GST | Goods & Service Tax, GST Portal & GSTN, GST Council

Contents :

1. Why Are Taxes Levied ?.
2. Difference B/W Direct Tax & Indirect Tax.
3. Features of Indirect Tax.
4. History/Genesis of GST.
5. What is GST ?.
6. Classification of Goods and Services & GST Compensation Cess.
7. GST Council: Article 279A.
8. GST Common Portal & GSTN.
9. Goods & Service Tax Network.
10. GST Suvidha Providers/Asps.
11. Concept/Features of GST in India.
12. Need, Types of GST In India & Benefits of GST in India.
13. What Makes GST So Special ? Seamless Flow of Credit in GST with Example.
14. Taxes to be Subsumed in GST & Takes Not to be Subsumed.
15. Constitution of India.
16. Constitutional Provisions For Taxation Purpose.
17. Framework of GST In India (Dual GST, GST In India, GST Acts, GST Rates).

WHAT IS TAX ?

• A tax may be defined as a pecuniary (monetary) burden laid upon individuals or property owners to support the Government [Black' s Law Dictionary].
• It is financial charge (fee) imposed by Government on income, commodity or activity.
• A tax is not a voluntary payment or donation, but an enforced contribution.
• Thus it can be said that Tax is "Compulsory Extortion of Money" by government.

WHY ARE TAXES LEVIED ?

• Taxes constitute basic source of revenue to the Government which are utilized for meeting expenses of Government like defence, provision of education, health-care, facilities like roads, dams etc.
• They are levied & collected to fulfill the soci-economic objectives of the government.

DIFFERENCE B/W DIRECT TAX & INDIRECT TAX :

Particulars	Direct Tax	Indirect Tax
Definition	If tax is levied directly on income/wealth of a person, it is a direct tax.	If tax is levied on price of a good or service, it is an indirect tax.
Time of Collection	Collected on yearly basis.	Collected at the time of sale/purchase of goods or rendering of services.
Examples	Income tax, Tax on undisclosed foreign Income or Assets.	GST, Custom duty.
Burden	There is No Shifting of burden. Directly borne by the taxpayer.	Burden is shifted to subsequent buyer. Burden falls on final consumer.
Levied on	Income/wealth of the person.	Price of Goods or Services.
Incidence & Impact	A tax is said to be direct when impact & incidence of tax are on same person.	A tax is said to be indirect when impact and incidence of tax are on different person.

FEATURES OF INDIRECT TAX :

1) Wider Tax Base :

Majority of the products or services are subject to IDT with low threshold.

2) Major Source of Revenue : 

In India, IDT contribute> 50% of Total tax revenues of CG & SGs.

3) Tax on Commodities (Goods & Services) :

It is levied on commodities at the time of their manufacture/purchase or sale or import/export & thus it is also called as commodity taxation.

It is also levied on provision of services.

4) Shifting of Burden :

GST paid by the supplier of the goods is recovered from the buyer by including the tax in the cost of the commodity.

5) No Perception of Direct Pinch :

Since the value of IDT is generally in-built in the prices of the commodity, most taxpayers pays them without knowing that they are paying tax to the government.

6) Regressive in Nature :

Indirect taxes are not based on the principle of ability to pay. All consumers (Both Rich & Poor) have to pay same rate of indirect taxes. This may further increase income disparities b/w rich & poor.

7) Inflationary in Nature :

IDT directly affects the prices of commodities & leads to inflationary trend.

8) Promotes Social Welfare :

High taxes on harmful products (sin goods) [Ex: Tobacco & Alcohol products].

9) Reduced Tax Evasion :

Since indirect taxes are already included in price of G&S.

WHAT GST MEANS ?

HISTORY/GENESIS OF GST :

Concept of GST was introduced first of all in France in 1954. In India has adopted its GST model from Canada (DUAL GST Model).

2000 :

Atal Bihari Vajpayee (PM of India) mooted the concept of GST & set up a committee to design GST model for India.

2003 :

CG formed a task force under Vijay Kelkar.

2004 :

Iden of fully integrated National GST was mooted by Kelkar Task Force based on VAT. Taskforce was headed by Vijay L. Kelkar who was advisor to Finance Ministry.

