Due date for filing of form GSTR-3B for the month of Jan 2019 has been extended to 22nd Feb. All taxpayers would file return in FORM GSTR-3B along with payment of tax by 20th of the succeeding month # Taxpayers with annual aggregate turnover upto Rs. 1.5 crore need to file GSTR-1 on quarterly basis by 11th of succeeding months from the end of quarter. Other taxpayer required to file GSTR-1 by 11th of succeeding month. Composition dealers are required to file GSTR-4 by 18th of next month from the end of quarter #



Introduction


 2004
The Idea of GST (Goods and Service Tax) was first given by the Kelkar Task Force in 2004. Kelkar Task Force was constituted to implement the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 to eliminate the revenue deficit. This committee recommended the single GST in place of Excise duty, Service Tax, sales tax etc. with tax credit across goods and services.

2007
In 2007 first report on GST was given by the Advisor to Finance Minister and he recommend to conceptualizing a GST model. On the basis of recommendation given by the finance advisor, a Joint Working Group (JWG) was constituted in 2007 by Empowered committee of State Finance Ministers to suggest a model framework of GST and structure of GST rate. Apart from other roles and responsibilities JWG was also given the responsibility to study the globally existing GST models and identify the Central and State Taxes which are required to be subsumed in GST. JWG submitted its report in November 2007, recommended a central tax and a uniform state tax across the country. State may levy tax over and above the GST on tobacco and keep Petroleum, liquor, stamp duty, levies on minerals, petroleum products outside the GST purview. The 13th Finance commission was constituted in 2007 under article 280(1) of the Constitution was required to study the impact of the GST. Apart from other recommendations, the key recommendations of the 13th Finance commission was that a there should be a single rate on goods and services, export should be zero rated, seamless tax credit across the states and 50000 crores grant to be provided to all states in aggregate to compensate the adversely affected states.

2009
A comprehensive structure of the GST model was given in First discussion paper on GST release in November 2009 by Empowered Committee.

2014-15
122nd constitutional amendment bill was introduced in Parliament in December 2014 to give the constitutional validity and it was passed by Lok Sabha in May 2015 and referred to select committee of Rajya Sabha. The select committee of Rajya Sabha submited its report on 122nd constitutional amendment bill on 22nd July 2015.

2016

Finally idea of GST became a reality when the 122nd constitutional amendment bill was passed by Rajya Sabha on 3rd August 2016 and Lok Sabha on 8th August 2016 and got assent of president in September 2016. As per Article 279A of the amended Constitution, the GST council was formed.

2017
Finally Central Goods and Service Tax Act, 2017, Integrated Goods and Services Tax Act, 2017, UnionTerritory Goods and Services Tax Act, 2017 and Goods and Services Tax (Compensation to States) Act, 2017 is passed by both houses and published in the Gazette of Indian in the Month of April, 2017. Some state also passed their respective State Goods and Service tax Act.

Justification of GST
In the existing mechanism of Indirect Taxes service tax and excise duty is levied by the Central at the point of manufacturing and States levy VAT on sale of goods. There are constitutional constraints on Centre and States Government. As per constitutional power, Centre cannot levy any taxes on goods beyond point of manufacturing and states are not allowed to levy any tax on services. In the currentscenario CENVAT credit is not allowed against state VAT and VAT credit is not allowed against excise and service tax. It breaks the input credit in total supply chain from the point of manufacturing to supply to end  consumer. Since services are outside the scope of state taxation power, it creates problem where any supply is packaged as composite bundles of goods and services. In the existing system there is no seamless credit of input across the states and neither input of service tax and excise against VAT and vice versa. This has tax cascading and increases the cost of production. Other major problem with existing system is complexity in determining whether
a particular transaction is sale of goods or supply of services, classification of goods for rate purpose etc. Considering these shortcomings in existing indirect tax structure there is a requirement of a complete tax reform.

Required Legislative Amendments
The Constitution of India divides the power of taxation between Centre and States. While the Centre has the power to levy taxes on services and goods upto the production stage, the States have the power to levy taxes on sale of goods. The States do not have power to levy taxes on services and goods at the stage of production. Considering the federal structure of India and fiscal autonomy of states, various committees and task forces suggest the dual GST model. Hence to give the constitutional validity to GST, the Constitution (One Hundred and Twenty Second Amendments) Bill, 2014 was passed where both Centre and States have been given the concurrent power to levy taxes on supply of goods and services. A Joint working group is constituted to draft the legislation for CGST, IGST and Model legislation for SGST.

