Goods and Services Tax
Removing Cascading Effect
Primary object of GST is to remove the cascading effect of taxes. Prior to July 2017, due to different indirect taxes i.e. Central Excise, Service Tax, VAT etc. the taxpayers were not able to set off the tax credits of one tax against the other.
Now in the GST regime it contributed to the seamless flow of input tax credits across both goods and services. Prior to GST regime Central Excise Duty was levied on manufacture and Service Tax was levied on services provided to the person. VAT was levied on sale of goods.
One Nation, One Tax
Now it is a single tax, imposed on the transactions namely Supply of the goods and services, right from the manufacturer to the customer. GST is based on the principle of destination-based consumption taxation as against the previous principle of origin-based taxation.
GST is a tax levied on all India basis, including J&K across goods and services. It is a tax which has replaced many indirect taxes in India such as the Excise Duty, VAT, Services Tax, Entertainment Tax etc. to achieve the ideology of One Nation, One Tax.
CGST, SGST, and IGST
Goods and Service Tax Act excludes leviability of GST on Alcohol for human consumption. Petroleum products are also temporarily not covered under GST. Under GST tax liability is on supply of goods or services or both. GST is a dual levy tax wherein Central and State government both are empowered to levy tax.
The tax is called CGST (Central Goods and Service Tax), levied by Central Government, SGST (State Goods and Service Tax), levied by State Government, and UTGST levied in an Union Territory. Tax levied on Inter State supply of goods and services is called Integrated GST (IGST), collected by Centre.
GST Registration and Compliance
Under GST Law every assessee/person has to get registered himself. Except in few conditions value of supply of goods or services or both is the transaction value, which is the price actually paid or payable for such supply. Every registered person under GST is entitled to take credit of Input Tax charged by the supplier.
In case of non-payment of GST demand can be raised by issuing Show Cause Notice in two years and nine months in normal situation whereas period of issuing Show Cause Notice is extendable to four years and six months in case of Fraud etc. Some of the powers and functions vest in GST Council which comprise Union Finance Minister and Finance Ministers of all the States.