Goods and Services Tax information in Short

GST defined as any tax on supply of goods and services other than on alcohol for human consumption.

The illustration shown below indicates, in terms of a hypothetical example with a manufacturer, one wholesaler and one retailer, how GST will work. Let us suppose that GST rate is 10%, with the manufacturer making value addition of Rs.30 on his purchases worth Rs.100 of input of goods and services used in the manufacturing process. The manufacturer will then pay net GST of Rs. 3 after setting-off Rs. 10 as GST paid on his inputs (i.e. Input Tax Credit) from gross GST of Rs. 13. The manufacturer sells the goods to the wholesaler. When the wholesaler sells the same goods after making value addition of (say), Rs. 20, he pays net GST of only Rs. 2, after setting-off of Input Tax Credit of Rs. 13 from the gross GST of Rs. 15 to the manufacturer. Similarly, when a retailer sells the same goods after a value addition of (say) Rs. 10, he pays net GST of only Re.1, after setting-off Rs.15 from his gross GST of Rs. 16 paid to wholesaler. Thus, the manufacturer, wholesaler and retailer have to pay only Rs. 6 (= Rs. 3+Rs. 2+Re. 1) as GST on the value addition along the entire value chain from the producer to the retailer, after setting-off GST paid at the earlier stages. The overall burden of GST  on the goods is thus much less. This is shown in the table below. The same illustration will hold in the case of final service provider as well.

Stage of Supply Chain	Purchase Value Of Input	Value Addition	Value at Which Supply Goods and Services Made to Next Stage	Rate of GST	GST on Output	Input Tax Credit	Net GST=GST on output-Input Tax Credit
Manufacturer	100	30	130	10%	13	10	13–10 = 3
Whole Seller	130	20	150	10%	15	13	15–13 = 2
Retailer	150	10	160	10%	16	15	16–15 = 1

What are the salient features of the proposed GST model? 

The salient features of the proposed model are as follows:

• Consistent with the federal structure of the country, the GST will have two components: one levied by the Centre (hereinafter referred to as Central GST), and the other levied by the States (hereinafter referred to as State GST). This dual GST model would be implemented through multiple statutes (one for CGST and SGST statute for every State). However, the basic features of law such as chargeability, definition of taxable event and taxable person, measure of levy including valuation provisions, basis of classification etc. would be uniform across these statutes as far as practicable.
• The Central GST and the State GST would be applicable to all transactions of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits.
• The Central GST and State GST are to be paid to the accounts of the Centre and the States separately.
• Since the Central GST and State GST are to be treated separately, in general, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST.
• Cross utilisation of ITC between the Central GST and the State GST would, in general, not be allowed.
• To the extent feasible, uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST.
• The administration of the Central GST would be with the Centre and for State      GST with the States.
• The taxpayer would need to submit periodical returns to both the Central GST authority and to the concerned State GST authorities.
• Each taxpayer would be allotted a PAN linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance. The exact design would be worked out in      consultation with the Income-Tax Department.
• Keeping in mind the need of tax payers convenience, functions such as assessment, enforcement, scrutiny and audit would be undertaken by the authority which is collecting the tax, with information sharing between the Centre and the States.

Benefits:

GST has been envisaged as a more efficient tax system, neutral in its application and distributionally attractive. The advantages of GST are:

• Wider tax base, necessary for lowering the tax rates and eliminating classification disputes
• Elimination of multiplicity of taxes and their cascading effects
• Rationalization of tax structure and simplification of compliance procedures
• Harmonization of center and State tax administrations, which would reduce duplication and compliance costs
• Automation of compliance procedures to reduce errors and increase efficiency

 Given the passage of the Constitution Amendment Bill for Goods and Services Tax (GST) in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016), the Government of India seems committed to replace all the indirect taxes levied on goods and services by the Centre and States and implement GST by April 2017. As a next step, the Bill will need to be ratified by more than 50 perecnt state legislatures, before being put for the President’s assent.  

The following states ratified the GST bill:

S.No	State	Ratified Date	Chief Minister	Party
1	Assam	August 12,2016	Sarbananda Sonowal	BJP
2	Bihar	August 16,2016	Nitish Kumar	JDU
3	Jharkhand	August 17,2016	Raghubar Das	BJP
4	Himachal Pradesh	August 22,2016	Virbhadra singh	Congress
5	Chhattisgarh	August 22, 2016	Raman Singh	BJP
6	Gujarat	August 23, 2016	Vijay Rupani	BJP
7	Madhya Pradesh	August 24, 2016	Shivraj singh Chouan	BJP
8	Delhi	August 24, 2016	Arvind Kejriwal	AAP
9	Nagaland	August 26, 2016	T R Zeliang	NPF
10	Mahrashtra	August 29, 2016	Devendra Fadnavis	BJP
11	Haryana	August 29, 2016	Manohar Lal Khattar	BJP
12	Telangana	August 30, 2016	Chandrashekar Rao	TRS
13	Mizoram	August 30, 2016	Lal Thanhawla	Congress
14	Sikkim	August 30,2016	Pawan Kumar Chamling	SDF
15	Goa	August 31, 2016	Laxmikant Yashwant Parsekar	BJP
16	Odisha	September 1, 2016	Naveen Patnaik	BJD
17	Puducherry	September 2, 2016	V Narayana Swamy	Congress
18	Rajastan	September 2, 2016	Vasundhara Raje	BJP
19	Andhra Pradesh	September 8, 2016	Chandrababu Naidu	TDP
20	Arunachal Pradesh	September 8, 2016	Pema Khandu	Congress
21	Meghalaya	September 9, 2016	Mukul Sangma	Congress
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