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1% Additional Levy: Where is it heading us?

Goods and Services Tax - GST - By: - Pradeep Jain - Dated:- 5-9-2015 Last Replied Date:- 26-12-2015 - Introduction:- Goods and Service Tax (GST) has been a topic of debate in the recent past. With the NDA government looking firm to bring in the GST, the members of Rajya Sabha still have a number of objections to raise, and for their very reasons. Finance Minister Arun Jaitley has been strongly contending that the implementation of GST would remove cascading effect of taxes thereby making way for .....

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en proposed in clause 18 of the Constitution (122nd Amendment) Bill (popularly known as GST bill). This clause is being divided into four sub-clauses. These clauses are explained as follows:- The sub-clause (1) to the clause 18 says:- An additional tax on supply of goods, not exceeding one per cent in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or .....

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The period of two year can be revised by GST Council. The proceeds from this levy will be assigned to the State in which the supply of goods originates. Further, provisions contained in sub-clause 2 to 4 to the clause 18 are explained as follows:- Sub- clause no. Provision contained 2 Collection from this levy shall not form part of consolidated fund of India and will be deemed to be assigned to the State from where the supply originates. Only the proceeds attributable to Union territories shal .....

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he manufacturing states, i.e., the states from where the supply of goods takes place. However, it is expected that GST will lead to increase in revenues of all the States, thus, the manufacturing states will also gain in long run. Due to this reason, this levy has been proposed for a period of two years only. However, end decision has been kept safe in the hands of GST council. This levy can be said to be a serious effort made by the Centre to convince the States to agree upon the introduction o .....

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s is against the very basic objective of GST. Even the main feature of GST as popularized by the ruling party is that there will be no cascading effect. When the Credit of this levy will not be allowed where will it go? Definitely, it will be included in the cost of the goods that will further be subject to tax. Thus, cascading effect will be there. Also, it is mentioned that this 1% Additional tax shall be levied for a period of two years or such other period as the Goods and Services Tax Counc .....

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s of implementation of VAT, CST could not be abolished as initially promised by the Government. Thus, the past indicates how far has the government withdrawn any tax after imposing it once? One can never be so sure as to if the duty shall last for two years or twenty! Against the spirit of GST which says no cascading effect here :- GST is a destination based tax and this 1% additional duty is an origin based tax. How can both- the destination based as well as the origin based tax be levied on a .....

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o Delhi. Such finished goods are then consigned to Maharashtra for sale. In this way, by the time they reach Maharashtra, they would be laden with an additional tax burden of 3-4%, being 1% for each state. It would be more feasible for the dealer in Maharashtra to import such goods rather than getting them from Delhi. On one hand, the government has been laying emphasis on Make in India campaign, wherein, special efforts are being made to ensure the free flow of goods and services in the economy .....

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ch is quite high. A service provider, who currently pays tax @14%, would be liable to pay the tax at a higher rate. The same goes with trader of goods as well. Adding to this, the rate of GST is going to be a single consolidated rate for both goods as well as services. In this manner, a trader of goods has to pay tax for service component also and service provider has to pay tax for goods also. Under such circumstances, when the tax imposition is already going to be higher than the existing situ .....

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