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Goods and Services Tax

Goods and Services Tax
Question 1. What is GST? How does it work?
Answer:
 
Question 2. What are the benefits of GST?
Answer: The benefits of GST can be summarized as under:
  1. For business and industry
  1. For Central and State Governments
  1. For the consumer
 
Question 3. Which taxes at the Centre and State level are being subsumed into GST?
Answer:
At the Central level, the following taxes are being subsumed:
1. Central Excise Duty,
2. Additional Excise Duty,
3. Service Tax,
4. Additional Customs Duty commonly known as Countervailing Duty, and
5. Special Additional Duty of Customs.
At the State level, the following taxes are being subsumed:
1. Subsuming of State Value Added Tax/Sales Tax,
2. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
3. Octroi and Entry tax,
4. Purchase Tax,
5. Luxury tax, and
6. Taxes on lottery, betting and gambling.
 
Question 4. How would GST be administered in India?
Answer: Keeping in mind the federal structure of India, there will be two components of GST — Central GST (CGST) and State GST (SGST).
Question 5. How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?
Answer: The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of Central Excise.
 
Question 6. How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method?
Answer:
 
Question 7. How will IT be used for the implementation of GST?
Answer:
 
Question 8. How will imports be taxed under GST?
Answer: The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.
 
Question 9. What are the major features of the Constitution (122nd Amendment) Bill, 2014?
Answer: The salient features of the Bill are as follows:
1. Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
2. Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs;
3. Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling;
4. Dispensing with the concept of 'declared goods of special importance' under the Constitution;
5. Levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
6. GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council;
7. Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years;
8. Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.