Proposed GST Model in India
India has a federal structure and states and centre have fiscal autonomy. The Constitution of India lays down a clear division of the power between Centre and States which also includes levy and collection of taxes. Considering the federal structure and maintain the taxation power and fiscal autonomy, a concurrent dual GST model is suggested which is acceptable to all stakeholders and easily implementable. The Salient features of proposed GST model are as follow:


1. The GST shall have two component one levied by Centre that shall be called Central GST(CGST) and other levied by State shall be called State GST (SGST). In case of supply of goodsor services within the State, CGST and SGST shall be charged concurrently on every point ofsupply.


2. In case of inter-state supply (including stock transfer) the Centre would levy Integrated GST (IGST) which would be equal to CGST plus SGST.

3. Input tax credit (ITC) of CGST shall be allowed against CGST and input of SGST shall be allowed against SGST liability. No cross utilization of CGST and SGST shall be allowed except in case of inter-state supply under IGST model.

4. Input Credit of IGST shall be allowed in the order of IGST,CGST & SGST.

5. Input Credit SGST and CGST allowed against IGST liability.

6. Uniform procedure for collection of CGST and SGST would be prescribed in the respective legislation for Centre and States.


7. Uniform threshold exemption would apply to both CGST and SGST. Taxpayers with an annual turnover of Rs. 20 Lakhs (Rs. 10 Lakhs for special category States) would be exempt from GST. A composition levy option i.e. a flat rate tax without ITC, would be available to small taxpayers (except manufacturers and service providers) having an annual turnover of upto Rs. 50 Lakhs.

8. A PAN-linked taxpayer identification number would be allotted.


9. Central Excise, Additional Excise Duties, The duties levied under Medical and Toiletries Preparation Act, Service Tax, CVD, SAD, Surcharge and Cess will be subsumed in GST.


10. State taxes VAT/Sales Tax, Entertainment tax, Luxury Taxes, Taxes on lottery betting and gambling, State Cesses and Surcharge related to supply of goods and services and entry tax will be subsumed in GST.

11. Alcoholic beverages would be kept out of the preview of GST.


12. Tobacco products would be kept under preview of GST and Central excise.

13. Petroleum products would be kept out of the preview of the GST for the time being and GST council shall decide the date to include the same in GST.

14. Exports would be zero rated with refund of input credit.


Illustration

1. Assumptions: CGST, SGST & IGST rates are 10%, 10% & 20% respectively

2. Initial cost Rs. 90/ with input credit Rs. 9/ at manufacturing stage and further every stage dealer adds a margin of Rs 10/-





Benefits to Trade

1. Uniform tax laws across the state

2. Uniform tax rate across the states.

3. Single tax instead of various taxes which reduce compliance cost.

4. Few tax rates and exemptions instead of a plethora of tax rates and exemptions in current indirect tax system

5. Input tax credit across services and goods as well as accorss states.

6. Uniform tax rates will make business more competitive.

7. Hassle-free tax compliances due to use of technology.


Benefits to Customers

1. Reduction in prices due to elimination of cascading effect of taxes.

2. Uniform prices throughout the county

3.
Increase in employment opportunity


Current Status of GST

The 122nd constitutional amendment bill was passed by Rajya Sabha on 3rd August 2016 and by Lok Sabha on 8th August 2016 and it got assent of the President in September 2016. As per Article 279A of the amended Constitution, the GST council was formed. GST council is process to finalizing rate of tax, exemption list etc. Central Government passed the GST Act and some stated also passed their respective state act. Target date for GST roll out is 1st July 2017.

Initiative taken by the Government to roll out GST

1. Target date for GST roll out is 1st July 2017.

2. GST council has been set up.

3. GST Act is passed at Centre Level.

4. Draft GST rules and forms have been released.

5. GST council is in process of finalization of GST rates, exemption list and zero rated supply.

6. Goods and Services Tax Network (GSTN) has been set up as a common portal to provide IT infrastructure and services to Centre, State, tax payers and other stakeholders.

7. Modules for back-end processes of tax authorities such as processing registration/returns, assessments, audit, appeals, etc are under process.

8. Development of GST Front-end and Back-end module for States is under process.

9. Training of staffs and awareness of taxpayers are in full swing.

Conclusion

GST is a major tax reform in India after independence. GST is going to be a reality after a long journey of twelve years. Main hurdle in the way of GST is already been crossed by passing of 122nd constitutional amendment bill. It is an ornament of Indian democracy, that despite of federal structure, different regional parties, political differences, and different priorities of states, dream of “One nation, One tax, One Market” is now going to be a reality. GST law in India is a matter of study for scholars.


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