Two lakh youth to be benefited by Government’s GST training programme
Government pushed a GST preparing program under the Pradhan Mantri Kaushal Vikas Yojna. Through this program around two lakh people will be readied, and those readied people will then further help in associations especially in domains, for instance, selection and calculation of cost hazard under the new obligation organization. Skill development minister Rajiv Pratap Rudy said at an event, the second recognition of Skill India Mission, that this readiness program will be completed in 14 states.
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Rudy alongside Water Resources Minister Uma Bharti, Oil Minister Dharmendra Pradhan, Health Minister J P Nadda, Textiles Minister Smriti Irani and Rural Development Minister Narendra Singh Tomar carefully initiated the training course at 100 focuses in the nation.
The service likewise propelled a national entrance for assessors and mentors other than 51 new PMKVY focuses. With this, the aggregate number of PMKVY focuses has expanded to 200.
Just a few days back government similarly launched an app ‘GST Rate Finder’, through which one can without much of a stretch check what is the GST rate on a specific thing. All these efforts can be viewed as government’s activity to encourage the business and everyday action in new GST administration.
e-way bill: Movement of goods set to be easy from February 1
As confirmed by GST Network , from 1st of February transporters will not need separate transit passes for transporting goods from one state to another as the e-way bill issued to them will be valid pan India.
Under the Goods and Services Tax made effective from July last year, inter-state transportation of goods beyond 10 kms of range, with a value of Rs 50,000 and above, will mandatorily require e-way bill from February 1 2018.
GSTN CEO Prakash Kumar said: “Taxpayers and transporters need not visit any check post or tax office as the e-way Bill can be generated electronically in a self-service mode.
“The new system makes generation of e-Way bill very easy on the portal, via mobile App, SMS and for large number of users using offline tool.”
The e-way bill system has already been launched in four states — Rajasthan, Karnataka, Uttarakhand and Kerala. These states together generate approximately 1.4 lakh e-way bills per day.
“The remaining states will join during in next two weeks. The trial period will run till January 31 for all stakeholders,” GSTN said in a statement.
It said transporters who want to generate e-way bill can visit the ‘ewaybill.nic.in’ portal and would need to register themselves by giving the GSTIN. Those who are not registered under GST can get themselves enrolled under e-way bill system by providing their Aadhaar or PAN to generate the eWay Bill.
Alert messages are also issued to the users through online and SMS facility.
“Vehicle number can be entered by those who generate E- way Bill or transporter and they can also update the vehicle number in case of vehicle breakdown or transshipment,” said GSTN, the company handling the technology project for GST roll out.
There is also a provision for cancellation of e-way Bill within 24 hours of time.
“No E-way Bill is required for transportation of goods in non- motorised conveyance and also for certain class of goods like fruits, vegetables, fish and water,” the report added.
The e-way bill rules provide for random verification which can be done by a any tax officer on duty. However, he has to upload and provide the requisite report within the specified time frame.
Also, the new rule also says that if a transporter faces detention of more than 30 minutes, he can go online and upload a report on the portal.
Rules, User Manual, Notification, FAQs and Computer based tutorials (CBTs) are available online.
GSTN has invited suggestions from stakeholders on the e-way bill system.
Government all set to include petrol, diesel under GST, says FM Arun Jaitley
As a result of the consistent demand for the inclusion of petroleum products like petrol, diesel under GST, the government may soon include these products under the uniform tax regime. The first clear hint on this came from Union Finance Minister in Parliament a couple of days back when Mr. Arun Jaitley said the government was willing to include petrol, diesel under GST, and that before the GST Council took a decision, the government was awaiting confirmation response from different states of the country. A couple of days ago, Bihar Finance Minister and GST Council member Sushil Modi had stated that the government should include petroleum under the GST domain. Also, the Petroleum Ministry has been suggesting for a uniformity of taxes on petroleum products due to price difference in states after imposing of Value Added Tax (VAT).
On December 15, Sushil Modi Finance Minister of Bihar and GST Council member had said real estate, electricity, stamp duty and petroleum products should become a part of the GST regime. He also added that the GST council could merge tax slabs of 18% and 12% into one and reduce the highest tax slab from 28% to 25% once the tax collection is stabilised. Sushil Modi had also assured the states that their revenues would remain unaffected as they would be free to levy addition cess to the petroleum products.
During the Rajya Sabha sessions, P Chidambaram the former finance minister also asked Jaitley to tell the House when the final decision would be taken this new inclusion. Jaitley replied saying the previous Congress regime knew that the petroleum inclusion in the GST could be a “deal breaker”, and so it was kept out of the GST draft. He said he was hopeful that the centre government and states would soon reach a consensus on the issue.
In its biggest GST tax rate change, the GST Council on November 10 had slashed tax rates on over 200 items but kept the petroleum products out of the GST domain. Close to 178 items of daily use were shifted to low tax bracket, bringing them down from 28% to 18%, while a uniform 5% tax was prescribed for all type of restaurants.
Besides, several reports said the government had not paid attention to several warnings from private companies that the complex technology required for a nationwide goods and services tax GST) to work smoothly was not ready for launch. Weeks before the launch of GST, the government did not listen to industry experts who said more time was required to prepare for the changes, reports said. More than IT and tax consultant professionals who worked on the GST project said that the government was deliberately ignoring warnings for more testing of the complex system even as it was pushing through late changes.
