Meaning of GST and its Advantages

GOODS AND SERVICE TAX

Constitution (122nd Amendment) Bill, 2014 received the assent of the President of India on 8th September, 2016 and became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of GST in India.

                                            Constitution (101st Amendment) Act, 2016 was enacted on 8th September, 2016, with following significant amendments:

 (a) Concurrent powers on Parliament and State Legislatures to make laws governing goods and services. It means there will be dual control of State and Central authorities for all assessees.

 (b) As per Article 246A, the power to levy GST has been given to the Parliament as well as to   Legislature of every State. 

•     CGST – enacted by Central Government of India. 
•     IGST – enacted by Central Government of India.
•     SGST – enacted by respective State Governments 
•     UTGST – enacted by Central Government of India 

(c) IGST will be apportioned between Center and the States in the manner provided by Parliament by Law as per the recommendation of the GST Council. 

(d) GST will be levied on all supply of goods and services except alcoholic liquor for human consumption. 

(e) The explanation to Article 269A of Constitution of India provides that the import of goods or services will be deemed as supply of goods or services or both in the course of inter-State trade or commerce. In case of import of goods IGST will be levied along with the Basic Customs duty. It means IGST is levied in replacement of CVD + Spl. CVD. In case of import of servies only IGST will be levied. 

(f) Principles for determining the place of supply and when a supply takes place in the course of inter-state trade or commerce shall be decided by the Parliament. 

(g) The power to levy Central Excise duty on goods manufactured or produced in India is available in respect of the following products:

              a. Petroleum crude; 

              b. High speed diesel; 

              c. Motor spirit (commonly known as petrol); 

              d. Natural gas; 

              e. Aviation turbine fuel; and 

              f. Tobacco and tobacco products.

However, once GST is imposed there will be no duty on manufacture of these goods. 

(h) The power to impose tax on sale of the following products is still provided to the State                   governments:

•  Petroleum crude; 
•  High speed diesel; 
•  Motor spirit (commonly known as petrol); 
•  Natural gas; 
•  Aviation turbine fuel; and 
•  Alcoholic liquor for human consumption.

 However, once GST Council is recommend the date from which GST is imposed on these products (except alcoholic liquor for human consumpiton), and no sales tax will be imposed on these products. As per definition given in article 366(12A), GST covers all the goods except alcoholic liquor for human consumption. It means no GST can be levied on Alcoholic liquor for human consumption. Present system of State Excise duty and sales tax on Alcoholic liquor for human consumption will continue. As a result, the following bills became an Act on 12th April 2017:

 ● Central Goods and Services Tax Bill, 2017 

 ● Integrated Goods and Services Tax Bill, 2017 

 ● Union Territory Goods and Services Tax Bill, 2017 

 ● Goods and Services Tax (Compensation to States) Bill, 2017

The Central Government notified 1st July, 2017 as the date from which the much awaited indirect tax reform in India, i.e Goods and Services Tax (GST) will be implemented. Accordingly, Goods and Services Tax (GST) has been implemented in India w.e.f. 1st July, 2017.

MEANING OF GST:-

                       Goods and services tax means a tax on supply of goods or services, or both, except taxes on supply of alcoholic liquor for human consumption (Article 366 (12A) of Constitution of India). It is a value added tax levy on sale or service or both. It is a destination based consumption tax. GST offers comprehensive and continuous chain of tax credit where the burden is borne by final consumer. GST eliminate cascading effect of tax and brings uniform tax structure all over India. 



ADVANTAGES OF GST



(a) One Nation One Tax.

(b) Removal of bundled indirect taxes such as VAT, CST, Service tax, CAD, SAD, and Excise.

(c) Removal of cascading effect of taxes i.e. removes tax on tax.

(d) Increased ease of doing business.

(e) Lower cost of production, increases demand will lead to increase supply. Hence, this will ultimately lead to rise in the production of goods. Resultantly boost to make in India initiative.

(f) It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth.