The GST or Goods and Services Tax is a consumption-based value addition for most goods and services available for domestic consumption. This tax paid by consumers is remitted to the government by the business selling the goods and services.
Main Features of GST
- Applicable On supply:
- The meaning of the current GST has been that it is applicable on “supply” of goods or services rather than the old manufacture-at-sold-sum concept or sale of good precious metals or provision of services.
- Destination Based Taxation:
- This is opposed to the current principle of origin-based taxation, that is, destination-based consumption taxation.
- Dual GST:
- It is a dual GST with the Centre and the States simultaneously levying tax on a common base. GST should be levied by the Centre called Central GST (CGST) and the levy by the States is known as State GST (SGST).
- Imports of goods or services would have the same treatment as an inter-state supply and hence would also be subject to Integrated Goods & Services Tax (IGST) since it is other than the applicable customs duties.
- To be mutually decided GST rates: CGST, SGST & IGST are levied at rates to be mutually agreed upon by the Centre and the States. Notification of changes in rates is done based on recommendations from the GST Council.
- Multiple Rates:
- Initially, this levy was at four rates which were 5%, 12%, 16% and 28%. The schedule or list of items that would come under these multiple slabs are worked out by the GST council.
Background and Establishment
- The Constitutional (122nd Amendment) Bill (CAB) was introduced in Parliament to implement GST.
- The CAB was passed by Rajya Sabha and Lok Sabha on 03rd and 08th August, 2016.
- The President assent to the “The Constitution (One Hundred And First Amendment) Act, 2016″ on 8th September, 2016.
Vision and Mission
- The Council aims to establish the highest standards of the cooperative federation and develop a harmonised national market for goods and services.
- The Council’s vision and mission are to evolve a GST structure that is information technology driven and user-friendly.
Composition of the Council
- The Council is a joint forum of the centre and the states, comprising the Union Finance Minister as the Chairperson, the Union Minister of State in-charge of Revenue or Finance, and the Minister in-charge of Finance or Taxation or any other Minister nominated by each state government.
- The Council’s decisions are taken at its meetings, with a majority of three-fourths of the weighted votes of the members present and voting at the meeting.
Functions of the Council
- The Council is required to make recommendations on taxes, cesses, surcharges, goods and services subjected to GST or exempted from GST, model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-state trade or commerce, the threshold limit of turnover below which goods and services may be exempted from GST, rates, special provision with respect to the states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand, and any other matter relating to GST.
- The Council also recommends the date on which the GST may be levied on petroleum crude, high-speed diesel, petrol, natural gas and aviation turbine fuel.