While the sources mentioned Infosys, a leading technology company which built the GST technological network, made “basic errors”, they said government officials did not accept any responsibility for the glitches in the GST roll out. Till date the government is making changes to filing deadlines, tax rates and other features, making it hard to bring stability in the system, they said. The finance ministry and GSTN, the government authority managing the GST network, refused to comment on specific problems about the GST rollout or specific warnings by industry related to testing. The GST law was debated for decades, industry had enough time to prepare, and glitches are being fixed, a finance ministry spokesman said.
Government reduces GST rate on 27 items, announces several relief measures for traders and exporters
Government reduces GST rate on 27 items, announces several relief measures for traders and exporters
The GST Council, headed by Finance Minister Arun Jaitley yesterday made a series of announcements on the new tax regime to provide relief to thousands of small business owners and exporters.
This meeting was the result of the discussion which happened between Jaitley, Prime Minister Narendra Modi and BJP President Amit Shah about the economy.
Confirming to reporters, Jaitley said, “GST doesn’t have exemptions, and hence there will be an e-wallet for each exporter with a notional advance refund amount. E-wallet for exporters are expected to be implemented by 1st April 2018, till then they can file GST on the rate of nominal 0.1%.”
Later he also added that ‘starting from October 10, tax refunds of July and August for exporters will be processed’. GST rates of 27 items reviewed by the GST Council, including sliced dry mangoes, khakhra, unbranded namkeen, chapati have been cut to a considerable low rate. E-way bill to be implemented from April 1, said the finance minister – Arun Jaitley.
GST rate on some diesel engine parts, stationery items have been reduced to as low as 18% from a raging 28%.
He also added that a group of Ministers are going to study taxation regime for restaurants. The decision will be taken while keeping the bifurcation on basis of AC and non-AC restaurants in mind.
Jaitley said reverse charge mechanism for transactions between registered and unregistered businesses has been postponed till March 31, 2018.
Limit for composition scheme in GST has been increased from Rs. 75 lakh to Rs. 1 crore so as to reduce compliance burden on medium and small taxpayers, as confirmed by Jaitley.
However, responses of business owners are yet to come on this news and let’s see how the general public reacts to this change.
Stay tuned for more updates from Discountwalas about latest news related to GST.
All eyes are on GST as Centre plans higher social pension
- A draft proposal is readied by the government to proliferate the quantum of the three key “social pensions”.
- It will however, depend largely on whether there are resources with the Centre to fund the revision.
- In the first quarter after GST, revenue collections far exceeded the Centre’s expectations.
NEW DELHI: A draft proposal is readied by the government so as to increase the three key social pensions’ quantum but everything relies on the revenues of the Centre post-GST, with the reconstruction being dependent on whether there are resources with the Centre to fund the revision.
The estimates say that restructuring of NSAP (National Social Assistance Programme) — disability pension, widow pension and old-age pension— will invite an extra expenditure of approx. Rs 10,000 crore over and above the present annual budget of Rs 9,500 crore.
While the proposal has been worked out by the rural development ministry, but it will be put forward to the Expenditure Finance Committee when there is a clearer picture on the availability of funds.
As per a source, “The fate of the proposal will be decided majorly by GST. We are ready, if there is availability of funds”.
Observers mentioned that in the first quarter, revenue collections were above the Centre’s expectations, which raises hope that in such revisions, funds will not be a hurdle. Recommendations of the Sumit Bose committee mentions that the government should link the pensions given to BPL households, under NSAP, to the CPI (consumer price index) and should reduce the age eligibility from 40 years to 18 years for widow pension.
At the time of accepting the recommendations, the ministry should also try to absorb the rising outgo on pensions, which can be done by restructuring the pattern of funding.
The Centre may ask states to share 40 % of the bill in contrast to the existing arrangement of total cost being borne by the Centre alone. The extent of coverage needs to be finalized crucially, probably viewing the uncertainty over resources.
As per the expert panel, pensions should be extended to all households except for those “automatically excluded” under the ‘socio-economic caste census’ — the measure of deprivation levels — the rural development ministry has kept it open whether to limit its schemes to families with “one deprivation” or “two deprivations”.
As a pilot proposal, the ministry may increase the old-age pension to Rs 500 from Rs 200, of which the states will pay Rs 300 and Centre Rs 200.
Currently 3.5 crore households are included by the pension. Extending it to people with “one deprivation” will increase the net to 8.72 crore households and extending it to those with “two deprivations” will spread it to 5.5 crore households. The ministry favors instituting widow pension for those aged 18-39 years while agreeing to pay a one-time grant in case of remarriage. On disability, the ministry has agreed to change the eligibility criteria from 18 years to the person’s date of birth, and from 80% disability to 40% disability. The pension too is to be raised from Rs.300 to Rs.500. There are estimations, that the Centre will need around Rs.22,000 crore to fund the revamped pensions. Introduction of state’s share of 40% will bring in Rs.10,000 crore and considerably ease the Centre’s burden.
GST basics: 7 misconceptions cleared
The rumour mills have gone on an overdrive mode since the launch of GST.
Here’s a reality check by ET Wealth for both GST supporters and its detractors.
1. Now it’s one nation one tax
Myth : Since GST will replace all other taxes on all goods and services, we are in a single tax regime.
Reality : Though this was the original idea, petroleum products—petrol, diesel—are still outside GST’s ambit and, therefore, their tax rates vary significantly across states.