Feb 2006 :

Union Finance Minister, Shri P. Chidambaram announced that GST would be introduced from 1 April 2010 while presenting Central Budget (2006-07).

Mar 2011 :

The Constitution (115th Amendment) Bill, 2011 was introduced in Lok Sabha to give concurrent taxing powers to Union & States. This Bill was subsequently lapsed.

Mar 2013 :

GSTN: A not for Profit, Non-Government, Private Ltd Company was incorporated named Goods & Services Tax Network (GSTN) as Special Purpose Vehicle to provide IT infrastructure & services for implementation of GST.

Dec 2014 :

The Constitution (122nd Amendment) Bill, 2014 seeking to amend Constitution to introduce GST was introduced on 19th Dec 2014.

6 May 2015 :

The Constitution Amendment (122nd) Bill was passed by Lok Sabha on 6 May 2015.

3 Aug 2016 :

It was passed by Rajya Sabha on 3rd August 2016 (with some changes)

8 Aug 2016 :

Changes made were unanimously passed by Lok Sabha on 8th Aug 2016.

8 Sept 2016 :

After Bill was adopted by majority of the State Legislatures (by atleast 50% of the States), final assent of President of India was given on sih Sep. 2016; & The Constitution (122nd Amendment) Bill, 2014 became 1101st Amendment) Act, 2016.

1 July 2017 :

GST law was made applicable in India from 1 July 2017.

8 July 2017 :

GST law was made applicable to J&K from 8 July 2017.

GOODS AND SERVICE TAX :

• Goods & services tax means any tax on supply of G/&S except on alcoholic liquor for human consumption.
• Presently, GST is levied on all G/&S except alcoholic liquor for human consumption & Petroleum crude, diesel, petrol, ATF and natural gas.
• GST will be levied on Petroleum Products (Petroleum crude, High Speed Diesel, Motor Spirit, Natural Gas & Aviation Turbine Fuel) from Notified Date on recommendation of GST Council. Note : Nothing is notified till now & thus NO GST will be levied on above products on date. 

Till such Notified date, Central Excise Duty will continue to be levied on Manufacture/Production of Petroleum Products & their Inter/Intra-State Sale is subject to CST/VAT respectively.

Position of Some Specific Goods as on the date :

Goods	Excise Duty	VAT/CST	GST
Alcoholic liquor for Human Consumption	✔	✔	✘
Petroleum crude, HSD, Motor Spirit, Natural Gas, ATF	✔	✔	✘
Tobacco & Tobacco Products	✔	✘	✔
Other Goods	✘	✘	✔

Note : Real estate sector has been kept out of ambit of GST. (GST will not be levied on sale/purchase of immovable property.

CLASSIFICATION OF GOODS AND SERVICES :

• HSN (Harmonised System of Nomenclature) is used for classifying the ods under the GST.
• Chapters referred in Rate Schedules for goods are Chapters of First Schedule to Customs Tariff Act, 1975.
• A new Scheme of Classification of Services has been devised wherein the services of various descriptions have been classified under various sections, headings & groups.
• Each group consists of various Service Codes (Tariff).

GST COMPENSATION CESS :

• GST (Compensation to States). Act, 2017 provides for a mechanism to compensate the States, on account of loss of revenue which may arise due to implementation of GST for a period of 5 year.
• It is levied by Central Government on Notified goods only on Intra/Inter state supply.
• It is levied on Specificd Luxury items or Demerit Goods, like pan masala, tobacco, acrated wpters, Coal, Lignite, Motor Cars etc., computed on value of taxable supply.

GST Council: Article 279A :

Constitution and Enforcment :

• Article 279A empowers President to constitute a joínt forum of Centre & States.
• The provisions relating to GST Council came into force on 12th Soptember, 2016.
• The President constituted GST Council on 15th September, 2016.
• Chairman of GST Council Union Finance Minister.
• Members of GST council Union Minister of State in charge of Revenue/Finance, Ministers in charge of Finance/Taxation or any other Minister nominated by each States & UTs with SL.

