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BASIC CONCEPTS OF GST (PART- 15)

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 9-4-2016 - GST Structure We are going to have a dual GST model. The Center and the States both, will levy GST on supply of goods and services. On Supply of goods and services in the course of Inter-state only Center will levy and collect taxes (IGST) which will be apportioned between Centre and States based on the recommendation of GST Council. The Center will have power to make place of supply rules in this regard. On supply of g .....

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his tax. The point to be noted here is that this tax is to be levied on goods only, thus the differentiation between goods and services would again resume significance. The proposed amendment in Article 271 restricts the power of the Central Government to levy any surcharge on the GST. We may therefore, be in a better situation wherein GST will not be subjected to any surcharge. (cess -we may still have) Further, tax on petroleum products will be covered in GST except for crude petroleum, high s .....

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y of notification, after enactment. For enactment, it has to be passed by two-third majority by both houses of the Parliament of those present and simple majority of total membership of both houses. It has to be then approved by one-half of the state Governments, i.e. atleast 15 states. The said Bill has been passed by Lok Sabha on 6-5-2015 but could not be passed by Rajya Sabha. The same has now been referred to the select committee of the Rajya Sabha. Fate of Bill in Parliament It may be noted .....

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Government may compensate to States for revenue loss for five years. The earlier version of the GST Bill provided that Center may compensate States for revenue loss for a period of upto five years. The Committee also suggested that levy of additional 1% tax should be only on all forms of supply made for a consideration . The following issues emerge: Functions of GST Council The Bill empowered GST Council to make recommendations for the rates of goods and service tax including floor rates with b .....

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pon the GST Council, it would be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services. While construing above definition of Band one has to ensure that harmonized structure of GST rates must not be altered. The GST Council is also tasked with making recommendations on taxes that would be subsumed by the Central and State GST laws. It has been recommended that in the drafting of state GST laws, reven .....

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ouncil in general and the legislatures in particular. Definition of Supply The Bill proposed definition of goods and services tax to mean any tax on supply of goods, or services or both. The Committee has opined that the term supply should be defined in the various GST laws relating to CGST and SGST, and as such, it may not be appropriate to define the term supply in the Bill. Definition of Services The Bill proposed to define services to mean anything other than goods. The Committee is of the v .....

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1% additional tax in its present form may lead to cascading effect of taxes. Therefore, it has strongly recommended that following Explanation should be added for word supply : Supply: All forms of supply made for a consideration. Compensation to States The Bill proposed that the Parliament may compensate States for loss of revenue for a period which may be extended to five years. The Committee felt that there was no justification for substitution of the word may with shall . It, has however, r .....

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minated by private banks, and this is not desirable. It recommended that the Non Government Institutional shareholding be limited to public sector banks and financial institutions It also stated that the information technology preparedness of states must be improved. Further, the IT infrastructure, unified tax credit clearing mechanism may be put in place. Notes of Dissent Three Notes of Dissent were submitted by Members of Parliament. Mr. Madhusudan Mistry, Mr. Mani Shankar Aiyar, and Mr. Bhalc .....

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