About Tax

August 3^rd 2016 is recorded as a red-letter day in the history of Indian taxation due to the unanimous passage of 122^nd Constitutional Bill in Rajya Sabha, paving the way for roll-out of GST in India from 1^st July 2017. GST Bill has significantly evolved over the past decade and is touted as the single largest tax reform in India since independence. It is estimated to boost GDP by 1.5 to 2%. ‘One India, One Tax’ is a reality with GST subsuming over 17 indirect taxes and making India a common market. (Though there are different tax rates) Apart from elimination of cascading effect, the benefits of simplified compliance, technological backing and uniform process across India will contribute significantly to ‘Ease of doing Business’.

Goods & Services Tax :

Goods & Services Tax popularly termed as GST is leviable in India since 1.7.2017. It is a tax levied on the supply of Goods, Services or both by a supplier made for a consideration in the course or furtherance of business to a recipient. It is a destination based tax on consumption of Goods, Services or both levied at every stage since manufacture upto final consumption with set off available of the GST paid at every previous or earlier stage. Normally the supplier is responsible for paying GST to the Govt. account; however in few cases the receiver is made responsible to pay the same.

The GST law has all the provisions including taxing event, place of supply, and time of supply, Input Tax credit availability and valuation, among others. The GST Law deals with various administrative and procedural aspects of the levy, including the issuance of Show Cause Notices, Appeals, Demands and Refunds. There are 11 different kinds of Refunds available to a registered person. Procedures for upkeep of accounts and records, registration, filing of returns, assessment, audits, search, seizure and arrest, and the adjudicatory and appellate processes also are formulated in the GST Law. The law makers have done a fantastic job by making a massive broadening of tax base, covering wide taxability and rationalizing the provisions to the benefits of all stakeholders at the same time. With GST, it is anticipated that the tax base will be comprehensive, as virtually all goods and services will be taxable, with minimum exemptions.

The term ‘destination based tax on consumption’ in simple words means the GST will accrue to the tax authority having jurisdiction over the place of supply i.e. the place of consumption of the supply. India has taken a step ahead in its economy with a dream of ‘One Nation One Tax’. By the introduction of GST 8 Central Taxes and 9 State Taxes, total 17 indirect taxes are subsumed. Effectively the barriers of State borders are removed and the set off of the GST paid at every earlier stage is seamlessly passed on for its availment.

Constituionality of GST :

Prior to 1.7.2017 the fiscal powers between the States and Centre were clearly demarcated in the Constitution of India with due care as to no overlaps; the Centre had the power to tax the manufacture of goods and provision of services; whereas the State used to levy tax on the sale of goods and certain services. To overcome this situation and empower both Centre and States to levy and collect the GST, the Constitution ofIndia was amended by the 101 st Constitution Amendment Act 2016 granting them this power under Article 246A.

Article 366(12A) of the Constituion defines GST as a tax on supply of goods, services or both except supply of alcoholic liquor for human consumption.

One Nation One Tax :

Though GST is introduced with this notion in fact it is a dual type of taxation. It is important to note that India is a federal country where Centre and States are assigned power to levy and collet tax through appropriate legislations. Similarly there is division of powers with different responsibilities as goverened by the Constitution of India. Keeping this in mind a dual GST system is adopted by India which will be simultaneously levied on a common tax base.

The design of GST is so that on the supply made within a State (i.e Intra State supply), there will be a Central GST i.e. CGST by Centre and a State GST i.e SGST by the State. If supplies are made within a Union Territory, there will be a Central GST i.e. CGST by Centre and a Union Territory GST i.e UTGST by the Union Territory. For the supply made by crossing the borders of States (i.e. Inter State Supply), Integrated GST is leviable by the Centre.

The CGST and IGST are administered by the Centre and SGST by the concerned State and UTGST by the concerned Union Terrotory.