GIST OF GST

[esha agrawal]

Hello everyone coming with another article on GST, a very hot topic in discussion now a days , here is a gist of GST with meaning of some important terms which will help readers to understand the definitions properly and help practising chartered accountants to deal their clients efficiently in the matter of GST

You all must have heard so many information on the Goods and Services Tax. Some are saying GST will take away the ‘cascading impact’ of taxes and some are saying GST is ‘one nation, one rate’.

Firstly GST will not reduce the amount of tax you pay, but it will make it less tiresome to pay and collect. GST is about fewer taxes, at unified rate, as we all know that the taxes are levied both by central and state government in indirect taxes in different level like vat , service tax, excise duty etc, what GST will do is to sweep (‘subsume’) many indirect taxes into a single label.

As things stand, the Centre has agreed to sweep excise duty and additional excise duty, service tax, countervailing duty, surcharge and cess and central sales tax into the waiting arms of GST. The States have obligingly agreed to give up VAT (sales tax), entertainment tax, luxury tax, taxes on gambling, octroi and entry taxes, cess and purchase tax. GST will thus replace all of these taxes.

 When goods are shipped from one State to another, then it is called inter state , the Centre will collect an integrated GST retained its part of share and give state part of share to state government like if goods are moved from Uttar Pradesh to Haryana then it is called inter state, centre will collect GST and give state share to Haryana govt, When the goods are moved within a state then it is called intra state like from Uttar Pradesh to Uttar Pradesh then Central GST and State GST will be levied.

As  we all  know currently we are working on ‘value added’ tax regime where taxes paid on inputs are deducted from taxes due on final product, but this exists in name only because so many taxes like central sales tax, additional excise and customs duty, luxury tax, to name a few - are not eligible for such set-offs, As a result, both producers and sellers end up paying taxes on the same inputs over and over again.

It should be thanks that in case of GST there is no concept of input tax credit all taxes are summed up and GST is you pay just once for.

Now here is the meaning of some basic terms in GST like What does the word GOODS means in GST

Goods means all kinds of movable properties (which can be moved as such without any dismantling) (only tangible) eg:- visualize, marker, exercise machine, fan etc

INCLUDING securities, growing crops & grass, things attached to or forming art of the land e.g. electricity pole etc

EXCLUDING money, Actionable claim

What does the word SERVICES means in GST

ANYTHING OTHER THAN GOODS i.e. Do something or not to do something (like non competence contract, cancellation charges of hotel/ aircraft etc.)

INCLUDING intangible property (which cannot be touched like copyright, patent etc)

EXCLUDING   Money

What does the word SUPPLY means in supply of goods/ services

If supply is for a consideration-

• All form of supply of goods/SERVICE :- exchange, transfer, barter, lease etcIN THE COURSE of business
• AGENCY SERVICES for supply or receiving goods/ services e.g. consignment agent
• Aggregator service e.g. meru cab/ uber/ Ola etc

In GST even if NO CONSIDERATION is there then also supply exists  like-

• Stock transfer, supply of goods between two registered units/ branch
• Transfer of business assets:- PERMANENT transfer, temporary transfer, retained on De- registration
• Service put to pvt-use
• Import of service( business use or personal use)

Some clarification regarding supply of Goods v/s supply of services

In case of Movable Property (Goods)

• If there is sale of goods i.e. transfer of ownership then it is called supply of goods but
• if only “ RIGHT TO USE” is transferred then it is called supply of service

In case of business assets

• if it is permanent transfer then it is called supply of goods,
• but if temporary transfer then it is called supply of services,
• if sold by third party (bank) then supply of goods by the person

In case of Immovable Property

• If there is Renting/ Leasing of immovable property then it issupply of service
• If sale of under construction property then also it is supply of service

In case of Intangible Property (IPR)

• Intangible property is either temporary or permanent transfer in both the cases it is supply of service

In case of software

• If the software is customised then it is supply of service
• But if the software is readymade then it is supply of goods

Goods on which 100% Exemption is there in GST

ROTI :- flour, pulse, rice, milk, cereals, poultry etc

KAPDA:- textile

MAKAN:- renting for residential/ construction for one family

SHIKSHA:- playway to XII- approved degree, diploma

SWASTHYA:- health care- diagnose, treatment , care etc

• THRESHOLD EXEMPTION OF GST IS RS 10 LAKHS  means now all the small traders also covered under GST.

So here are some of the provisions of GST... to be continued with some other and very important concepts of GST till then enjoy and keep smiling!!!!

Thanking you all                                                                   

                    For any queries and comments please contact me on:[email protected]                                                 

Discussions to this article

[Moni Vimal]

Hello esha

Thanks for sharing the update. But can you please tell me when these exmptions like roti, kapda, shiksha etc. are notified and via which notification.

[Ganeshan Kalyani]

Sir, the article is based on Draft GST Model. There are numerous articles posted by experts trying to melt the draft act and serve the reader in nice and simple waffle I.e article. Thus there is not notification or circluar as such. This is to understand.

Appeal to reader: The GST Bill has got passed in both the houses, currently the bill is under ratification process. There is considerable time for GST to become an act. Thanks.

[esha agrawal]

There is no such notification this I have written just to make understand readers easily

[KASTURI SETHI]

Nicely explained by both experts i.e. Sh.Ganeshan Kalyani Ji and the author.

[swaminathan venkataraman]

Wprt :

In case of Immovable Property

• If sale of under construction property then also it is supply of -‘GOODS’ AND ‘service’ - ( envisaged to be rolled into one, though).

To note the words in FONT; see :

“SCHEDULE II

MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES”

........

If so care and interested, for individual's own and the common good, look up and give further thoughts to the canvassed viewpoints against the constitutionality /propriety of the proposed levy as shared, with reasoning, on Facebook /Linkedin, also elsewhere in public domain.

[KASTURI SETHI]

Respected Madam,

Will it be compulsory for all i.e. manufacturer, wholesale dealer and retailer to issue invoice on internet under GST ?