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BATTLE ON GST : STATES V/S CENTRE

Goods and Service Tax - GST - By: - Pradeep Jain - Dated:- 12-10-2015 - INTRODUCTION:- Goods and Services Tax (GST), the 122nd Constitutional Amendment Bill, 2014 tabled by Finance Minister Arun Jaitley has already passed in the Lok Sabha. However, due to conflicts between the States and Centre and the reason that the Centre is not having majority in Rajya Sabha; GST bill is lying on the tables of Rajya Sabha since past few months, awaiting the clearance therefrom. What are the reasons of confli .....

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abroad Service tax - On provision of services Indirect Taxes levied and collected by States are as follows:- Value Added Tax (VAT) - On sale of goods Central Sales Tax (CST) - On interstate sale of goods State Excise - On manufacture of alcohol Besides these taxes, State government is also empowered to levy other indirect taxes like Entry tax, Entertainment tax, Luxury tax, Electricity tax, stamp duty, etc which are normally entrusted to local bodies prevailing in the states. TAXING POWERS OF C .....

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from the stage of manufacture till consumption. The taxable event will no longer be manufacture or sale of goods; rather it will be supply of goods/ services against a consideration. States will also receive revenue from transactions related to provision of services. Presently, states are not empowered to collect any amount in respect of provision of services. Centre will also receive revenue from supply of goods post manufacture. Presently, Centre is not empowered to collect any tax on any post .....

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by the Centre and will be distributed in the State in which the supply originates. FEAR OF STATES:- As each thing has its own pros and cons the GST also brings with it many consequences which makes its implementation a tough challenge for Modi Sarkar and the GST proposal is presently receiving severe opposition from some states even those ruled by the BJP government because of their very reasons. Here the important thing to consider is that Why the states are so worried about the upcoming GST? S .....

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ral Sales tax (CST) which is levied on interstate trade @ 2% is a major source of revenue of States. In the GST Regime, CST is to be replaced by 1% additional levy which will be levied for initial two years of implementation of GST. This period can be increased if the GST council decides. There is direct loss due to decrease in rate by 1% besides other projected losses. Tamil Nadu, for example, estimates its losses from scrapping CST as ₹ 3,500 crore annually. The GST bill proposes that th .....

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will not be such a huge loss. The reasons stated by Centre for this verdict are summed as follows:- The proposed GST rate is also roaming between 18-22% which will generate more revenue to both Centre as well as the States. The scope of GST will be much wider than the existing tax structure. Thus, number of assessees in GST regime will be much more than registered at present. More the no. of assessees, more the tax collection. The loss suffered due to scrapping of VAT will be compensated mainly .....

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