RATE OF GOODS AND SERVICES TAX

[Mr. M. GOVINDARAJAN]

The provisions of service tax provide a uniform rate of tax to be levied from the service recipients except in cases of abatement.  The provisions of excise law and VAT provide for various rate of tax according to the classification made by the respective Government.

Four tier structure

The GST Council recommended a four tier GST rate structure of 5%, 12%, 18% and 28%, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess.

Under CGST Act

Section 9 of the CGST Act, 2017  provides that there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, on the value determined under Section 15 and at such rates not exceeding 20% as may be notified by the Government on the recommendations of the Council.  This will not be applicable on the supply of alcoholic liquor for human consumption.

Composition levy

Section 10(1) provides that a registered person, whose aggregate turnover in the preceding financial year did not exceed ₹ 50 lakhs may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceeding-

• 1% of the turnover in State or turnover in Union territory in case of a manufacturer;
• 2.5% of the turnover in State or turnover in Union territory in case of person engaged in making supplies-

• works contract as defined in Section 2(119); and
• supply, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration;

• 0.5% of the turnover in State or turnover in Union territory in case of other suppliers

subject to such conditions and restrictions as may be prescribed.

TCS

Section 52 (1) of the Act provides that every electronic commerce operator not being an agent, shall collect an amount calculated at such not exceeding 1%, as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the condition with respect to such supplies is to be collected by the operator.

TDS

Section 51(1) of the Act provides that the Government may mandate a department or establishment of the Central Government or State Government or a local authority or Governmental agencies or such persons or category of persons as may be notified by the Government on the recommendations of the council to deduct tax @ 1% from the payment made or credited to the supplier of taxable goods or services or both, where the total value of such supply under a contract, exceeds ₹ 2,50,000/-.

Under IGST Act

Section 5(1) provides that there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both except on the supply of alcoholic liquor for human consumption, on the value determined under Section15 of CGST Act, 2017 and at such rates, not exceeding 40% as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

Section 16(1) provides that zero rated supply is applicable to export of goods or services or both or supply of goods or services or both to a Special Economic Zone developer or a Special Economic zone unit.

Proviso to Section 20 provides that in the case of tax deducted at source, the deductor shall deduct tax at the rate of 2% from the payment made or credited to the supplier.

The second proviso to Section 20 provides that in the case of tax collected at source, the operator shall collect tax at such rate not exceeding 2% as may be notified on the recommendations of the Council, of the net value of taxable supplies.

Under UTGST Act

Section 7(1) of the Union Territory Goods and Services Tax Act, 2017 provides that there shall be levied a tax called the Union territory tax on all intra-State supplies of goods or services or both, except on supply of alcoholic liquor for human consumption, on the value and at such rates, not exceeding 20% as may be notified by the Central Government on the recommendations of the Council.

Composition Cess

Section 8(2) of the Goods and Services Tax (Compensation to States) Act, 2017 provides that the cess shall be levied on such supplies of goods and services as are specified in the Schedule.  The following is the maximum rate at which GST compensation Cess may be collected-

• Pan Masala – 150% ad valorem;
• Tobacco and manufactured tobacco substitutes including tobacco products – ₹ 4175/- per 1000 sticks or 295% ad valorem or a combination thereof, but not exceeding ₹ 4175/- per 1000 sticks plus 295% ad valorem;
• Coal briquettes, ovoids, and similar solid fuels manufactured from coal, lignite, whether or not agglomerated excluding jet, peat (including peat litter), whether or not agglomerated – ₹ 400/- per tonne;
• Aerated waters – 15% ad valorem;
• Motor cars and other motor vehicles principally designed for the transport of persons (other than motor vehicles for the transport of 10 or more persons, including the driver), including station wagons and racing cars – 15% ad valorem;
• Any other supplies – 15% ad valorem.

Late fee

Section 47 of CGST Act, 2017 provides that any registered person who fails to furnish the details of outward or inward supplies required under Section 37 or Section 38 or returns required under section 39 or section 45 by the due date shall pay a late fee of ₹ 100/- for every day during which such failure continues subject to a maximum of ₹ 5000/-

Any registered person who fails to furnish the required under section 44 by the due date and shall be liable to pay a late fee of ₹ 100/- for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State or Union territory.

Conclusion

The provisions of CGST Act, UTGST Act and IGST Act provide the tax shall be levied not exceeding 20%, 40% and 20% respectively.   It can be inferred that more than one tax rate may prevail in the system.  It is to be decided by the Government on the recommendations of the council.  The fate of SBC and KKC is not known.  Since there is no cess other than Compensation cess it can be inferred that levy of SBC and KKC may not continue in the GST regime.