Question 1. WHAT IS GST?
Answer : Abbreviation of Goods and Service Tax. GST is a 1 indirect tax on goods and services throughout India. It makes INDIA one unified common market. Officially known as the Constitution (One Hundred and Twenty Second Amendment Bill), 2014. GST is Governed by GST Council (setup by Hon’ble President of India- Shri Pranab Mukherjee) and its Chairman is Union Finance Minister of India – Shri Arun Jaitley. Slogan for GST is “one nation one tax”.
Question 2. WHAT ARE THE BENEFITS OF GST IN INDIA?
Answer : After GST rollout essential food items like food grains, rice, wheat are taxed at zero rate. (Goods become cheaper). Also, there is lower rate (i.e. 5%) on education, health care, spices, tea & coffee(except instant), edible oil.
Question 3. WHAT ARE THE COMPONENTS OF GST?
- CGST (Central GST):- tax levied and collected by Central Govt.
- SGST (State GST):- tax levied and collected by State Govt.
- IGST (Inter-State GST):- tax levied and collected by Central Govt.apportioned between Union and States.
Question 4. EXPLAIN THE COMPONENTS OF GST?
- CGST/SGST:– a tax levied on all intra-statesupply of goods or services i.e. goods or services supplied within same state. For example location of supplier of goods/services is in “Jaipur” and Place of supply (Buyer) is in “Bikaner”.
- IGST:– a tax levied on all inter-statesupply of goods or services i.e. goods or services supplied from one state to another state. For example location of supplier of goods/services is in “Rajasthan” and Place of supply (Buyer) is in “Gujarat”.
Question 5. WHAT WHERE THE PROBLEMS IN PAST INDIRECT STRUCTURE WHICH GST HAS BEEN TO REPLACE?
- It was complicated,
- Urban population was taxed far higher than the rural rich,
- Different tax rates in different states resulting in economic imbalance,
- No Input Tax Credit in supply chain resulting in inflation in prices of goods and services,
- Scope for tax evasion is higher,
- ITC of Central Sales Tax(CST) not available to manufacturer/Traders,
- ITC of Excise/Service tax not eligible for traders,
- ITC of VAT not eligible for service providers,
- High compliance cost due to multiple compliances (i.e. return filings),
- Cascading effect i.e. tax on tax,
- Tax burden on consumers is higher,
- Barrier in free-trade because State Govt. levies entry tax at state borders,
- Confusion/lack of clarity/interpretational issues.
Question 6. MAJOR EVENTS IN CHRONOLOGICAL ORDER WHICH GIVE RISE TO GST INTRODUCTION IN INDIA.
Answer : GST has been introduced in India after a 13 year long journey since it was first discussed in the report of the “Kelkar Task Force on indirect taxes”. A brief chronology outlining the major milestones on the proposal for introduction of GST in India is as follows:
- a) In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.
- b)A proposal to introduce a National level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07.
- c)Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC).
- d)Based on inputs from Govt. of India and States, the EC released its First Discussion Paper on Goods and Services Tax in India in November, 2009.
- e)In order to take the GST related work further, a Joint Working Group consisting of officers from Central and State Government was constituted in September, 2009.
- f)In order to amend the Constitution to enable introduction of GST, the Constitution (115th Amendment) Bill was introduced in the Lok Sabha in March 2011. As per the prescribed procedure, the Bill was referred to the Standing Committee on Finance of the Parliament for examination and report.
- g)Meanwhile, in pursuance of the decision taken in a meeting between the Union Finance Minister and the Empowered Committee of State Finance Ministers on 8th November, 2012, a ‘Committee on GST Design’, consisting of the officials of the Government of India, State Governments and the Empowered Committee was constituted.
- h)This Committee did a detailed discussion on GST design including the Constitution (115th) Amendment Bill and submitted its report in January, 2013. Based on this Report, the EC recommended certain changes in the Constitution Amendment Bill in their meeting at Bhubaneswar in January 2013.
- i)The Empowered Committee in the Bhubaneswar meeting also decided to constitute three committees of officers to discuss and report on various aspects of GST as follows:-
(i) Committee on Place of Supply Rules and Revenue Neutral Rates;
(ii) Committee on dual control, threshold and exemptions;
(iii) Committee on IGST and GST on imports.
- j)The Parliamentary Standing Committee submitted its Report in August, 2013 to the Lok Sabha. The recommendations of the Empowered Committee and the recommendations of the Parliamentary Standing Committee were examined in the Ministry in consultation with the Legislative Department. Most of the recommendations made by the Empowered Committee and the Parliamentary Standing Committee were accepted and the draft Amendment Bill was suitably revised.
- k)The final draft Constitutional Amendment Bill incorporating the above stated changes were sent to the Empowered Committee for consideration in September 2013.