For example, petrol is still sold in Mumbai at Rs 74.30 per litre (as on 5 July) compared to Rs 63.12 in New Delhi. Similarly, some other items, such as liquor, have also been kept out of GST for now.
2. Small businesses will suffer
Myth : The life of small businessmen will become difficult under GST because of computerised billing, need for Internet connectivity.
Reality : Shops can do manual billing under GST and Net connectivity is needed only at the time of filing monthly return and can be managed from a cyber cafe.
3. Prices will shoot up
Myth : Personal expenses will go up on account of GST making it inflationary because tax rates have been fixed at higher levels—18%, 28%.
Reality : Though the GST rates seem high, it is only because the entire tax is now visible to the consumer. Earlier most taxes—central and state excise, additional excise, purchase tax, etc.—did not reflect on your bill. If one adds up all the taxes, it would have been more for most items (ie effective tax rates will be lower for most products).
For example, the price of chicken dish in Kerala should fall because there was a 14.5% tax on live chicken earlier, which has come down to zero now under GST.
4. Corporates may try to profiteer but govt won’t
Myth : Business will try to rob you of the GST benefits, but the government won’t make money at your expense.
Reality : Some state governments are also acting greedy and not passing on the GST benefits to consumers. For example, the Maharashtra government has increased the vehicle registration tax by 2% after auto firms passed on the GST benefit by cutting prices by 2-3%.
5. No tax other than GST is now a reality
Myth : For every good or service that has been brought under GST, there won’t be any additional tax.
Reality : GST only subsumes central and state taxes and the levies charged by local bodies are still outside its ambit. Using this loophole, the Tamil Nadu government has allowed its local bodies to charge 30% tax on movie tickets over and above GST. GST is 18% for movie tickets up to Rs 100 and 28% for tickets that cost more than Rs 100.
But because of local body levies, tax in Tamil Nadu will be 48% for tickets up to Rs 100 and 58% for tickets that cost more. Not surprisingly, the cinema hall owners in the state went on strike. “Action of the Tamil Nadu government is against the spirit of the GST and the GST council should take action against it,” says Amit Sarkar, Partner and Head, Indirect Taxes, BDO India.
6. Economic growth will rise
Myth : GST will push up the economic growth.
Reality : Real economic growth comes from both organised and unorganised sectors. Tax evasion becomes difficult in GST, so cost advantage of unorganised sector goes and this will result in some businesses shifting to the organised sector. So, what happens will not be an in increase in ‘real’ economic growth but an increase in ‘recorded’ economic growth. However, there will be a small uptick in ‘real’ economic growth due to the improvement in the ease of doing business.
7. Pay GST twice for card payments
Myth : GST will be charged twice, if you make payments via credit card.
Reality : There is no additional GST for credit card payments and the confusion arose only because there is GST on additional fees—convenience charges—levied by companies. For example, you make a Rs 10,000 payment and a company charges Rs 50 as convenience fee for helping you make the payment via the credit card, you have to pay 18% GST on that fee too—earlier you paid a 15% tax on it. So the 3% increase is very small—just Rs 1.5 on Rs 50.
Impact Of GST On Your Household Budget
The tax system in India has seen an overhaul with the launch of Goods and Services Tax (GST) from July 1. The GST, in its making, was met with both inhibitions and excitement. While the country is still debating the impact of the four-structure tax system, some of its benefits have already started to trickle down to the masses.
India now has four tax slabs – 5%, 12%, 18% and 28% and an exempt and additional cesses category. Though GST will impact the budget of everyone differently, depending on their lifestyle patterns, the change in household expense is set to be more or less the same for everyone.
Some household articles have seen a price increase, while the prices of many others have come down. Food products have seen a GST imposition of 0-5%, while toiletries have seen an imposition of 18%. Let us take a look at the overall impact of GST on your basic household expenditure:
Groceries –While some grocery items like milk, bread, pulses, flour, fruits and vegetables, tea, coffee and basmati rice have been left outside the ambit of GST, other items like packaged curd, paneer, cheese, biscuits, corn flakes, shampoos, face creams, hair oils, medicines, etc. have become cheaper. Things which have become expensive include packaged chicken, butter, bhujia, etc.
Lifestyle expenses – Entertainment expenses have come down as the tax has been reduced to 28% from 30% earlier.
Airfares – The economy class airfare too has come down as the new tax regime levies 5% tax on airfare against the old rate of 9%.
Cab rides – Your monthly expense on travel is sure to come down if you take cabs for regular commute as the service tax has now been reduced to 5% from 6%.
Telecommunication services – DTH and cable TV charges have become dearer as these services will charge 18 per cent GST instead of 15% service tax.
Education – Pre-schools and school education will remain tax free under GST. Services offered by colleges and higher universities will attract 18% GST levy as compared to 15 % earlier.
Luxury spending – Stay in 5-star hotels, restaurant bills etc have gone up with the implementation of GST. Luxury expenses are now taxed at 28%.
Car prices – Many companies have revised the prices of their car models after the GST roll out. Now car purchases are taxed at 28 per cent GST with an additional cess between 1% and 15%. Cars with diesel engines less than 1,500 cc will attract 3 per cent cess, while small cars with petrol engines less than 1200 cc will be imposed with 1% cess. Big cars with engines over 1,500 cc and SUVs with length over 4 metres will be imposed with 15% cess in addition to 28% GST. Electric vehicles have been kept at 12%.
