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ISSUE OF ADDITIONAL (ENTRY TAX) IN PROPOSED GST

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 19-12-2015 - Additional tax is an additional tax levy whereby states will be allowed to collect tax of one percent over and above the normal GST for the goods that enter the state. This is imposable for a maximum period of two years. The Constitutional Amendment Bill on GST provided that 'An additional tax on the supply of goods, not exceeding one per cent, in the course of inter-state trade or commerce shall be levied and col .....

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ed by the Centre on inter-state supply of goods (and not on services). This additional tax, applicable for a period of two years, will be assigned to states from where the supply of goods originates. The GST Council could further extend the period beyond two years. However, the Bill is silent on whether credit of this additional levy will be available, or will it be a cost in the supply chain. In case of latter, it could have a tax cascading effect on the supply chain. Manufacturing states claim .....

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movement of goods. Thus, it will be hindrance to inter-state movement of goods. It is yet to be seen whether 1% additional tax will be imposed only at the initial movement from originating State or at each inter-state movement of same goods. Salient Features of Additional 1% Tax Proposed on Inter-State Supply of Goods Additional tax to accrue to the originating (manufacturing) State. To be non-creditable. Not in consonance with GST Principles State boundaries continue to be relevant. Levy of 1% .....

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