GST

Goods and Service Tax is the progressive way in taxation policy of India particularly for
indirect taxes. It brings benefits to all the stakeholders of industry, Government and the
consumer. It will lower the cost of goods and services, give a boost to the economy and make
the products and services globally competitive.
The term GST is defined in Article 366 (12A) to mean “any tax on supply of goods or
services or both except taxes on supply of the alcoholic liquor for human consumption”.
101st Amendment, 2016:
To address all these and other issues, the Constitution (122nd Amendment) Bill was
introduced in the 16th Lok Sabha on 19.12.2014. The Bill provided for a levy of GST on
supply of all goods or services except for Alcohol for human consumption. The tax shall be
levied as Dual GST separately but concurrently by the Union (central tax - CGST) and the
States [including Union Territories with legislatures) (State tax - SGST)/ Union territories
without legislatures (Union territory tax- UTGST)]. The Parliament would have exclusive
power to levy GST (integrated tax - IGST) on inter-State trade or commerce (including
imports) in goods or services. The Central Government will have the power to levy excise
duty in addition to the GST on tobacco and tobacco products. The tax on supply of five
specified petroleum products namely crude, high speed diesel, petrol, Aviation Turbine Fuel
(ATF) and natural gas would be levied from a later date on the recommendation of GST
Council.
The bill received assent of the President on 8th September, 2016 and has since been enacted
as Constitution (101st Amendment) Act, 2016 w.e.f. 16th September, 2016.
The significant benefits of GST are discussed hereunder:
• Creation of unified national market: GST aims to make India a common market with
common tax rates and procedures and remove the economic barriers thus paving the way for
an integrated economy at the national level.
• Mitigation of ill effects of cascading: By subsuming most of the Central and State
taxes into a single tax and by allowing a set-off of prior-stage taxes for the transactions across
the entire value chain, it would mitigate the ill effects of cascading, improve competitiveness
and improve liquidity of the businesses. (A cascading tax is imposed repeatedly at each stage
of a product's journey along the supply chain. A cascade tax inflates the price of a product
due to the compounding effects of taxes on top of taxes. This results in a real tax rate that is
higher than the official one.)
• Elimination of multiple taxes and double taxation: GST has subsumed majority of
existing indirect tax levies both at Central and State level into one tax i.e., GST which is
leviable uniformly on goods and services. This will make doing business easier and will also
tackle the highly disputed issues relating to double taxation of a transaction as both goods and
services.
• Boost to ‘Make in India' initiative: GST will give a major boost to the ‘Make in India'
initiative of the Government of India by making goods and services produced in India
competitive in the national as well as international market.
• Buoyancy to the Government Revenue: GST is expected to bring buoyancy to the
Government Revenue by widening the tax base and improving the taxpayer compliance.
Dual GST Model: India adopted a dual GST where tax imposed concurrently by the Central
and States.

Central Goods and Services Tax Act, 2017 (CGST): CGST levied and collected by Central
Government. It is a revenue source to the Central Government of India, on intra-state supplies
of taxable goods or services or both.
State Goods and Services Tax Act, 2017 (SGST): SGST levied and collected by State
Governments/Union Territories with State Legislatures (namely Delhi and Pondicherry) on
intra-state supplies of taxable goods or services or both. It is a revenue source of the
respective State Government.
Union Territory Goods and Services Tax (UTGST): UTGST levied and collected by
Union Territories without State Legislatures, on intra-state supplies of taxable goods or
services or both. Note: India is a Union of States. The territory of India comprises of the
territories of the States and the Union Territories. Currently, there are 29 States and 7 Union
Territories; of which, two (Delhi and Pondicherry) are having Legislature.
GST – in Union Territories without Legislature:
Supplies within such Union territory, Central GST will apply to whole of India and hence, it
would be applicable to all Union Territories, with or without Legislature. To replicate the law
similar to State GST to Union Territories without Legislature, the Parliament has the powers
under Article 246(4) to make such laws. Alternatively, the President of India may use his
general powers to formulate such laws. Hence, law same as similar to State GST can be
formulated for Union Territory without Legislature, by the Parliament. The following are
Union Territories without Legislature:
1. Chandigarh
2. Lakshadweep
3. Daman and Diu
4. Dadra and Nagar Haveli
5. Andaman and Nicobar Islands
Integrated Goods and Services Tax Act, 2017 (IGST):
IGST is a mechanism to monitor the inter-state trade of goods and services and ensure that
the SGST component accrues to the Consumer State. It would maintain the integrity of ITC
chain in inter-state supplies. The IGST rate would broadly be equal to CGST rate plus SGST
rate. IGST would be levied and collected by the Central Government on all inter-State
transactions of taxable goods or services. The revenue of inter-state sales will not accrue to
the exporting state and the exporting state will be required to transfer to the Centre the credit
of SGST/UTGST used in payment of IGST.