GST has certainly brought in changes in prices of various items, but what you need to do is plan your household budget smartly to avoid getting into any financial mess.
GST rates: Here’s your complete guide
Most of the goods and services have been listed under the four broad tax slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent. Some items like gold and rough diamonds have exclusive tax rates while some have been exempted from taxation.
As India wakes up to a new tax regime, here is a quick guide to all the goods and services and their respective tax slabs:
A number of food items have been exempted from any of the tax slabs. Fresh meat, fish, chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, all kinds of salt, jaggery and hulled cereal grains have been kept out of the taxation system.
Bindi, sindoor, kajal, palmyra, human hair and bangles also do not attract any tax under GST.
Drawin .. or colouring books alongside stamps, judicial papers, printed books, newspapers also fall under this category.
Other items in the exempted list include jute and handloom, Bones and horn cores, hoof meal, horn meal, bone grist, bone meal, etc.
Grandfathering service has been exempted under GST.
A low budget holiday may get cheaper as hotels and lodges with tariff below Rs 1,000 are in this category.
Rough precious and semi-precious stones will attract GST rate of 0.25 per cent.
An array of food items such as fish fillet, packaged food items, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, cashew nut, cashew nut in shell, raisin, ice and snow will be priced at 5 per cent tax.
Apparel below Rs 1000 and footwear below Rs 500 are also in this category.
Some items in the fuel category like bio gas, kerosene and coal are in this slab.
Items from the health industry in this category include medicine, insulin and stent.
Other items in this slab are agarbatti (incense sticks), kites, postage or revenue stamps, stamp-post marks, fertilizers, first-day covers and lifeboats.
Transport services like railways and air travel fall under this category.
Small restaurants will also be under the 5% category
Gold has been taxed under a separate slab of 3 per cent.
Yet another category of edibles like frozen meat products, butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, namkeen and ketchup & sauces will attract 12 per cent tax.
Cellphones will also be priced in this category.
Cutlery items like Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs fall in this slab.
Ayurvedic medicines and all diagnostic kits and reagents are taxed at 12 per cent.
Utility items like tooth powder, umbrella, sewing machine and spectacles and indoor game items like playing cards, chess board, carom board and other board games like ludo are in this slab.
Apparel above Rs 1000 will attract 12 per cent tax.
Non-AC hotels, business class air ticket, state-run lottery, work contracts will fall under 12 per cent GST tax slab
Another set of consumables are listed under the 18 per cent category- biscuits, flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasonings and mineral water.
Footwear costing more than Rs 500 are in this category.
Items like Printed circuits, camera, speakers and monitors, printers (other than multi function printers), electrical transformer, CCTV, optical fiber are priced at 18 per cent tax under GST.
Other items in this slab include bidi leaves, tissues, envelopes, sanitary napkins, note books, steel products, kajal pencil sticks, headgear and its parts, aluminium foil, weighing machinery (other than electric or electronic weighing machinery), bamboo furniture, swimming pools and padding pools.
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST.
The residuary set of edibles which include chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with choclate, pan masala and aerated water fall in this category.
Bidi attracts 28 per cent tax.
n array of personal care items like deodorants, shaving creams, after shave, hair shampoo, dye and sunscreen are in the highest tax slab as well.
Paint, wallpaper and ceramic tiles are priced at 28 per cent.
Water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers and hair clippers have been clubbed together in this slab.
Automobiles, motorcycles and aircraft for personal use will attract 28 % tax – the highest under GST system.
5-star hotels, race club betting, private lottery and movie tickets above Rs 100 are under the 28 per cent category.
The GST on restaurants in five-star and luxury hotels has been reduced to 18 per cent from 28 per cent, bringing it at par with standalone air-conditioned (AC) restaurants. Even at some air-conditioned restaurants, the bills may come down, as GST will subsume service tax and value-added tax (VAT) that is currently charged.
- What is GST?
- Why is Goods and Services Tax so Important?
- How does GST work?
- How will GST help India and common man?
- GST Law in India – A Detailed History
What is GST?
Goods & Services Tax is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition.
To understand this, we need to understand the concepts under this definition. Let us start with the term ‘Multi-stage’. Now, there are multiple steps an item goes through from manufacture or production to the final sale. Buying of raw materials is the first stage. The second stage is production or manufacture. Then, there is the warehousing of materials. Next, comes the sale of the product to the retailer. And in the final stage, the retailer sells you – the end consumer – the product, completing its life cycle.
So, if we had to look at a pictorial description of the various stages, it would look like:
Goods and Services Tax will be levied on each of these stages, which makes it a multi-stage tax. How? We will see that shortly, but before that, let us talk about ‘Value Addition’.
Let us assume that a manufacturer wants to make a shirt. For this he must buy yarn. This gets turned into a shirt after manufacture. So, the value of the yarn is increased when it gets woven into a shirt. Then, the manufacturer sells it to the warehousing agent who attaches labels and tags to each shirt. That is another addition of value after which the warehouse sells it to the retailer who packages each shirt separately and invests in marketing of the shirt thus increasing its value.
GST will be levied on these value additions – the monetary worth added at each stage to achieve the final sale to the end customer.
