IMPLICATIONS OF GST - Murali Krishnan, Online Editor, ANSWERINGLAW

The proposed Goods and Service Tax (GST) if realized will result in a drastic overhaul of the existing tax regime in the country. The proposed Goods and Service Tax (GST) is founded on a single taxation system for goods and services across the country. Accordingly, there will be only two taxes on all goods and services which will be as follows:

(1)    State level GST (SGST)

(2)    Central level GST (CGST)

Various excise duties like Central excise duty, Additional excise duty etc., Service tax, Additional Customs duty, Special additional duty, Education Cess and Secondary and Higher Secondary education Cess etc. which are presently levied separately on goods and services by the Central government are likely to be subsumed with Central GST. Similarly, VAT/Sales tax, Luxury tax, State Cess and Surcharge to the extend related to supply of goods and services etc. which are presently levied by the concerned State governments will be subsumed with the State level GST.  

Taxes on items containing alcohol and petroleum will be continued to be taxed as per the existing practices. Exemption to Small Tax payers will continue. Taxes Paid against CGST allowed as Input Tax Credit (ITC) against CGST and vice versa. However, cross utilization of ITC between Central GST and State GST will not be permitted.  The two rate tax structure with a lower rate of tax for goods of basic importance and necessary items is another highlight of the GST.   

With GST all set to storm the Indian tax arena, the fate of taxes like Excise etc. is hanging in balance. That excise might be dubbed as a crude form of taxation which existed well into the second decade of globalization is very much a possibility in the coming years.