10 Frequently Sought Answers on GST Bill

1) What are final GST rate slabs?

☞GST – also known as Goods and Service Tax will be levied at multiple slabs starting from the range of 0% upto 28% categorising them as based on the essential and luxurious goods and services. A four-tired structure of 5%, 12%, 18%, and 28% has been finalised with a lower rate for essential goods and services and highest rate for luxurious and de-merit goods and services.

☞The service tax will rise up from 15% to 18%. The services that are being taxed at lower rate, owing to provision of abatement such as train ticket will fall under lower slab.

☞The essential items such as food item which currently constitute almost half the consumer inflation basket will be taxed under 0% tax rate.

☞The commonly used goods will fall under 5% tax rate.

☞The rate of 12% and 18% tax will be levied o bulk of goods and services which would include fast moving consumer goods.

☞Items that are now charged a tax of 30 to 31% along with excise duty and Vat will fall under the highest slab items. Sin goods such as tobacco and aerated drinks, ultra luxuries, and demerit goods will fall under the slab of 28% tax with an additional cess for a period of 5 years.

It is considered that the collection of this cess and also the clean energy cess will generate a revenue pool which will be used for compensating the state for any loss of any revenue during the first 5 years of the implementation of GST. The structure has agreed to compromise and accommodate demand for highest tax rate of 40% by states such as Kerala.

☞Tax on gold rate is yet to be finalised.

☞GST will incorporate a number of cesses that are in place right now which include Swachh Bharat Cess, the Krishi Kalyan Cess and also the Education Cess. The only cess that will be retained is the Clean Environment Cess, revenues from which will fund the compensation to the states.

2) What are CGST, SGST and IGST?

CGST stands for Central Goods and Service Tax and will be levied in areas where the Centre has powers.

SGST stands for State Goods and Service Tax and will be levied in areas where State has taxation capabilities

IGST stands for Integrated Goods and Service Tax and will be levied for movement of goods within the Indian states.

3) What are the differences between the UPA’s GST and the NDA’s GST?

The major differences between the UPS’s GST and NDA’s GST are given as under:

☞Petroleum sector has been kept out of the domain of GST

☞Liquor for consumption of human is exempted however tobacco and tobacco products will fall under GST.

☞1% tax on top of GST will be levied for inter-state movement of goods and services.

4) What are the taxes that GST has replaced?

The GST replaces numerous different indirect taxes such as:

a) Central Excise Duty

b) Service Tax

c) Countervailing Duty

d) Special Countervailing Duty

e) Value Added Tax (VAT)

f) Central Sales Tax (CST)

g) Octroi

h) Entertainment Tax

i) Entry Tax

j) Purchase Tax

k) Luxury Tax

l) Taxes applicable on lotteries

m) Advertisement taxes

5) What will be the short-term impact of GST?

☞Implementation of GST may increase fuel prices for a short term.

☞The GST rate begins with 5% and raises upto 18% and therefore the services such as restaurants, movies etc, will increase.

☞A lot of experts opine that since petroleum, petroleum products and liquor are not kept under the umbrella of GST the government may suffer loss as both petroleum and liquor are major sources of revenue for the government.

6) When will GST be implemented?

1st July 2017

7) What is a constitutional amendment?

A Constitutional Amendment is the change in the Constitution. Time and again with the passing of years and generations the changes are done to the constitution for the betterment and improvement of the country. The GST is 122nd Constitutional Amendment is therefore named The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014.

8) What are the finer points in the implementation of the bill?

There have been several committees that were setup in order to evaluate the feasibility and implementation of the GST. Some fine points that were considered are:

☞The issues pertaining to separation of taxation powers of the state and the centre that resulted in CGST and SGST.

☞Exemption of Petroleum and liquor for human consumption.

☞GST is applicable on imports along with the Basic Customs Duty which has not been scrapped off.

☞The GST is applicable at the point of sale.

☞The implementation of IGST still needs to be worked out.

9) What is the Empowered Committee?

The Empowered Committee is the committee that comprises of all the Finance Ministers of all the states in India. The empowered committee was set up by the Vajpayee Government to look into Value Added Tax model. The committee had led apersuasive hand in shaping and constituting GST.

10) What will become costlier and cheaper?

Items that would get Costlier:

✔ Tobacco products such as Cigarette prices likely to hike up with the hike in GST rate

✔ Commercial vehicles such as truck will be costlier

✔ If the service tax goes up the Mobile phone calls will get costlier

✔ Textiles and branded jewelry may get costlier

Items that would get Cheaper:

✔ Auto: Prices of two-wheelers, entry-level cars, and SUVs may fall

✔ Car batteries may get cheaper

✔ Cement and paint prices likely to fall

✔ Prices of Movie ticket may fall as entertainment tax is likely to come down

✔ All the Electronics items such as like lightings, fans, air coolers and water heaters, etc. are likely to get cheaper

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