The entire taxation system followed in India is soon to be transformed by the imposition of the Goods and Services Tax, which purports to replace all the indirect taxes in on sweep, making it the central point of much upheaval of concerns from lawyers, businessmen, CA professionals, academicians, etc. and not to forget, the public. The arrival of GST into the Indian Taxation Regime has been boisterous, causing great furor in the market, with several advertisements doing the rounds asking you to buy their products at great discounts and not to wait for GST; while a wide range of speculations and confusions are persistent amongst the public. Here we bring to you some basics regarding GST and its possible implications on the economy and the market, to give you an overview of the scenario that will soon unwind in India.

  • The Taxes that will be included and replaced by GST are excise duty, countervailing duty, cess, service tax, and state level VATs, etc.
  • The GST Regime will be two-fold, with Central GST (CGST) at the central level, and by individual States on the second level (SGST).
  • Business has been widely defined to include trade, commerce, manufacture, profession, vocation or any other similar activity, including transactions related or incidental thereto, irrespective of volume or frequency, as well as supply of goods/services in connection with commencement or closure of business (S.2 (17) of CGST Act) Indian Kanoon.
  • CGST will be levied on all intra-State supplies of goods or services or both (on the supply of alcoholic liquor for human consumption), at rates not exceeding 20%; by virtue of S.9 (1) of the CGST Act, 2017.
  • GST is expected to rectify the cascading effect of multiple taxes, by bringing into operation a single and unified taxation system, integrating the various indirect taxes.
  • GST is leviable only if aggregate turnover is more than 20 Lakhs, and the computation of aggregate supplies would be by addition of the turnover of all supplies made by the person.
  • The Tax slab for 11 special category States is Rs.10 Lakhs, instead of the Rs.20 Lakhs slab applicable to the other States.
  • Central Government has retained the right to impose excise duty on petroleum and tobacco products, while State Governments would continue to be eligible to impose VAT on the sale. State Governments have also reserved their right to impose electricity duties.
  • Import of services by a taxable person from a related person or from any of his other establishments outside India in the course or furtherance of business, would be considered as a “supply” within the meaning of the Act, even if made without consideration, by virtue of Schedule I of the Act which lists activities that are to be treated as supply even if made without consideration.
  • Any treatment or process which is applied to another person’s goods is to be regarded as a supply of services, by Schedule II of the Act. The Schedule lists the range of activities which are to be treated as supply of goods or services.
  • Services by an employee to the employer in the course of or in relation to his employment; or services by any court or Tribunal; Services of funeral, burial, crematorium or mortuary including transportation of the deceased, etc. shall not be treated as supply of goods or services, under Schedule III of the Act (enlisting activities which shall not be treated as supply of goods or services).

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