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TMI BlogOverview of Goods and Services Tax (GST)X X X X Extracts X X X X X X X X Extracts X X X X ..... The GST would replace the following taxes: (i) taxes currently levied and collected by the Centre: a. Central Excise duty b. Duties of Excise (Medicinal and Toilet Preparations) c. Additional Duties of Excise (Goods of Special Importance) d. Additional Duties of Excise (Textiles and Textile Products) e. Additional Duties of Customs (commonly known as CVD) f. Special Additional Duty of Customs (SAD) g. Service Tax h. Central Surcharges and Cesses so far as they relate to supply of goods and services (ii) State taxes that would be subsumed under the GST are: a. State VAT b. Central Sales Tax c. Luxury Tax d. Entry Tax (all forms) e. Entertainment and Amusement Tax (except when levied by the local bodies) f. Taxes on advertisements g. Purchase Tax h. Taxes on lotteries, betting and gambling i. State Surcharges and Cesses so far as they relate to supply of goods and services The GST Council shall make recommendations to the Union and States on the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed in the GST. Q 4. What principles were adopted for subsuming the above ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST. Similarly, Integrated GST (IGST) will be levied and administered by Centre on every inter-state supply of goods and services. Q 9. Why is Dual GST required? Ans. India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism. Q 10. Which authority will levy and administer GST? Ans. Centre will levy and administer CGST IGST while respective states /UTs will levy and administer SGST/ UTGST. Q 11. Why was the Constitution of India amended recently in the context of GST? Currently, the fiscal powers between the Centre and the States are clearly demarcated in the Constitution with almost no overlap between the respective domains. The Centre has the powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the States have the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Illustration II: Suppose, again hypothetically, that the rate of CGST is 10% and that of SGST is 10%. When an advertising company located in Mumbai supplies advertising services to a company manufacturing soap also located within the State of Maharashtra for, let us say ₹ 100, the ad company would charge CGST of ₹ 10 as well as SGST of ₹ 10 to the basic value of the service. He would be required to deposit the CGST component into a Central Government account while the SGST portion into the account of the concerned State Government Of course, he need not again actually pay ₹ 20 (Rs. 10+Rs. 10) in cash as it would be entitled to set-off this liability against the CGST or SGST paid on his purchase (say, of inputs such as stationery, office equipment, services of an artist etc.). But for paying CGST he would be allowed to use only the credit of CGST paid on its purchase while for SGST he can utilise the credit of SGST alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST. Q 13. What are the benefits which the Country will accrue from GST? Ans. Introduction of GST would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shold limit of turnover below which the goods and services may be exempted from GST; (vi) the rates including floor rates with bands of GST; (vii) any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster; (viii) special provision with respect to the North- East States, J K, Himachal Pradesh and Uttarakhand; and (ix) any other matter relating to the GST, as the Council may decide. Q 17. What is the guiding principle of GST Council? Ans. The mechanism of GST Council would ensure harmonization on different aspects of GST between the Centre and the States as well as among States. It has been provided in the Constitution (one hundred and first amendment) Act, 2016 that the GST Council, in its discharge of various functions, shall be guided by the need for a harmonized structure of GST and for the development of a harmonized national market for goods and services. Q 18. How are decisions be taken by GST Council? Ans. The Constitution (one hundred and first amendment) Act, 2016 provides that every decision of the GST Council shall be taken at a meeting by a majority of not less than 3/4th of the we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ans. HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above ₹ 1.5 crores but below ₹ 5 crores shall use 2-digit code and the taxpayers whose turnover is ₹ 5 crores and above shall use 4-digit code. Taxpayers whose turnover is below ₹ 1.5 crores are not required to mention HSN Code in their invoices. Services will be classified as per the Annexure to Notification No. 11/2017-Central tax dated 28th June, 2017 . In this regard, Central Board for Indirect Tax and Customs has also issued Explanatory Notes to the Scheme of Classification of Services on 12th June 2018. Q 22. What is the scope of composition scheme under GST? Ans. Small taxpayers with an aggregate turnover in a preceding financial year up to Rs. One Crore (75 lakhs for special category States except Jammu Kashmir and Uttarakhand) are eligible for composition levy. This scheme is basically for suppliers of goods and restaurant service providers only. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover in a state during the year without the benefit of ITC. The rate of tax fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he GSTN would also be integrating the common GST portal with the existing tax administration IT systems and would be building interfaces for tax payers. Further, the GSTN is developing back-end modules like assessment, audit, refund, appeal etc. for 19 States and UTs (Model II States). The CBIC and Model I States (15 States) are themselves developing their GST back-end systems. Integration of GST front-end system with back-end systems will have to be completed and tested well in advance for making the transition smooth. Q 24. How are the disputes going to be resolved under the GST regime? Ans. The Constitution (one hundred and first amendment) Act, 2016 provides that the Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute- (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other Sates on the other side; or (c) between two or more States, arising out of the recommendations of the Council or implementation thereof. Q 25. What is the purpose of Compliance rating mechanism? Ans. As per Section 149 of the CGST /SGST Act, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ans. As per Section 153 of the CGST /SGST Act, having regard to the nature and complexity of a case and in the interest of revenue, department may take assistance from an expert at any state of scrutiny, inquiry, investigation or any other proceedings. Q 30. Is there any provision in GST for tax treatment of goods returned by the recipient? Ans. Yes, Section 34 deals with such situations. Where the goods supplied are returned by the recipient, the registered person (supplier of goods) may issue to the recipient a credit note containing the prescribed particulars. The details of the credit note shall be declared by the supplier in the returns for the month during which such credit note was issued but not later than September following the end of the year in which such supply was made or the date of filing of the relevant annual return, whichever is earlier. The details of the credit note shall be matched with the corresponding reduction in claim for input tax credit by the recipient in his valid return for the same tax period or any subsequent tax period and the claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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