- l)The EC once again made certain recommendations on the Bill after its meeting in Shillong in November 2013. Certain recommendations of the Empowered Committee were incorporated in the draft Constitution (115th Amendment) Bill. The revised draft was sent for consideration of the Empowered Committee in March, 2014.
- m)The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok Sabha.
- n)In June 2014, the draft Constitution Amendment Bill was sent to the Empowered Committee after approval of the new Government.
- o)Based on a broad consensus reached with the Empowered Committee on the contours of the Bill, the Cabinet on 17.12.2014 approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country. The Bill was introduced in the Lok Sabha on 19.12.2014, and was passed by the Lok Sabha on 06.05.2015. It was then referred to the Select Committee of Rajya Sabha, which submitted its report on 22.07.2015.
Question 7. WHEN GST ROLLOUT IN INDIA?
Answer : 1st July 2017
Question 8. WHAT TRIGGER GST?
Answer : The “Supply” of Goods and/or Services to anyone in India. Supply includes:- Sale, Transfer, Barter (goods and services are traded in exchange for other goods), Exchange, License, Rental, Lease, or Disposal of goods.
Question 9. WHAT ARE THE INDIRECT TAXES SUBSUMED IN GST?
- TAXES LEVIED AND COLLECTED BY CENTRAL GOVERNMENT
- Central Excise Duty
- Additional Excise Duty
- Excise Duty levied under Medicinal and Toiletries Preparation Act, 1955
- Service Tax
- Additional Custom Duty, commonly known as Countervailing Duty (CVD)
- Special Additional Duty of Customs – 4% (SAD)
- Central Sales Tax (collected by State Government)
- Cesses and Surcharges
- TAXES LEVIED AND COLLECTED BY STATE GOVERNMENT
- VAT/ State Tax
- Entertainment Tax
- Octroi and Entry Tax (all forms)
- Purchase Tax
- Luxury Tax
- Taxes on lottery, betting and gambling
- State Cesses and Surcharges
Question 10. HOW MANY STATES HAVE PASSED THE STATE GST ACT?
- 1st – Telangana on 9th April, 2017
- 2nd – Bihar on 24th April, 2017
- 3rd – Rajasthan on 26th April, 2017
- 4th – Jharkhand on 27th April, 2017
- 5th – Chhattisgarh on 28th April, 2017
- 6th – Uttarakhand on 2nd May, 2017
- 7th – Madhya Pradesh on 3rd May, 2017
- 8th – Haryana on 4th May, 2017
- 9th – Gujarat on 9th May, 2017
- 10th – Goa on 9th May, 2017
- 11th – Odisha on 11th May, 2017
- 12th – Assam on 11th May, 2017
- 13th – Arunachal Pradesh on 12th May, 2017
- 14th – Uttar Pradesh on 16th May, 2017
- 15th – Andhra Pradesh on 16th May, 2017
- 16th – Puducherry on 17th May, 2017
- 17th – Maharashtra on 22nd May, 2017
- 18th – Tripura on 24th May, 2017
- 19th – Sikkim on 25th May, 2017
- 20th – Mizoram on 26th May, 2017
- 21st – Nagaland on 27th May, 2017
- 22nd – Himachal Pradesh on 27th May, 2017
- 23rd – Delhi on 31st May, 2017
- 24th – Manipur on 5th June, 2017
- 25th – Meghalaya on 12th June, 2017
- 26th – Karnataka on 16th Jun,e 2017
- 27th – Punjab on 19th June, 2017
- 28th – Tamil Nadu on 19th June, 2017
- 29th – Jammu and Kashmir on July 5th, 2017
- 30th – West Bengal passed the GST Bill on 7th August, 2017 replaced the ordinance for GST on 15th June, 2017.
- 31st – Kerala passed the GST Bill on 16th September, 2017 replaced the ordinance for GST on 21st June, 2017.
Question 11. EXPLAIN DIFFERENT TYPES OF SUPPLY UNDER GST LAW?
- COMPOSITE SUPPLY:-(Defined under section 2(30) of CGST Act, 2017.) Composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. For example, A consumer buys T.V and gets 1 year warranty and maintenance with supply of T.V. Supply of T.V is principal supply, warranty and maintenance are ancillary.
- MIXED SUPPLY:-(Defined under section 2(47) of CGST Act, 2017.) Mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax. For example, A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply (If these items are supplied separately, it shall not be a mixed supply).
- EXEMPTED SUPPLY:- (Defined under section 2(47) of CGST Act, 2017)means supply of goods or services at nil rate (0%).
- INWARD SUPPLY:- (Defined under section 2(47) of CGST Act, 2017.)It in relation to a person means receipt of goods or services. In short it means buying of goods or services or both.
- OUTWARD SUPPLY:- (Defined under section 2(83) of CGST Act, 2017.)It means selling of goods or services or both.
