KEY FEATURES OF GST

Key Features of GST and Benefits of GST, Salient Features of GST, features of gst in india. Goods and Service Tax  is also known as GST in a Canadian value added tax on most goods and services sold for domestic consumption. Here we are Providing Features of Goods and Service Tax (GST) and also provide benefits of Goods and Service Tax (GST). Check  key features of the proposed GST model and Benefits to Traders and Government. Now you can scroll down below n check more details regarding “Key Features of GST and Benefits of GST”

The following are the key features of the proposed GST model:-

1. Dual Goods and Service Tax : CGST and SGST
2. Inter-State Transactions and the IGST Mechanism:The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.
3. Destination-Based Consumption Tax:GST will be a destination-based tax. This implies that all SGST collected will ordinarily accrue to the State where the consumer of the goods or services sold resides.
4. Computation of GST on the basis of invoice credit method: The liability under the GST will be invoice credit  method i.e.  cenvat credit will be allowed  on the basis of invoice issued by the suppliers.
5. Payment of GST: The CGST and SGST are to be paid  to the accounts of the central and states respectively.
6. Goods and Services Tax Network (GSTN):A not-for-profit, Non-Government Company called Goods and Services Tax Network (GSTN), jointly set up by the Central and State Governments will provide shared IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders.
7. INPUT TAX CREDIT (ITC)  SET OFF : ITC for CGST & SGST will be  taken for taxes allowed against central and state respectively.
8. GST on Imports : Centre will levy IGST on inter-State supply of goods and services.Import of goods will be subject to basic customs duty and IGST.
9. Maintenance of Records : A taxpayer or exporter would have to maintain separate details in books of account for availment,  utilization or refund of Input Tax Credit of CGST, SGST and IGST.
10. Administration of GST :  Administration of GST will be the responsibility  of  the GST Council , which will be the apex policy making body of the GST. Members of GST Council comprised of the Central and   State ministers in charge of the finance portfolio.
11. Goods and Service Tax Council: The GST Council will be a joint forum of the Centre and the States. The Council will make recommendations to the Union and the States on important issues like tax rates, exemption list, threshold limits, etc. One-half of the total number of Members of the Council will constitute the quorum of GST council.

Benefits of GST :-

To Traders:-

• Reduction in multiplicity of taxes
• Mitigation of cascading /double taxation.
• More neutralization of taxes especially for exports.
• Development of common national market.
• Simpler tax regime.

To Government :-

• Simpler Tax System
• Broadening of Tax base
• Improved compliance & revenue collections
• Efficient use of resources.
• Automation of compliance procedures to reduceerrors and increase efficiency. 

Goods and Service tax - an Introduction

Hello guys, now days a very hot topic is going on in finance and tax fraternity , which is GOOD AND SERVICE TAX or also known as GST. Since GST has been passed now every one is concerned about the effect and causes of GST on there routin work. In this article we shall discuss the basic info about the GST.

INTRODUCTION

The Constitution Amendment Bill for Goods and Services Tax (GST) has been approved by The President of India post its passage in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016) and ratification by more than 50 percent of state legislatures. The Government of India is committed to replace all the indirect taxes levied on goods and services by the Centre and States and implement GST by April 2017.

With GST, it is anticipated that the tax base will be comprehensive, as virtually all goods and services will be taxable, with minimum exemptions.

GST will be a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the tax structure, tax incidence, tax computation, tax payment, compliance, credit utilization and reporting, leading to a complete overhaul of the current indirect tax system.

GST will have a far-reaching impact on almost all the aspects of the business operations in the country, for instance, pricing of products and services, supply chain optimization, IT, accounting, and tax compliance systems.