Functions :

Make recommendations to Union & States on important issues like,

• (a) taxes, cesses & surcharges which may be subsumed in GST.
• (b) Goods & Services that may be subjected to, or exempted from GST.
• (c) Model GST Laws, Principles of levy, apportionment of GST & the principles that govern the place of supply.
• (d) Threshold limit of turnover beclow which G&S may be exempted from GST.
• (e) Rates including floor rates with bands of GST.

PC Note : Tax rates; Exemptions; Threshold limits; Dispute resolution; GST legislations.

Decision :

• Every decision of GST Council is taken by a majority of not less than 3/4 th of weighted votes of members present & voting.
• Vote of Centre has a weightage of 1/3 rd of total votes cast.
• Votes of all SGs together has a weightage of 2/3 rd of total votes cast, in that meeting.

Article 279A(4)(f) :

• Special Category States Assam, AP, J&K, Manipur, Meghalaya, Mizoram (MMM), Nagaland, Sikkim, Tripura, Himachal Pradesh (HP), Uttrakhand (UK).

Article 279A(4)(g) :

• GST council shall recommend the date on which GST shall be levied on Petroleum crude, High specd diesel, Motor spirit, Natural gas & Aviation Turbine Fuel.

GST COMMON PORTAL & GSTN :

GST Common Portal :

• Common GST Electronic Portal (www.gst.gov.in) a website managed by Goods & Services Network has been set by the Government to establish uniform interface for taxpayer; common & shared IT infrastructure b/w the Centre & States.
• This portal is one single common portal for all GST related services.
• It acts as a clearing house to verify claims & informs the respective governments to transfer funds.
• A common GST system provides linkage to all State/ UT Commercial Tax Departments, Central Tax authorities, Taxpayers, Banks & other stakeholders.
• The eco-system consists of all stakeholders starting from taxpayer professional to tax officials to GST portal to Banks to accounting authoritics.

Accessibility of Portal :

• It is accessible over Internet by taxpayers & their CAs/Tax Advocates & over Intranet by Tax officials etc.

Front and Services : 

• GSTN provides 3 front end services (i) Registration (ii) Payment; (iii) Return.

GOODS & SERVICE TAX NETWORK :

What is GSTN ?

GSTN is a non-Government, private limited campany formed u/s 8 of Companies Act, 2013, (not for profit companies). It is backbone of technology used for GST.

Functions of GSTN [IMP] :

• Facilitating registration: (Filing of application).
• Forwarding returns to CG & SG authorities; (Filing of Return).
• Computation & Settlement of IGST payment [Like a Clearing House).
• Matching of tax payment details with banking network.
• Providing various MIS reports to CG & SG based on taxpayer return information.
• Creation of Challan for tax payment.
• Providing analysis of taxpayers' profile; & running matching engine for matching, reversal & reclaim of input tax credit.

Note: All statutory functions like approval of registration, assessment, audit, appeal, enforcement etc. will remain with respective tax departments.

GST SUVIDHA PROVIDERS/ASPs :

• GSTN has selected certain IT, ITS & financial technology companies, to be called GST Suvidha Providers (GSPs).
• GSPs develop applications to be used by taxpayers for interacting with GSTN.
• They facilitate the taxpayers in uploading invoices as well as filing of returns and act as a single stop shop for GST related services.
• They customize products that address the needs of different segment of users.
• GSPs may take the help of Application Service Providers (ASPs) who act as a link b/w taxpayers & GSPs.

CONCEPT/FEATURES OF GST IN INDIA :

1) Value Added Tax : 

Levied on manufacture, sale & consumption of Goods & Services.

2) Continuos Chain of Tax Credit : 

From original producer's/ service provider's point upto retailer's/consumer's level. Only value added' at each stage of supply chain is taxed.

3) Burden borne by Final Consumer : 

Final consumer bears the GST charged by the last supplier.

4) No Cascading Effect :

Since, only the value added at each stage is taxed under GST, there is no tax on tax. Moreover, since there is only one tax, there cannot be cascasing effect.

5) No Double (Multiple) Taxation : 

GST does not differentiate b/w goods & services & thus there cannot be double taxation.

6) Uniform Tax Structure all over India : 

One Nation, One Tax, One Market.