- TAXABLE SUPPLY:- (Defined under section 2(108) of CGST Act, 2017.)It means supply of goods or services on which tax is levied.
- ZERO RATED SUPPLY:- means export of goods and/or services or supply of goods and/or services to a SEZ (Special Economic Zone) developer or a SEZ Unit.
Question 12. HOW MANY GST COUNCIL MEETINGS HAVE HELD SO FAR?
Answer : Following 20 meetings have been held since its constitution on September, 2016:-
1st Meeting on 22nd September, 2016:- Exemption limit Rs.10 Lac for North-Eastern and Rs. 20 Lac for Rest of India.
2nd Meeting on 30th September, 2016:- Finalized 5 sets of draft rules relating to Payment, Returns, Refunds, Invoice, And Registration.
3rd Meeting on 19th October, 2016:- A 4 tier- rate structure 6%, 12%, 18%, 26% were proposed.
4th Meeting on 3rd November, 2016:- 4 tier- rate structure 5%, 12%, 18%, 28% were proposed. Essential items including food will be taxed at 0%.c
5th Meeting on 3rd December, 2016:- Certain headway was made on finalization of the draft legislations.
6th Meeting on 11th December, 2016:- Contentious issue of dual control of assesses could not be sorted. Draft GST legislations were discussed at the meeting.
7th Meeting on 23rd December, 2016:- No consensus was reached on issue of dual control.
8th Meeting on 4th January, 2017:- No major decision.
9th Meeting on 16th January, 2017:- Consensus for GST to be rolled out from 1st July, 2017.
10th Meeting on 18th February, 2017:- Approved only one draft law compensation to states.
11th Meeting on 4th March, 2017:- Approved CGST (Central GST) and the IGST
12th Meeting on 16th March, 2017:- Cleared remaining legislations UTGST Law (Union Territory GST Law) and the SGST (State GST Law).
13th Meeting on 31st March, 2017:- 5 sets of draft rules relating to Registration, Refunds, Returns, Payment & Invoice, Debit Note & Credit Note that were originally approved have to be partly amended and altered. Also, council gave its tentative nod to 4 more new sets of draft rules dealing with GST input tax credit, Valuation, Transitional provision, composition scheme.
14th Meeting on 18th May, 2017:- 9 rules finalized relating to Composition, Valuation, Transition, Input Tax Credit, Invoice, Payment, Refund, Registration and Return.
15th meeting on 3rd June, 2017. The main objective of the meeting was to decide tax rates on six items which included gold, textiles and footwear. The major highlights of the meeting are:
- The GST Council has cleared all the pending rules related to transition provisions and returns.
- All the states have agreed to rollout GST from July 1, 2017
- Gold, Gems, Jewellery to be taxed at 3 percent
- GST on apparel below Rs 1,000 fixed at 5 percent
- GST on all biscuits to be 18%
- Readymade garments to attract 12% GST; Yarn and fabric cotton 5 per cent
- Footwear priced below Rs 500 to be taxed at 5%, the rest at 18%
- Bidi to be taxed at 28% without cess. However Beedis are still under discussion, no proposal of cess for beedis
- A nominal rate of 0.25 percent imposed on rough diamond
- GST Council will set up committee to look into complaints regarding anti-profiteering clause.
16th meeting on 11th June, 2017. Main agenda items of the 16th GST Council Meeting include confirmation of the minutes of the 15th GST Council meeting held on 3rd June, 2017, approval of amendments to draft GST Rules and Rate Adjustment, if any, based on the representations received from different trade and industry and their associations.
17th meeting on 18th June, 2017. The main agenda items of the 17th GST Council Meeting include confirmation of the minutes of the 16th GST Council meeting held on 11th June, 2017, approval of draft GST Rules and related Forms for (i) Advance Ruling, (ii) Appeals and Revision, (iii) Assessment and Audit, (iv) E-Way Bill & (v) Anti-Profiteering, and Fitment/adjustment of GST Rates on certain items among others.
18th meeting on 30th June, 2017. The last GST Council Meeting before the final GST Rollout was held today at Vigyan Bhawan at New Delhi. The major highlights of the meeting are:- The tax rate on fertilizers have been reduced to 5% from previously decided 12% and Tax rate on Exclusive parts of tractors has been cut to 18% from 28%
19th meeting on 17th July, 2017 The 19th GST council meeting held on 17th july 2017 in New Delhi. Council here decided to increase the cess applied on cigarettes by as much as 31% in certain categories, effective from July 18. Outcomes of 19th GST council meeting.
20th meeting on 5 August, 2017 The 20th GST Council meeting held on 5th August, 2017 in New Delhi. The Council here gave approval to the e-way bill rules. All kinds of Job work on textiles will be taxed at 5%. Council also discussed on Anti-Profiteering. Tax rate on tractor parts has been cut down to 18%. These are some outcomes of 20th GST Council meeting.