Skip to main content

Decoding the indirect tax regime

By

It is a proposed new indirect tax regime, where one commodity will have the same rate, pan-India. There could be exceptions based on local importance, in which case those would be exempt.
Input tax credit
Refunds for taxes paid on input. This would be done in each stage, so that there is no cascading tax on tax.
How is it different from now?
In GST, only two buckets will have to be created to get input tax credit — one for State-GST and another for Central-GST. Currently, if companies are selling in, say, seven states, they have to make seven buckets for taking input tax credit in value added tax (VAT). Similarly, for excise duty, they have to make as many buckets as there are manufacturing units. For services, only one bucket is required. 
Filing of statements and returns
They will have to file a statement of outward supplies by the 10th of the next month of sale, statement of inward supplies or inputs by the 15th of the next month and returns by the 20th of the next month, matching inward and outward supplies and claims on input tax credit.
Which taxes will be subsumed in GST?
Service tax, central excise duty, state level value added tax and local taxes such as octroi.
GST Council
A body to recommend any changes in GST, including rates. It will have the Union finance minister as chair and state finance ministers as members. 
Voting rights in GST Council
The Centre will have one-third vote and all states combined will have two-third. Each state will have equal voting power.
Requirement for approval by the Council
Every decision has to be passed with three-fourth voting. 
Does the Centre have a veto?
No, but the Centre alone can block a resolution. 
GST slabs  
Five slabs have been approved by the council. These are zero, 5%, 12%, 18% and 28%. There could be one more for bullion.
Will cess and surcharges be subsumed in GST?
Yes, except for the cess on demerit, luxury and polluting items such as tobacco, luxury cars, aerated drinks and coal over the peak rate of 28%.
Use of this cess and its longevity
It would be used for compensating states for any revenue loss due to GST for the first five years of the rollout, slated from this July. It would be there for these five years only. 
What is not included in GST?
Real estate, except for land leasing, alcohol and electricity. 
Is petroleum included?
Yes. But, it will be zero rated till the Council decides to impose GST on it. Till then, central excise duty and state VAT will be imposed on it.
Have all the Bills been enacted for rolling out GST?
Yes, except for state GST Bills, which will have to be passed in respective states. 
What is left now, beside state GST Bills?
Fitment of items in five GST rates, and finalisation of four GST rules — on input tax credit, composition, transition and valuation.
Have other rules been cleared by the Council?
Five rules have been cleared — invoice, payment, refunds, registration and returns. Rules on returns are yet to be made public.
How many returns are to be filed by companies under GST?
Rules on returns are yet to be out, but the draft rules say it should be 13. One each month and then a final return. Currently, 13 returns are to be filed for state-level VAT, 13 for excise and two for supplies. So, for suppliers, it would be a less tedious task in the goods and services tax.
Do companies have to file for registration in every state they are selling, manufacturing or offering services?
Yes. Life will be a bit complicated for service providers currently they have to file only for a centralised registration.
Are e-commerce companies required to collect one per cent tax at source?
Yes.
The Business Standard New Delhi, 17th April 2017 

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more