GST rollout: India launches historic indirect tax regime GST after 17 years of debate

Jul 1, 2017 12:25 IST

India launches historic indirect tax regime GSTThe Goods and Services Tax (GST) was launched in India at the stroke of midnight on 1 July 2017, nearly after 17 years of its conception.

The launch was organised in the Central Hall of Parliament on the midnight of 30 June - 1 July 2017 in the presence of President, Vice President,  Prime Minister, Speaker of Lok Sabha and Union Finance Minister among other dignitaries.

The GST launch was marked by the speech of Prime Minister Narendra Modi, who dubbed the tax regime as the ‘Good and Simple Tax’.

With effect from 1 July 2017,  GST is expected to completely transform the Indirect Taxation landscape in the country involving both the Central and State levies as GST will be administered together by the Centre and States.

Impact of GST on Goods and Services

Items that will now cost less

Items with no change

Items that will now cost more


Corn flakes

Milk

 

Cold drinks, Chocolate, Chewing gum

Toothpaste

Fresh vegetables and fruits

Shampoo,  Face cream

 

Soap

Bread

 

Television, Fridge, Air conditioner, Washing machine, Furniture

Hair oil

Basmati

Watches

 

Ice cream

rice

 

Gold

 

Cheese

Atta

 

Edible oil, Aluminium foil, Packaged food items, Butter, Bhujia

Packaged tea and coffee

Juices

 

Banking services, Leasing of cars

Atta (packed & branded)

Electricity

Professional services, Maintenance services

Sweets

 

Courier services, Legal services, Restaurant services

Packed curd

 

Dry cleaning services, Cleaning services

Economy class air travel

 

Beauty parlour services

GST drive after the Constitutional Amendment Act, 2016
After the assent of President Pranab Mukherjee on 8 September 2016, the GST Constitutional (101st Amendment) Act, 2016 came into existence for the implementation of GST Regime. Following which, the GST Council was constituted on 15 September 2016.

The GST Council has held 18 meetings since its formation in September 2016. These meetings have been attended by the Finance Ministers of all the states or their representative along with State and Central Government officials to formulate the law and procedure to implement this historic tax reform.

Over 200 meetings of the government officials took place in different parts of the country to speed up the implementation of GST.

While framing GST Acts and Rules, the key consideration was to endure ‘Ease of doing business’ for the taxpayers and accordingly the roles and responsibilities of the States and Central government were defined.

In a short span of time, the GST council cleared GST laws, GST Rules, Tax rate structure including Compensation Cess, Classification of goods and services into different rate slabs, exemptions, structure for tax administration, etc.

On 29 March 2017, the Union Finance Minister Arun Jaitley tabled four Goods and Services Tax (GST) Bills- The Central Goods and Services Tax (CGST) Bill, 2017, The Integrated Goods and Services Tax (IGST) Bill, 2017, The Union Territories Goods and Services Tax (UTGST) Bill, 2017 and the GST (Compensation to States) Bill, 2017.

They were passed by the Parliament on 6 April 2017. Thereafter, the GST Council decided the final structure of GST as follows:

The threshold limit for exemption from levy of GST is Rs 20 lakh for the States except for the Special Category, where it is Rs 10 Lakh.

A four slab tax rate structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent has been adopted for GST.

A cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28 per cent for payment of compensation to the states.

The threshold for availing the Composition scheme is Rs 75 lakh except for special category States where it is Rs 50 lakh. Certain categories of manufacturers, service providers are out of the Composition Scheme.

India launches historic indirect tax regime GST

Important Features of GST
GST will be administered through a modern world-class information technology (IT) system.

A special GST Network (GSTN) was created for GST implementation. Under this, section 25 private limited company with Strategic Control with the Union Government will function as a common Pass-through portal for taxpayers.

GST envisions that all transactions and processes to be done only through electronic mode to achieve non-intrusive administration.

It provides for the facility of auto-populated monthly returns and annual return.

It facilitates the taxpayers by prescribing grant of refund within 60 days, and provisional release of 90 per cent refund to exporters within 7 days.

Under GST, the tax incidence will be transparent, enabling full removal of tax burden on exports and full incidence of domestic taxes on imports.

An important aspect is that individual states will no longer be able to change their tax rates. The tax rates will be decided by the GST Council, which has representation from all states and the Centre.

State governments will earn the SGST part of the GST (and a share from the consolidated revenue of the Centre). However, it will not have the ability to change this share to respond to droughts or floods. The only instrument that will remain with states is borrowing.

Petroleum products such as petrol, diesel and aviation turbine fuel have been kept out of GST as of now. The GST Council will take a decision on it at a later date. Alcohol has also been kept out of GST.

Is this article important for exams ? Yes37 People Agreed

DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

Latest Videos

Register to get FREE updates

    All Fields Mandatory
  • (Ex:9123456789)
  • Please Select Your Interest
  • Please specify

  • ajax-loader
  • A verifcation code has been sent to
    your mobile number

    Please enter the verification code below

This website uses cookie or similar technologies, to enhance your browsing experience and provide personalised recommendations. By continuing to use our website, you agree to our Privacy Policy and Cookie Policy. OK