NEED FOR GST IN INDIA :

• Double Taxation of transaction as both goods & services (Fixe Hotel Business, Softwares]. (VAT + ST).
• Cascading of Taxes due to (i) Non-VATable CST & VAT charged on Value + Excise Duty.
• Set off of CENVAT & State VAT against the crecht of one nnother was not possible as CENVAT was a central levy & State level VAT was a State levy.
• Several Local taxes in the states (Ex-Luxury tax, Entertainment tax) were not subsumed in State VAT.
• Non-integration of VAT & Service Tax: VAT on goods was not integrated with tax on services, at the state level, to remove cascading effect on Service Tax.
• When goods were manufactured & sold, both Excise duty (CENVAT) & State-level VAT were levied.
• No CENVAT after manufacturing stage.

BENEFITS OF GST IN INDIA :

(One Nation, One Tax, One Market)

• Creation of Unified national market.
• Mitigation of cascading effect.
• Elimination of double (multiple) taxation - Removal of many Indirect taxes.
• Boost to make in India initiative - Since Lower cost due to reduced taxes.
• Increase in government revenue - Since rates of GST are lower & thus more people will pay tax.
• It will boost export & manufacturing & thus gencrate more employment, leading to rise in GDP.

TOP TREADING IMPORTANT ARTICLE IN TAXATION :

RETURN OF INCOME (SECTION 139 TO 140A)

ADVANCE TAX PAYMENT

AGRICULTURAL INCOME

CAPITAL GAINS

INCOME FROM OTHER SOURCES

INCOME FROM HOUSE PROPERTY

PROFIT & GAIN FROM BUSINESS OR PROFESSION

DEDUCTIONS FROM GROSS TOTAL INCOME (SECTION 80A TO 80U)

WHAT MAKES GST SO SPECIAL ? SEAMLESS FLOW OF CREDIT IN GST :

• Since GST is destination based consumption tax, revenue of SGST ordinarily accrues to consuming states.
• Inter-State supplier in exporting State is allowed to set off the available credit of IGST, CGST & SGST/UTGST (in that order) against the IGST payable on inter-State supply made by him.
• Buyer in importing State is allowed to avail the credit of IGST paid on inter-State purchases made by him. Thus, unlike earlier scenario where the credit chain used to break in case of inter-State sales due to non-VATable CST, under GST regime there is a seamless credit flow in case of inter-State supplies too.
• Revenue of inter-State sale does not accrue to the exporting State & exporting State transfers to the Centre the credit of SGST/UTGST used in payment of IGST.
• The Centre transfers to the importing State the credit of IGST used in payment of SGST/UTGST.

This whole process with the help of the example given below:

1) INTRA STATE SUPPLY : Supplier-would charge dual GST (CGST+SGST) at specified rates.

a) Supply of goods/services by A to B

Particulars	Amount
Value charged for supply of goods/services	Rs. 10,000
Add: CGST 9%+ SGST @ 9%	Rs. 900 + Rs. 900
Total price charged by A from B for local supply of goods/ services	Rs. 11,800

CGST and SGST charged on B for supply of G/S will be remitted by A to appropriate account of CG & SG respectively. A is the first stage supplier of goods/services and hence, does not have credit of CGST, SGST or IGST.

b) Supply of goods/services by B to C -Value addition @ 20%

B will avail credit of CGST & SGST paid by him on the purchase of goods/services from A & will utilise such credit for being set off against CGST & SGST payable on the supply of goods/services made by him to C.

Particulars	Amount
Value charged for supply of goods/ services (Rs. 10,000 x 120%)	Rs. 12,000
Add: CGST @ 9%+ SGST @ 9%	Rs. 1080 + Rs. 1080
Total price charged by B from C for local supply of goods/ services	Rs. 14,160

Computation of CGST, SGST payable by B to Government

Particulars	Amount
CGST payable	Rs. 1080
Less: Credit of CGST	Rs. 900
CGST payable to Central Government	Rs. 180
SGST payable	Rs. 1080
Less: Credit of SGST	Rs. 900
SGST payable to State Government	Rs. 180

Statement of revenue earned by CG & SG

Transaction	Revenue to CG	Revenue to SG
Supply of goods/services by A to B	900	900
Supply of goods/services by B to C	180	180
Total	1080	1080

