TMI BlogBASIC CONCEPTS OF GST (PART-4)X X X X Extracts X X X X X X X X Extracts X X X X ..... BASIC CONCEPTS OF GST (PART-4) - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 23-1-2016 - - How do we compare the present indirect tax laws vis- -vis proposed GST law regime ? In this part, an attempt is being made to list down the possible differences between the present tax laws and proposed provisions under GST. This comparison is not final and is only for academic purposes to understand the differences or deviations tax base, origin, structure, approach to tax goods and services, place of provision, powers to levy tax, export and import etc. Comparison of Present Taxation and Proposed GST S.No Particulars Present Taxation Proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST 1. Structural Architecture Two separate VAT systems operate simultaneously at two levels, Centre and State, and tax paid (input tax credit) under one is not available as set off against the other Tax on services is levied under separate legislation by Centre, i.e., Finance Act, 1994 which regulates service tax No comprehensive taxation of services at the State level; few services are taxed under separate enactments Import of goods in India are not subjected to State VAT A dual tax with both Central GST (CGST) State GST (SGST) will be levied on the same base. Thus, all goods and services, barring a few exceptions, will be brought into the GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... base. There will be no distinction between goods and services for the purpose of tax with a common legislation applicable to both It allows seamless tax credit amongst Excise Duty, Service Tax VAT 2. Place of Taxation Taxable at the place of manufacture or sale of goods or rendering of service It is consumption (destination) based tax 3. Tax Base Comparatively narrow Wider 4. Excise Duty Imposed by Centre under separate Act, Central Excise Act, 1944 . Taxable event is manufacture; Taxed up to manufacturing point To be subsumed in CGST; Taxable event will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale; To be taxed up to retail level 5. Basic Customs Duty Imposed by Centre under separate Act, i.e., Customs Act, 1962 . Taxable event is import No change is proposed 6. CVD/SAD Imposed by Centre under separate Act, i.e., Customs Act, 1962 . Taxable event is import To be subsumed in CGST; Taxable event will be import 7. Service Tax Imposed by Centre under separate Act ( Finance Act, 1994 ). Taxable event is provision of service To be subsumed in CGST SGST; Taxable event will be provision of service 8. Central Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Imposed by Centre under CST Act, 1956. Collection assigned to States; Taxable event is movement of goods from one State to another Is being phased out 9. State VAT Imposed by States; Taxable event is sale within the State To be subsumed in SGST; Taxable event is sale within State 10. Inter-State Transactions Imposed on goods services by the Centre (CST, Service Tax) To be subsumed in GST and subject to SGST CGST 11. Tax on Manufacturing activity As Excise Duty by Centre No such powers under GST regime 12. Powers to levy Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Sale of Goods Inter-State : Centre Local : State Concurrent powers to Centre State 13. Powers to levy Tax on Provision of Services Service Tax by Centre Concurrent powers to Centre State; States to tax more than 40 services 14. Tax on Import in India Goods are taxed to Customs Duty (comprises Basic Customs Duty, CVD SAD); Services are taxed to Service Tax Basic Custom Duty on goods : No Change - CVD SAD on import of goods and import of services : To be subsumed in GST 15. Tax on Export of Goods Services Exempt / Zero-rated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No change is proposed 16. Tax on inter-State Transfer of Goods to Branch / Depot or Agent Exempt against Form F Will be taxable 17. Tax on Transfer of Goods to Branch or Agent within States Generally exempt but depends upon State procedures May not be taxable, if BIN of transferor and transferee is same 18. Cross-Levy set-off / adjustment Excise duty and Service tax : Cross set off allowed No cross set-off between CGST and SGST will be allowed 19. Cascading Effect Allows cenvat tax credit between Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Duty Service Tax, but not with VAT (cross set off is not allowed) Allows seamless tax credit amongst Excise Duty, Service Tax VAT 20. Non-Creditable Goods Do exist May exist depending upon negative list / exemptions etc 21. Credit on Inputs used for Exempted Activities Not allowed May not be allowed 22. Various Exemptions -Excise Free Zone or VAT Exemption Available May be phased out 23. Exemption for transit Inter-State Sale and High Seas Sale Available May be taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. Transactions against Declaration Forms Allowed under the CST / VAT Forms likely to be abolished 25. Taxation on Govt. and Non-Profit Public Bodies Partially taxed May not change much 26. Stamp Duty Presently taxed concurrently by the Centre and State Status not clear; If subsumed under GST, big relief to real estate industry : to claim input tax 27. Excise Duty Threshold Limit Presently ₹ 1.5 crores Rs.10 lacs to 20 lacs (Turnover of ₹ 1.5 crores above may be administered by Centre and less than ₹ 1.5 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res may be administered by States) 28. VAT Threshold Limit Presently, ₹ 5 lacs to 10 lacs May be ₹ 10 lacs to ₹ 20 lacs 29. Service Tax Threshold Limit ₹ 10 lacs May be ₹ 10 lacs to ₹ 20 lacs 30. Classification of Commodities Excise Duty based on HSN VAT not applicable Likely to be based on HSN 31. VAT/GST Regis tration Number Simple TIN (some States : PAN only based) PAN based 32. Procedures for Collection of Tax and Filing of Return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For Central Excise Service Tax, it is uniform. For VAT, it varies from State to State Likely to be uniform 33. Tax Administration Complex due to number of taxes Likely to be simple and easy, tax friendly 34. Use of Computer Network Just started by the States; very minimum; Central taxes are online Extensive; It will be pre-requisite for implementation of GST 35. Nature of Present Litigations Sale or Service Classification of goods Situs issue between States Interpretational issues Sale or works contract Valuation of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposite transactions, etc. Exemptions Suppression / limitation Likely to be reduced provided GST legislations are properly drafted (To be continued ) - Reply By Ashok Aggarwal as = Very good analysis and comparison between present situation and that after implementation of proposed GST law. Let us hope that the procedures will be simple and more system based to avoid harassment of trade industry at the hands of those who enforce the law. If the trade will be running to tax departments of Central State Governments even after GST is reality, the very purpose of bringing GST would be defeated. At Sr N. 18 it is mentioned that no cross set off between CGST and SGST would be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed against present Excise duty and Service tax. It may be noted that cross set off at present is allowed only between Central Excise duty and Service Tax and this position would not change because CGST will comprise of both ie Central Excise duty and Service Tax. Dated: 25-1-2016 Reply By Dr. Sanjiv Agarwal as = Dear Ashok ji , At serial no 18 , kindly see that in the present taxation regime , service tax and excise duty set off is allowed as both are central taxes whereas in the proposed GST regime , CGST is a central tax and SGST is a state tax , therefore , cross set off will not be allowed. Thanks Regards , CA Neha Somani Dated: 27-1-2016 Reply By Ashok Aggarwal as = I know that cross set off between CGST and SGST iwill n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be allowed. The point is that it has been mentioned at point no 18 where it is mentioned that at present Cross set off between Central Excise and Service tax is allowed. Hence the comment against this point is not relevant because the cross set off between C.E duty and Service tax will still be allowed because both will be subsumed in CGST and the credit of CGST irrespective of type of tax will be allowed against payment of CGST. Dated: 27-1-2016 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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