What is GST?
Goods and Services Tax (GST) is a value-added tax at each stage of the supply of goods and services precisely on the amount of value addition achieved. It seeks to eliminate inefficiencies in the tax system that result in ‘tax on tax’, known as cascading of taxes. GST is a destination-based tax on consumption, as per which the state’s share of taxes on inter-state commerce goes to the one that is home to the final consumer, rather than to the exporting state. GST has two equal components of central and state GST (CGST and SGST)
What is input tax credit?
To make sure that tax is levied only on the amount of value addition at each stage of the supply chain, credit for the taxes paid at the previous stage is granted. For example, a garment manufacturer gets credit for the taxes paid on the materials purchased while computing the final indirect tax liability on his product that is collected from the consumer. Similarly, a service provider, say, a telecom company, gets credits for the taxes paid on the goods and services used in his business.
Who is liable to pay GST?
Businesses and traders with annual sales above Rs20 lakh are liable to pay GST. The threshold for paying GST is Rs 10 lakh in the case of northeastern and special category states. GST is applicable on inter-state trade irrespective of this threshold.
What are the existing taxes subsumed into GST?
Taxes on production such as central excise duty and additional excise duty, import duties such as additional customs duty known as countervailing duty and special additional customs duty, service tax, central cesses and surcharges, state taxes like value-added tax (VAT), central sales tax on inter-state trade of goods, luxury tax, entertainment tax except those levied by local bodies, taxes on advertisements, taxes on betting and gambling and state cesses and surcharges on supply of goods and services are subsumed into GST. Basic customs duty, which includes the tariff barrier on imports, is not part of GST.
What are the benefits of GST?
GST brings transparency on the taxes levied on the supply of goods and services. At present, when an item is purchased, the common man sees only the state taxes on the product label, not the various embedded tax components. GST will improve the ease of doing business as entry barriers along state borders will be dismantled. The new indirect tax system is expected to improve tax compliance, boost revenue receipts of central and state governments and accelerate GDP growth rate by an estimated 1.5-2 percentage points. Elimination of cascading of taxes will result in reduced tax burden on many items.
What are the products not part of GST?
Crude oil, diesel, petrol, natural gas and jet fuel are temporarily kept out of GST. The GST Council, the federal indirect tax body of state finance ministers chaired by the Union finance minister, will decide when to bring these items into GST. Liquor is kept out of GST as a constitutional provision and hence it would require an amendment to Constitution if it is to be brought into GST net.
What is integrated GST or IGST?
IGST is the tax on inter-state supply of goods and services with central and state GST components.
How are imports treated?
Imports are treated as inter-state supplies and will attract IGST. Exports do not attract any tax. Taxes paid on raw materials and services used in export of goods and services are refunded to the business.
What is the anti-profiteering mechanism?
To prevent the possibility of prices going up and to make sure that the reduced tax burden on products and services are passed on to consumers, the government has introduced an anti-profiteering clause in the GST law. The anti-pro teering authority to be set up will act on complaints of profiteering and direct a profiteering supplier to cut price, return the benefit of reduced tax burden to the buyer with 18% interest, or recover such amount if the buyer cannot be identified or doesn’t make a claim. A profiteering business could lose its GST registration, too.
How are decisions taken at the GST Council?
No decision can be taken in the Council without the concurrence of both the Union and the state governments. Decisions will be taken by a 75% majority of the weighted votes of members present and voting. The Union government’s vote has a weightage of one-third of the votes cast, while all states together will have a weightage of two-thirds of the votes cast.
What is GSTN ?
GSTN or Goods & Service Tax Network is a Section 25 company, i.e. a non-government, non-profit organization. It has been formed with the sole purpose of providing the IT backbone to Government, pertaining to GST or Goods and Service Tax Law.
It is partly owned by Central Government (49%) and partly by Private players (51%) which includes Banks and Financial Institutions. Since the Central Government holding is much larger than any individual Private holding, it ensures a complete control by the Government over the governing body of this institution. It also ensures data safely by preventing any misuse of taxpayer’s data.
These myths relating to GST and Reality of each one is given below.
Myth 1: Do I need to generate all invoices on computer/ internet only.
Reality 1: Invoices can be generated manually also.
Myth 2: I need internet all the time to do business under GST.
Reality 2: Internet would be needed only while filing monthly return of GST.
Myth 3: I have provisional ID but waiting for final ID to do business.
Reality 3: Provisional ID will be your final GSTIN number. So start business.
Myth 4: My item of trade was earlier exempt so I will need new registration before starting business now.
Reality 4: You can continue doing business and get registered within 30 days.
Myth 5: There are 3 returns per month to be filed.
Reality 5: There is only 1 return with 3 parts, out of which first part is to be filed by dealer and two other parts would be auto populated by computer.
Myth 6: Even small dealers will have to file invoice wise details in the return.
Reality 6: Those in retail business (B2C) need to file only summary of total sales.
Myth 7: New GST rate is higher compared to earlier VAT.
Reality 7: It appears higher because excise duty and other taxes which were invisible earlier are now subsumed in GST and so visible now.
Sub-Mission on Agricultural Mechanisation (SMAM)
- It has been started in the year 2014-15 to promote agricultural mechanisation.
- Last few years there has been a shift has been towards the use of mechanical and electrical sources of power. While in 1960-61, about 92.30% farm power was coming from animate sources, in 2014-15 the contribution of animate sources of power reduced to about 9.46% and that of mechanical and electrical sources of power increased from 7.70% in 1960-61 to about 90.54% in 2014-15