There is one more term we need to talk about in the definition – Destination-Based. Goods and Services Tax will be levied on all transactions happening during the entire manufacturing chain. Earlier, when a product was manufactured, the centre would levy an Excise Duty on the manufacture, and then the state will add a VAT tax when the item is sold to the next stage in the cycle. Then there would be a VAT at the next point of sale.
So, earlier the pattern of tax levy was like this:
Now, Goods and Services Tax will be levied at every point of sale. Assume that the entire manufacture process is happening in Rajasthan and the final point of sale is in Karnataka. Since Goods & Services Tax is levied at the point of consumption, so the state of Rajasthan will get revenue in the manufacturing and warehousing stages, but lose out on the revenue when the product moves out Rajasthan and reaches the end consumer in Karnataka. This means that Karnataka will earn that revenue on the final sale, because it is a destination-based tax and this revenue will be collected at the final point of sale/destination which is Karnataka.
Why is Goods and Services Tax so Important?
So, now that we have defined GST, let us talk about why it will play such a significant role in transforming the current tax structure, and therefore, the economy.
Currently, the Indian tax structure is divided into two – Direct and Indirect Taxes. Direct Taxes are levies where the liability cannot be passed on to someone else. An example of this is Income Tax where you earn the income and you alone are liable to pay the tax on it.
In the case of Indirect Taxes, the liability of the tax can be passed on to someone else. This means that when the shopkeeper must pay VAT on his sale, he can pass on the liability to the customer. So, in effect, the customer pays the price of the item as well as the VAT on it so the shopkeeper can deposit the VAT to the government. This means that the customer must pay not just the price of the product, but he also pays the tax liability, and therefore, he has a higher outlay when he buys an item.
This happens because the shopkeeper has paid a tax when he bought the item from the wholesaler. To recover that amount, as well as to make up for the VAT he must pay to the government, he passes the liability to the customer who has to pay the additional amount. There is currently no other way for the shopkeeper to recover whatever he pays from his own pocket during transactions and therefore, he has no choice but to pass on the liability to the customer.
Goods and Services Tax will address this issue after it is implemented. It has a system of Input Tax Credit which will allow sellers to claim the tax already paid, so that the final liability on the end consumer is decreased.
How does GST work?
When Goods and Services Tax is implemented, there will be 3 kinds of applicable Goods and Services Taxes:
CGST: where the revenue will be collected by the central government
SGST: where the revenue will be collected by the state governments for intra-state sales
IGST: where the revenue will be collected by the central government for inter-state sales
In most cases, the tax structure under the new regime will be as follows:
|Transaction||New Regime||Old Regime||Comments|
|Sale within the state||CGST + SGST||VAT + Central Excise/Service tax||Revenue will now be shared between the Centre and the State|
|Sale to another State||IGST||Central Sales Tax + Excise/Service Tax||There will only be one type of tax (central) now in case of inter-state sales.|
A dealer in Maharashtra sold goods to a consumer in Maharashtra worth Rs. 10,000. The Goods and Services Tax rate is 18% comprising CGST rate of 9% and SGST rate of 9%. In such cases the dealer collects Rs. 1800 and of this amount, Rs. 900 will go to the central government and Rs. 900 will go to the Maharashtra government.
Now, let us assume the dealer in Maharashtra had sold goods to a dealer in Gujarat worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case the dealer has to charge Rs. 1800 as IGST. This IGST will go to the Centre. There will no longer be any need to pay CGST and SGST.
How will GST help India and common man?
To understand this, let us first understand what is Input Tax Credit. It is the credit an individual receives for the tax paid on the inputs used in manufacturing the product. So, if there is a 10% tax that the individual must submit to the government, he can subtract the amount he has paid in taxes at the time of purchase and submit the balance amount to the government.
Let us understand this with a hypothetical numerical example.
Say a shirt manufacturer pays Rs. 100 to buy raw materials. If the rate of taxes is set at 10%, and there is no profit or loss involved, then he has to pay Rs. 10 as tax. So, the final cost of the shirt now becomes Rs (100+10=) 110.
At the next stage, the wholesaler buys the shirt from the manufacturer at Rs. 110, and adds labels to it. When he is adding labels, he is adding value. Therefore, his cost increases by say Rs. 40. On top of this, he has to pay a 10% tax, and the final cost therefore becomes Rs. (110+40=) 150 + 10% tax = Rs. 165.
Now, the retailer pays Rs. 165 to buy the shirt from the wholesaler because the tax liability had passed on to him. He has to package the shirt, and when he does that, he is adding value again. This time, let’s say his value add is Rs. 30. Now when he sells the shirt, he adds this value (plus the VAT he has to pay the government) to the final cost. So, the cost of the shirt becomes Rs. 214.5 Let us see a breakup for this:
Cost = Rs. 165 + Value add = Rs. 30 + 10% tax = Rs. 195 + Rs. 19.5 = Rs. 214.5
So, the customer pays Rs. 214.5 for a shirt the cost price of which was basically only Rs. 170 (Rs 110 + Rs. 40 + Rs. 30). Along the way the tax liability was passed on at every stage of transaction and the final liability comes to rest with the customer. This is called the Cascading Effect of Taxes where a tax is paid on tax and the value of the item keeps increasing every time this happens.
|Buys Raw Material @ 100||100||10||110|
|Manufactures @ 40||150||15||165|
|Adds value @ 30||195||19.5||214.5|
In the case of Goods and Services Tax, there is a way to claim credit for tax paid in acquiring input. What happens in this case is, the individual who has paid a tax already can claim credit for this tax when he submits his taxes.
