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Dual GST Based on Thirteen Finance Commission Task Force Report published on 15.12.2009
Corporate Fiscal, India
Corporate Fiscal
What is GST
It is collected on value added at each stage of sale or purchase in the supply chain. GST is a comprehensive value added tax on goods and services No differentiation between Goods and Services as GST is levied at each stage in the supply chain 100% input tax credit throughout the supply chain
Corporate Fiscal
Corporate Fiscal
Dual GST
Task Force Recommended Dual GST imposed concurrently by the Centre and the States called CGST and SGST Both the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST) should be levied on a common and identical base.
Corporate Fiscal
Type of GST
The Centre and the States should adopt a consumption type GST, i.e. there should be no distinction between raw materials and capital goods in allowing GST credit. Only this GST variant is equivalent to a retail sales tax. The tax base of both CGST and SGST should Comprehensively extend over all goods and services including immovable property going up to the final consumer (retail level), reflecting the tax base of a typical consumption VAT.
Corporate Fiscal
Corporate Fiscal
Destination Principal:
The GST should be structured on the destination principle. As a result, the tax base will shift from production to consumption whereby imports will be liable to both CGST and SGST and exports should be relieved of the burden of goods and service tax by zero rating. Consequently, revenues will accrue to the State in which the consumption takes place or is deemed to take place
Corporate Fiscal
Exemption
Current Area based tax exemption scheme should not be continued under the GST framework . Tax exemptions, remissions etc. related to industrial incentives to be converted into cash refunds schemes after collection of tax so that continuous chain of set-offs in GST scheme is not disturbed.
Comment: List of exempted goods and services are still not notified as there is no consensus among the states and centre. Initially Government may adopt a list of exempted items of local importance similar to VAT regime.
Corporate Fiscal
Method of Computation
Credit Method is recommended
The credit method requires that the amount of VAT charged be explicitly stated on the invoice associated with any taxable transaction. The amount of tax a dealer submits to tax authorities is simply the difference between the tax he collected on his sales and the tax he paid on his purchases.
Corporate Fiscal
Corporate Fiscal
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Registration
All persons with annual aggregate turnover of goods and services exceeding Rs.10 lakh (excluding CGST and SGST) should be required to register and obtain a GST registration number. Persons with lower turnover may be allowed an option to register. The GST registration number should be a twelve digit alpha numeric number. The first ten digits should be the alpha-numeric Permanent Account Number (PAN) followed by a space and two more digits indicating the state code. There will be a single GST registration number for all branches in a State. Therefore, a dealer having branches across States will have as many GST registration numbers as the number of States in which he operates.
Corporate Fiscal
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Treatment of Inter-State transactions Integrated Goods and Service Interstate transactions Tax(IGST) as per a new would be taxed innovative model of Integrated GST.
Integrated GST would be levied by centre. IGST = Centre GST + State GST.
and
IGST will apply on all inter-state supplies of taxable goods and services. Person making sale would charge IGST and he can utilize input IGST, Centre GST and State GST in order to discharge the output IGST.
Corporate Fiscal
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(III) CST
*I & II are parallel levies and cannot be set off against each other Credit set off possible Set off not possible
Corporate Fiscal
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IGST
Continued :
Corporate Fiscal
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Appellate Authority
Task Force has recommended a common appellate authority. Similarly, the Authority for Advance Ruling should also be common. Best international practices should be embedded in the Central-GST, particularly in respect of laws relating to levy of penalties, and circumstances and method of prosecution. No authority should have any power to make preventive detention for the purposes of CGST and SGST
Corporate Fiscal
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