, VAT, Services Tax, Entertainment Tax etc. to achieve the ideology of “One Nation, One Tax”.
Goods and Service Tax Act excludes leviability of GST on Alcohol for human consumption. Petroleum products are also temporarily not covered under GST. Tobacco and Tobacco products are subject to GST and also additionally subject to Central Excise Duty. Under GST tax liability is on supply of goods or services or both. GST is a dual levy tax wherein Central and State government both are empowered to levy tax. The Goods and Service Tax Act came into effect on 1st July 2017.
The tax is called CGST Central Goods and Service Tax Act 2017 is enacted by parliament.The Tax is called CGST, levied by Central Government, levied by State Government, is called SGST, UTGST levied in an Union Territory and UTGST Act is enacted by Centre and SGST Act is enacted by State Assemblies.
Tax levied on Inter State (Outside State) Supply of Goods and Services is called Integrated GST (IGST), levied by Centre by enacting IGST Act. This tax is total of CGST, SGST/UTGST and collected by Centre. Inter State supplies of goods and services will be treated as Import of goods and services and IGST is levied in lieu of CVD and SAD.
Some of the powers and functions of Parliament and State Legislature vest in GST Council which comprise Union Finance Minister and Finance Ministers of all the States and Union Territories. Council is empowering to decide Procedure, Rules, Rate of Tax, Exemptions and all other matter relating to levy, Payment, Demand, Penalties etc.
Under GST Law every assessee/person has to get registered himself. Except in few conditions value of supply of goods or services or both is the transaction value, which is the price actually paid or payable for such supply.
Every registered person under GST is entitled to take credit of Input Tax charged by the supplier on any supply of goods or services or both. However the entitlement of Input Tax credit is with some specified exceptions.
In case of non-payment of GST demand can be raised by issuing Show Cause Notice in two years and nine months in normal situation whereas period of issuing Show Cause Notice is extendable to four years and six months in case of Fraud etc.