What is Goods and Services Tax (GST)?

It is a destination based tax on consumption of goods and services. It is proposed to be levied at all the stages right from manufacturing up to final consumption with credit of taxes paid at earlier stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the end consumer.

What exactly is the concept of destination based tax on consumption?

The tax would accrue to the tax authority which has jurisdiction over the place of consumption of goods or service as the case may be which is also termed as place of supply.

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

Alcohol for human consumption, Petroleum Products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel(ATF) and electricity.

What will be the status in respect of taxation of above commodities after introduction of GST?

The existing taxation system (VAT & Central Excise) will continue in respect of the Alcohol for human consumption, Petroleum Products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel(ATF) and electricity.

What is composition scheme under GST?

There shall be levied a tax called the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the specified rate, a registered taxable person, whose aggregate turnover in a financial year does not exceed fifty lakh of rupees (Rs.50 lacs) , has to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than two and a half percent in case of a manufacturer and one percent in any other case, of the turnover in a State during the year.

Which authority will levy and administer GST?

Central Government will levy and administer CGST & IGST while SGST will be levied and administered by respective states.

Who will decide rates for levy of GST?

The CGST and SGST would be levied at rates to be jointly decided by the Centre and States. The rates would be notified on the recommendations of the GST Council.

Who is liable to pay GST under the proposed GST regime?

Under the GST tax regime, tax is payable by the taxable person on the supply of goods and/or services. Liability to pay GST arises when the taxable person crosses the threshold exemption, i.e. Rs.20 lakhs (Rs. 10 lakhs for North Eastern States including Sikkim) except in certain specified cases where the taxable person is liable to pay GST even if he has not crossed the threshold limit. The CGST / SGST is payable on all intra-State supply of goods and/or services and IGST is payable on all Inter-state supply of goods and/or services.

What are the benefits available to a small tax payer under the upcoming GST regime?

Tax payers with an aggregate turnover in a particular financial year up to [Rs.20 lakhs] would be exempt from tax. Aggregate turnover shall include the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services and exclude taxes i.e. GST. Aggregate turnover shall be computed on all India basis. For North Eastern States including Sikkim, the exemption threshold shall be limited to [Rs. 10 lakhs]. All taxpayers eligible for threshold exemption will have the option to pay tax with input tax credit (ITC) benefits. Tax payers making inter-State supplies or paying tax on reverse charge basis will not be eligible to opt for threshold exemption.

How will the goods and services be classified under the upcoming GST regime?

HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the upcoming GST regime. Taxpayers having turnover above Rs. 1.5 crores but below Rs. 5 crores shall use 2-digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4-digit code. Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code while invoicing. Services will be classified as per the Services Accounting Code (SAC).