Application of GST:
Taxes that have subsumed:
Not subsumed:

SALIENT FEATURES OF CGST ACT

The Central Goods and Services Tax Act, 2017, inter alia, will provide for the following,
namely:—
a) to levy tax on all intra-State supplies of goods or services or both except supply of
alcoholic liquor for human consumption at a rate to be notified, not exceeding twenty per
cent. as recommended by the Goods and Services Tax Council (the Council);
b) to broad base the input tax credit by making it available in respect of taxes paid on any
supply of goods or services or both used or intended to be used in the course or furtherance of
business;
c) to impose obligation on electronic commerce operators to collect tax at source, at such rate
not exceeding one per cent. of net value of taxable supplies, out of payments to suppliers
supplying goods or services through their portals;
d) to provide for self-assessment of the taxes payable by the registered person;
e) to provide for conduct of audit of registered persons in order to verify compliance with the
provisions of the Act;
f) to provide for recovery of arrears of tax using various modes including detaining and sale
of goods, movable and immovable property of defaulting taxable person;
g) to provide for powers of inspection, search, seizure and arrest to the officers;
h) to establish the Goods and Services Tax Appellate Tribunal by the Central Government for
hearing appeals against the orders passed by the Appellate Authority or the Revisional
Authority;
i) to make provision for penalties for contravention of the provisions of the proposed
Legislation;
j) to provide for an anti-profiteering clause in order to ensure that business passes on the
benefit of reduced tax incidence on goods or services or both to the consumers; and
k) to provide for elaborate transitional provisions for smooth transition of existing taxpayers
to goods and services tax regime.
Taxable person’ under GST

A ‘taxable person’ under GST, is a person who carries on any business at any place in India
and who is registered or required to be registered under the GST Act. Any person who
engages in economic activity including trade and commerce is treated as taxable person.

‘Person’ here includes individuals, HUF, company, firm, LLP, an AOP/ BOI, any corporation
or Government company, body corporate incorporated under laws of foreign country, co-
operative society, local authority, government, trust, artificial juridical person.

Person Liable to get Registered under GST (CGST, 2017- Chapter VI Registration)

GST registration is mandatory for-

 Any business whose turnover in a financial year exceeds Rs 20 lakhs (Rs 10 lakhs
for North Eastern and hill states).

[Note: If turnover is supply of only exempted goods/services which are exempt under GST,
this clause does not apply.]

 Every person who is registered under an earlier law (i.e., Excise, VAT, Service Tax
etc.)  needs to register under GST, too.
 When a business which is registered has been transferred to someone/demerged, the
transferee shall take registration with effect from the date of transfer.
 Anyone who drives inter-state supply of goods, etc.

Goods and Services Tax Network (GSTN)

Goods and Services Tax Network (GSTN) is a [Section 8 of the Companies Act, 2013, (i.e.
not for profit companies)], non-Government, private limited company. Technology backbone
for GST in India. GST being a destination based tax, the inter- state trade of goods and
services (IGST) would need a robust settlement mechanism amongst the States and the
Centre. This is possible only when there is a strong IT Infrastructure and Service back bone
which enables capture, processing and exchange of information amongst the stakeholders
(including tax payers, States and Central Governments, Accounting Offices, Banks and RBI).
As a result Goods and Services Tax Network (GSTN) has been set up.