2) INTER-STATE SUPPLY : Supplier would charge IGST at specified rates on the supply.

a) Supply of goods/services by X of State 1 to A of State 1

Particulars	Amount
Value charged for supply of goods/services	Rs. 10,000
Add: CGST 9%+ SGST @ 9%	Rs. 900 + Rs. 900
Total price charged by A from B for local supply of goods/ services	Rs. 11,800

A is the first stage supplier of goods/services and hence, does not have credit of CGST, SGST or IGST.

b) Supply of goods/services by A of State 1 to b of State 2 - Value addition @ 20%

Particulars	Amount
Value charged for supply of goods/services (Rs. 10,000 x 120%)	Rs. 12,000
Add: 1GST@ 18%	Rs. 2160
Total price charged by A from B for inter-state supply of goods/ services	Rs. 14,160

Computation of IGST payable to Government

Particulars	Amount
IGST payable	Rs. 2160
Less: Credit of CGST	Rs. 900
Less: Credit of SGST	Rs. 900
IGST payable to Central Government	Rs. 360

IGST charged on Bof State 2 for supply of goods/services will be remitted by A of State 1 to the appropriate account of CG. State 1 (Exporting State) will transfer SGST credit of Rs. 900 utilised in payment of IGST to CG.

c) Supply of goods/services by B of State 2 to C of State 2-Value addition @ 20%

B will avail credit of IGST paid by him on the purchase of goods/services and will utilise such credit for being set off against the CGST and SGST payable on the local supply of goods/services made by him to C.

Particulars	Amount
Value charged for supply of goods/services (Rs. 12,000 x 120%)	Rs. 14,400
Add : CGST@9%	Rs. 1,296
Add: SGST @ 9%	Rs. 1,296
Total price charged by B from C for local supply of goods/services	Rs. 16,992

Computation of CGST, SGST payable to Government

Particulars	Amount
CGST payable	Rs. 1,296
Less: Credit of IGST	Rs. 1,296
CGST payable to Central Government	Rs. Nil
SGST payable	Rs. 1,296
Less: Credit of IGST (Rs. 2,160 Rs. 1,296)	Rs. 864
SGST payable to State Government	Rs. 432

Note : CG will transfer 1GST credit of Rs. 864 utilised in payment of SGST to State 2 (Importing State).

Statement of revenue earned by CG & SG

Transaction	Revenue to CG	Revenue to SG1	Revenue to SG 2
Supply of goods/services by X to A	900	900
Supply of goods/services by A to B	360
Transfer by State 1 to Centre	900	(900)	432
Supply of goods/services by B to C			864
Transfer by Centre to State 2	(864)		1,296
Total	1,296	Nil

TAXES TO BE SUBSUMED IN GST :

Central Taxes	State Taxes
Central Excise Duty	State VAT (Sales Tax)
Central Sales Tax [levied by CG; collected by SG]	Central Sales Tax [levied by CG; collected by SG]
Additional Duties of Excise (Goods of special importance)/(textile & textile products)	Entry tax (all forms), Octroi or Local Body Tax
Excise Duty on Medicinal & Toilet Preparation	Taxes on Lottery, Betting & Gambling
Additional duties of Customs (CVD)	Purchase Tax & Luxury Tax
Special Additional duties of customs (SAD)	Tax on advertisements
Service Tax	Entertainment Tax (except those levied by local bodies)
Central Surcharge & Cess so far as they relate to supply of Goods & Service [Dx: KKC, SBC, EC]	State Surcharge & Cess so far as they relate to supply of Goods & Service

TAKES NOT TO BE SUBSUMED :

 (i.e these Taxes will Continue to Apply )

Basics Customs Duty	Excise Duty on Alcohol	Electricity Duty
Stamp Duty & Property Tax	Excise Duty on Petroleum Products

ABOUT CONSTITUTION OF INDIA :

• India has a three-tier federal system comprising the Union Government, SGs & Local Government.
• Constitution of India is supreme law of India. All other laws made are subordinate to it.
• It consists of a Preamble, 25 parts containing 448 Articles & 12 Schedules.
• Power to levy & collect taxes emerges from Constitution of India.
• If any law is not in conformity with Constitution, it is called ultra vires & is illegal & void.

