The Goods and Service Tax (GST), considered India’s biggest and most historic tax reform is just around the corner. To err is to perceive GST as just any other “Tax Reform”. GST signifies “Change” that too a Game changer!!
With the Government leaving no stone unturned to usher in GST on 01 July 2017, GST roll-out is going to change market dynamics
by creating an integrated marketplace. This new taxation regime would not only require organisations to capture appropriate
data for computation and compliance, but also presents a unique opportunity for cost optimization and cash liberation. The
hitherto shadow economy in business would be forced to join the mainstream and time of fake bills could end. Unless tax is paid
no one can avail credit and claim refund on exports.
Downside of Current Tax structure
Multiplicity of taxes-Multiple taxable events-Manufacture, Sales & Services
Cascading effect-Restriction in credit availment
Varied compliances under varied states
Lack of automation in SME sector
Cash economy thriving in a big way
GST Regime Key Features
One comprehensive levy on Goods & Services “ONE NATION ONE TAX”
Shift to “Destination based Taxation”
Increase in credit base-near seamless flow of eligible credits
Improves business competencies with rewarding the honest and compliant.
Dual GST Structure
GST is levied by both the federal and state or provincial governments whereby a Central Goods and Services Tax (CGST) and
a State Goods and Services Tax (SGST) will be levied on the taxable value of every transaction of supply of goods and services.
For within the state(Intra-state) supplies both CGST and SGST shall be levied with CGST Portion payable to Central Government
and SGST Portion payable to respective state. For across the State (Inter-State) supplies IGST (CGST + SGST) shall be levied
and collected by centre out of which the SGST Portion shall be transferrd to respective consumer state
4 Tier Rate Structure
A four tier rate GST tax structure of 5%, 12%, 18% and 28% with lower rates for essential items and the highest for luxury and
demerits goods that would also attract an additional cess, have been decided by the GST Council
5% – Essential Goods
12%- Standard slab rate
18%- Standard Slab rate
28%- De-merit and Lusury goods.