In our example, when the wholesaler buys from the manufacturer, he pays a 10% tax on his cost price because the liability has been passed on to him. Then he adds value of Rs. 40 on his cost price of Rs. 100 and this brings up his cost to Rs. 140. Now he has to pay 10% of this price to the government as tax. But he has already paid one tax to the manufacturer. So, this time what he does is, instead of paying Rs (10% of 140=) 14 to the government as tax, he subtracts the amount he has paid already. So, he deducts the Rs. 10 he paid on his purchase from his new liability of Rs. 14, and pays only Rs. 4 to the government. So, the Rs. 10 becomes his input credit.
When he pays Rs. 4 to the government, he can pass on its liability to the retailer. So, the retailer pays Rs. (140+14=) 154 to him to buy the shirt. At the next stage, the retailer adds value of Rs. 30 to his cost price and has to pay a 10% tax on it to the government. When he adds value, his price becomes Rs. 170. Now, if he had to pay 10% tax on it, he would pass on the liability to the customer. But he already has input credit because he has paid Rs.14 to the wholesaler as the latter’s tax. So, now he reduces Rs. 14 from his tax liability of Rs. (10% of 170=) 17 and has to pay only Rs. 3 to the government. And therefore, he can now sell the shirt for Rs. (140+30+17) 187 to the customer.
|Action||Cost||10% Tax||Actual Liability||Total|
|Buys Raw Material||100||10||10||110|
|Manufactures @ 40||140||14||4||154|
|Adds Value @ 30||170||17||3||187|
In the end, every time an individual was able to claim input tax credit, the sale price for him reduced and the cost price for the person buying his product reduced because of a lower tax liability. The final value of the shirt also therefore reduced from Rs. 214.5 to Rs. 187, thus reducing the tax burden on the final customer.
So essentially, Goods & Services Tax is going to have a two-pronged benefit. One, it will reduce the cascading effect of taxes, and second, by allowing input tax credit, it will reduce the burden of taxes and, hopefully, prices.
GST Law in India – A Detailed History
France was the world’s first country to implement GST Law in the year 1954. Since then, 159 other countries have adopted the GST Law in some form or other. In many countries, VAT is the substitute for GST, but unlike the Indian VAT system, these countries have a single VAT tax which fulfills the same purpose as GST.
In India, the discussion on GST Law was flagged off in the year 2000, when the then Prime Minister Atal Bihari Vajpayee brought the issue to the table.
History of GST in India – Year by Year Events
The idea behind having one consolidated indirect tax to subsume multiple currently existing indirect taxes is to benefit the Indian economy in a number of ways:
- It will help the country’s businesses gain a level playing field
- It will put us on par with foreign nations who have a more structured tax system
- It will also translate into gains for the end consumer who not have to pay cascading taxes any more
- There will now be a single tax on goods and services
In addition to the above,
- The Goods and Services Tax Law aims at streamlining the indirect taxation regime. As mentioned above, GST will subsume all indirect taxes levied on goods and service, including State and Central level taxes. The GST mechanism is an advancement on the VAT system, the idea being that a unified GST Law will create a seamless nationwide market.
- It is also expected that Goods and Services Tax will improve the collection of taxes as well as boost the development of Indian economy by removing the indirect tax barriers between states and integrating the country through a uniform tax rate.
The Goods and Services Tax (GST) has been one of the key things that has caught the attention of the market given its implications on earnings of companies. The government has kept a large number of items under 18% tax slab. The government categorised 1211 items under various tax slabs. Here is a low-down on the tax slab these items would attract:
Here is the complete updated list:….
Gold and rough diamonds do not fall under the current rate slab ambit and will be taxed at 3% and 0.25% respectively.
No tax will be imposed on items like Jute, fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, Bones and horn cores, bone grist, bone meal, etc.; hoof meal, horn meal, Cereal grains hulled, Palmyra jaggery, Salt – all types, Kajal, Children’s’ picture, drawing or colouring books, Human hair.Services
Hotels and lodges with tariff below Rs 1,000, Grandfathering service has been exempted under GST. Rough precious and semi-precious stones will attract GST rate of 0.25 per cent.
Items such as fish fillet, Apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats, Cashew nut, Cashew nut in shell, Raisin, Ice and snow, Bio gas, Insulin, Agarbatti, Kites, Postage or revenue stamps, stamp-post marks, first-day covers.
Transport services (Railways, air transport), small restraurants will be under the 5% category because their main input is petroleum, which is outside GST ambit.
Apparel above Rs 1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cellphones, Ketchup & Sauces, All diagnostic kits and reagents, Exercise books and note books, Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs, Spectacles, corrective, Playing cards, chess board, carom board and other board games, like ludo,
State-run lotteries, Non-AC hotels, business class air ticket, fertilisers, Work Contracts will fall under 12 per cent GST tax slab.
Most items are under this tax slab which include footwear costing more than Rs 500, Trademarks, goodwill, software, Bidi Patta, Biscuits (All catogories), flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors,Kajal pencil sticks, Headgear and parts thereof, Aluminium foil, Weighing Machinery [other than electric or electronic weighing machinery], Printers [other than multifunction printers], Electrical Transformer, CCTV, Optical Fiber, Bamboo furniture, Swimming pools and padding pools, Curry paste; mayonnaise and salad dressings; mixed condiments and mixed seasonings.
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST, Room tariffs between Rs 2,500 and Rs 7,500, Restaurants inside five-star hotels.
Bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with choclate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, will attract 28 % tax – the highest under GST system.
Private-run lotteries authorised by the states, hotels with room tariffs above Rs 7,500, 5-star hotels, race club betting, cinema will attract tax 28 per cent tax slab under GST.
Procedure for registration under GST
- First fill the Part- A of Form GST REG-01. Give your PAN, Mobile Number Email ID, and Submit the form.
- Then the PAN is verified on the GST portal. The mobile number and E-mail ID are verified with OTP(one time password)
- Then you will receive an application reference number on your mobile and Email.
- Then fill Part-B of Form GST REG 01 and specify the application reference number received. You should attach all these necessary documents as listed below.
- Submit the photographs of the proprietor, partners, managing trustee, committee etc and authorized signatory.
- Constitution of the taxpayer as to the partnership deed, registration certificate or other proof of constitution.
- You have to give proof of principal and additional place of business i.e if business is in own premises then you have to give any document in support of ownership of that property e.g latest property tax receipt, copy of electricity bill etc. As for Rented Lease you have to give rent/lease agreement along with owner’s documents like latest property tax receipt etc.
- Bank account related proof is to given by scanned copy of the First page of bank pass book or bank statement.
- Authorisation forms for each authorized signatory, upload authorization copy or a copy of resolution of managing committee or board of directors in the prescribed format
People who have to register in GST
- Person making for inter-state taxable supply
- Casual Taxable Person
- Persons who are required to pay tax under reverse damage
- Non-resident taxable persons
- Persons who are required to deduct tax under section 37
- Persons who supply goods or services on behalf of other registered taxable persons whether as a agent or otherwise
- Input service distributor
- Persons who sells other goods and services other than branded services, through electronic commence operator.
- Every electronic commence operator
- An aggregator who supplies services under his brand name or his trade name
- Such other person or class of persons as may be notified by central government or State government on the recommendation of the counsel.
Penalties under GST
An offender has to pay a penalty amount of tax evaded, i.e 100%, subject to minimum of Rs.10,000/-. The person who is helping the person to evade this is also liable for punishment. the amount extending to Rs.25,000/-
If a person is convicted under section 73(1) then he shall be punished with penalties as follows. If the tax evaded is between 25 lakhs and 500 lakhs then 1 year imprisonment and fine, if the tax evaded is between 50 lakhs to 250 lakhs then 3 years imprisonment and fine, if the tax evaded is more than 250 lakhs then 5 years imprisonment and fine.
Advantages and Disadvantages of GST
- GST is a transparent tax and reduces indirect taxes
- In GST there will be no hidden taxes and the cost of doing business will be lower.
- As the prices will come down which will help the companies as consumption will be increased by people.
- Separate taxes for goods and services, which is the present taxation system,
- in GST when all the taxes are integrated, then taxation burden will be split equally between manufacturing and services.
- GST will be levied on the final destination of consumption of VAT and not on various points.
- It will help build a transparent and corruption free tax administration.
- GST id backed by the GSTN, which is a fully integrated tax platform to deal with GST.
Pre-GST discounts: The complete list of best deals on offer right now
If you are looking to buy a car, apparel or white goods, now is the time. After all, it is not often that you get steep discounts in the months of May and June. Monsoon sales on apparel start usually by the end of June while electronics stores announce sale usually before Diwali. A range of deals—from freebies to price cuts—are available on goods ranging from big cars to smartphones.
Retailers have announced discounts to clear inventories due to the new indirect tax regime, the Goods and Services Tax, coming into force from July 1.
Below is a comprehensive list of discounts:
Costly home appliances are now available at 20 per cent to 40 per cent discount as retailers rush to clear their old inventories. The price tags are now slashed for TV sets, refrigerators, air conditioners and washing machines. The discounts vary, depending on the life of the old stock and the cost price. The usual discount offered by the retailers is 10 per cent to 15 per cent on maximum retail price. It will now significantly go up nearly threefold. Brands like Samsung, Panasonic, Hitachi and Videocon have come up with promotional offers, gifts and extended warranties to boost sales. Many other companies, such as LG India, are also offering attractive EMI schemes on select products.
Mumbai’s leading electronics retail chain, Kohinoor, is offering nearly 40 per cent discounts on goods kept on display.
Vijay Sales, which operates multi-brand consumer durables chain, is offering discounts from 25 per cent to 30 per cent on compressor-based products such as refrigerators and ACs. Samsung is offering a two-year warranty on TV sets and free Airtel DTH connection with a two-month subscription.
Paytm Mall launched a pre-GST clearance sale on electronics and large appliances from June 13 to June 15. Customers will win cashbacks of up to Rs 20,000 on items such as laptops, consumer durables, TVs and more.
Cars and bikes
Several carmakers such as Hyundai, Mahindra and Ford are doling out lucrative offers to draw buyers and clear stocks. Hyundai is offering price benefits in the range of Rs 25,000 (on Elite i20) to Rs 2,50,000 (on Santa Fe). Datsun is packaging deals with free insurance and reduced interest rates. Hyundai is offering pre-GST benefits across its range of vehicles –Rs 45,000 on Eon, Rs 62,000-73,000 on Grand i10, Rs 80,000-90,000 on Verna and Rs 25,000 on its new XCent till June 26, 2017. Maruti Suzuki is offering discounts of Rs 25,000-35,000 on Alto and Swift.
Mahindra is also offering discounts on these models: Rs 27,000 on Scorpio, Rs 61,000 on TUV300, Rs 72,000 on KUV100 and Rs 90,000 on XUV500 till June 30. Japanese auto major Honda Cars India has come out with an innovative scheme. It assures compensation to buyers in the event of a decline in vehicle prices after the implementation of the GST. Volkswagen fans can also enjoy benefits of up to Rs 76,000 and Rs 1,00,000 on Polo and Vento cars booked till June 20 and fully billed till June 30. The company is also offering reduced interest rate of 7.49%, free insurance, road-side assistance and extended warranty for three years. Nissan offers benefits of up to Rs 80,000 on sports utility vehicle Terrano and around Rs 25,000 on small car Micra. Ford is offering discounts of Rs 20,000-30000 on EcoSport and Rs 10,000-25,000 on Figo and Aspire depending on the variant.
Mercedes-Benz India has reduced prices by up to Rs 7.5 lakh of its locally assembled cars and SUVs. Its nine Made-in India models such as CLA, GLA, C-Class, E-class, S-Class, GLC, GLE, GLS and Mercedes-Maybach S500 get the price benefit from the GST and get more affordable. JLR has also slashed the price of three of its models in India by up to Rs 4 lakh. Audi has slashed prices of its models in India by up to Rs 10 lakh till June 30. BMW is offering customers financing at 7.90%, complimentary service and maintenance of three years, free insurance for the first year, and assured buyback for up to four years. Isuzu Motors India is offering discounts of up to Rs 1.5 lakh on its models such as the newly launched MU-X and the V-cross.
Bajaj Auto Ltd announced a reduction in prices of its motorcyles such as CT 100 and Dominor 400 up to Rs 4,500.
Brick-and-mortar retailers are also slashing prices to liquidate merchandise, advancing their usual end-of-season sale by a month. Brands such as Puma is offering an extra 10% off on the flat 40% discount at stores. Allen Solly has a buy-one-get-one free scheme in its pre-GST end-of-season sale for members. Levi’s is giving away two items free on the purchase of two, while Flying Machine is giving up to 50% off and Pepe Jeans is running a buy-three-get-three offer.
Other brands and retailers such as Shoppers Stop, Charles and Keith, Chemistry, AND and Forever 21 also have discounts or other promotional offers running in their stores. More than 50 brands, including Aeropostale, Vero Moda, Under Armour, Kenneth Cole and Crocs are on a nine-day sale on Flipkart. Brands such as Biba and W are available at 30-50% discount on online fashion portal Myntra.
Paytm Mall launched a month-long Pre-GST Clearance Sale on June 13 offering items such as footwear and accessories at up to 50% off plus 25% cashback. Pantaloons has announced a pre-GST preview sale from June 16 to June 18. The apparel brand is also offering free shopping vouchers worth Rs 6,000 on Rs 6,000 apart from up to 10 per cent cashback on e-wallets and cards. Wills Lifestyle has a buy-two-get-one offer on clothing.
Discounts on apparel are driven by the GST Council’s decision earlier this month that man-made apparel above Rs 1,000 will attract a 12% levy, higher than the existing 7%.
Paytm is giving up to 15 per cent on budget smartphones, 15 per cent on smartphones with battery more than 300mAh, up to Rs 9,000 cashback on android phones such as Gionee, Vivo and other brands. iPhones 7(128GB), which actually costs Rs 70,000 on the site, is available at a discount of 24%. The iPhone 7 (32GB) is available at Rs 46,182 after discount. iPhone 6S (32GB) will cost Rs 36,666 after discount and iPhone 5S is available at Rs 27,285 to the buyers. The Paytm is further giving cashback on iPhone 7 and iPhone 7 plus. The iPhone 7 Red (256GB) is priced at Rs 70,999 against the original price which is Rs 80,000. Paytm is also offering Rs 20,000 cashback on Lenovo laptops, DSLR cameras and up to Rs 10,000 discounts on refrigerators, TVs and ACs. It is also offering up to Rs 20,000 cashback on LED TVs. Paytm Mall is also offering discounts on footwear and accessories up to 50% plus 25% cashback.
Flipkart has an ongoing sale on fashion products from June 10 to June 18 to clear its inventories. ‘Bid n Win’ contest will also be open for the customers during the nine-day sale. The unique bidders will win premium prize like Emporio Armani watch worth Rs 13,995 and Victorinox bag worth Rs 15,960. Flipkart will also host a ‘Guess the brand Quiz’, where the customers have to identify the brand logos to win prizes. Flipkart is also giving up to Rs 2,000 off on exchange offer for newly launched MotoZ2 Play and Rs 10,000 off on exchange for Microsoft Surface Pro 4.
On Amazon Big Sale, the e-commerce company is giving a cashback of up to Rs 16,000 on iPhone 7 and iPhone 7 Plus. It is also offering 35 per cent off on desktops and monitors. You can also get a discount of Rs 13,501 on LG G6 and Rs 28,560 off on LG V20. The e-commerce giant will also offer 80 per cent discount on apparels starting from June 23 to June 25.
ShopClues is organising seller summit in different cities, sending regular updates to merchants through mails and updating GST-related information on its seller portal.