CONSTITUTIONAL PROVISIONS FOR TAXATION PURPOSE :

Article 265 :

It states that no tax shall be levied or collected except by authority of law.

Article 245 :

It deals with relationship between Union & States.

1. Power to enact laws is conferred on Parliament & on State Legislature. It states that Parliament may make laws for whole or any part of territory of India, & State legislature may make laws for whole or any part of State.

2. No law made by Parliament shall be deemed to be invalid on ground that it would have extra-territorial operation.

Article 246 :

It gives the respective authority to Union & SG to levy tax.

Seventh Schedule: It is classified into three lists :

List I [Union List]	Matters on which Parliament (CG) has exclusive right to make laws.
List II [ (State List]	Matters on which State legislatures has an exclusive right to make laws.
List III [Concurrent List]	Matters on which both Parliament & State have powers to make laws.

Article 246A(1) :

Concurrent power to levy GST has been given to Parliament & State.

Article 246A(2) :

Exclusive power of Parliament (for Inter - State supply → IGST).

FRAMEWORK OF GST IN INDIA :

Dual GST :

• India has adopted a Dual GST model as followed in Canada & Brazil.
• Centre & States simultaneously levy GST on taxable supply of G/&S which takes place within a State/UT.
• Now, Centre has power to tax Intra-State Sales & States have power to tax services.

GST in India :

GST in India comprises of :

Inter - Intra State Supply
CGST	Levied & collected by Central Government.	CGST Act, 2017
SGST	Levied & collected by SGs or UTs with State  Legislatures (Delhi & Puducherry (Pondicherry).	SGST Act, 2017
UTGST	Levied & collected by UTs without State Legislatures.	UTGST Act, 2017
IGST	Levied & collected by CG on all inter-State supplies.  IGST will be apportioned b/w CG & SG in manner provided by Parliament as per recommendation of GST Council. [Article 269A] Note: IGST = CGST + SGST/UTGST (approx).	ITGST Act, 2017
Note : Import of G/&S into India will be deemed to be Inter-State supply of G/&S.

GST Acts :

There are 35 GST Acts in India :

Name of the Act	No. of Act	Tax
Central Goods & Services Tax Act, 2017	1	CGST
State Goods & Services Tax Act, 2017	31	SGST
Union Territory Goods & Services Tax Act, 2017	1	UTGST
Integrated Goods & Services Tax Act, 2017	1	IGST
The GST (Compensation to States) Act, 2017	1	GST Compensation Cess

Though there are multiple SGST legislations, basic features of law (Ex: Chargeability, Definition of taxable event & taxable person, classification & valuation of G&S, procedure for collection & levy of tax etc), are uniform in all SGST legislations, (if feasible).

GST Rates :

• CGST & SGST would be levied at rates to be jointly decided by CG & SG on recommendations of GST Council.
• Rates of IGST shall be decided by the Centre on the recommendations of the GST Council.
• Highest (Peak) rates of CGST & IGST have been provided in the law @ 20% and 40%.
• Tax rates have been fixed at 5%, 12%, 18% and 28%. Other rates are 0%, 0.25% & 3%.

Revenue Neutral Rate	Basic Necessities	Essential Goods	Demerit & Luxury Goods
18%	12%	5%	28% + Cess

RELATED QUESTION :

Q1. List the Central and State levies which will be subsumed in GST in India.

Q2. What are the taxes not to be subsumed in GST?

Q3. What is GSTN and its role in the GST regime? Discuss functions of GSTN.

Q4. Explain Dual GST Model & Composition of GST in India.

Q5. How many number of Acts (Legislations) are there in India?

Q6. Write a short note on "GST Compensation Cess.

Q7. Which are the commodities proposed to be kept outside the purview of GST?

Q8. Write a short note on "Constitution of GST Council & its functions.

Q9. What are the Front end services provided by GSTN?

Q10. Write a short note on "GST Suvidha Providers & ASPs".

RELATED TERMS :

CHARGES OF GST

TYPES OF GST RETURNS