The reference of GST was first made in the Indian Budget in 2006-07 by the then Finance Minister Mr. P. Chidambaram as a single centralized Indirect tax. The GST Constitution (One Hundred and Twenty Second Amendment) Bill, 2014 was introduced on December 19, 2014 and passed on May 6, 2015 in the Lok Sabha and yet to be passed in the Rajya Sabha

The Bill seeks to amend the Constitution to introduce Goods and Services tax vide proposed new article 246A. This article gives power to legislature of every state and Parliament to make laws with respect to goods and services tax where the supplies of goods or of services take place. Recently, Union Minister Mr. Arun Jaitley said that GST could be implemented as early as January 1, 2016

MEANING

there was man Clause 366(12A) of the Constitution Bill defines GST as “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption. Further the clause 366(26A) of the Bill defines “Services” means anything other than Goods. Thus it can be said that GST is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. The proposed tax will be levied on all transactions involving supply of goods and services, except those which are kept out of its purview.

EFFECT OF GST 

Though GST may have diversed effect on depending upon the nature and related factors of the Entity concerned , yet two of the most important effects of GST are as follows .

1. Single Taxation system.

GST shall replace the burden of various taxes charged by the Union and state govt. 

Before GST there were different tax regarding sale inter-state (CST charged by central govt.) and intra- state ( Local VAT chagred by State govt.) but after CST the entity will have to pay all the taxes under a single umbrella . 

2. Removing Cascading effect 

Cascading Effect means in Simple way means Tax being charged on the earlier amount of tax. GST is intended to remove “Tax on Tax Effect” and provide for common national market for Goods and Services. Though before GST the VAT system provide a relief from cascading effect but it wasn't effective when goods where to be presented in National market but GST is being designed to take over this hindrance as well.

Hope this article will provide you with some basic concepts about GST  and we will be covering more aspects of GST soon .

krishi kalyan cess

Have you been noticing the creeping inflation in your restaurant bills, phone bills and travel agent bills? Well, put it down to the cess effect. After ushering in the 0.5 per cent Swacch Bharat Cess last year, the finance minister proposed the Krishi Kalyan Cess (KKC) in the February 2016 Budget. With effect from June 1, KKC adds on another 0.5 per cent to your service tax burden. After this latest addition, the service tax rate on all the services you use stands at 15 per cent.

what is a cess ?

Unlike taxes, amounts collected via cess are meant be segregated in government accounts and used for a specific purpose. So KKC is to be solely used towards financing activities for the improvement of agriculture and farmer welfare. Although charged along with service tax, KKC is to be listed separately by your service providers on the invoice, as a distinct line-item and paid using a unique accounting code notified by the government.

what is KKC ?

The KKC is based on the idea that levying a cess on a thriving sector of the economy can help fund a lifeline to a sector which is in distress. India’s transition to a service economy from an agrarian economy picked up after the reforms in the early 1990s. Services now contribute around 58 per cent to GDP, around thrice the contribution from agriculture. But despite ranking second worldwide in farm output, India has a legacy of recurring farm distress. The problem is particularly acute this year after two consecutive years of monsoon failure. KKC will ensure that strong growth in services will automatically boost the kitty available to the Centre, for alleviating farm distress. Over the long-term, any improvement in agricultural productivity can help farmers earn higher income and consumers benefit from lower prices as a result of better supplies, keeping a lid on food inflation.

Krishi Kalyan Cess is in addition to the current rate of service tax (14%) plus swatch Bharat cess (0.5%). Hence the total service tax rate is 15% from 1st June 2016 onwards.

Earlier, from 1st June 2015 onwards the Government had abolished the education cess (2%) and secondary & Higher education cess (1%), and enhanced the rate of service tax from 12% to 14%.
Then from 15th Nov 2015 onward government levies the Swatch Bharat Cess @0.5% resulting the total service tax rate to 14.5%.

Accounting treatment of KKC

AS KKC is in addition to Service tax (14%) and swatch bharat cess (0.5%) , therefore KKC shall be charged on the invoice value i.e value before charging Servive tax and swatch bharat cess. 

for example:

suppose M/s shivam consultancy has charged Rs.100000  plus service tax for its services .

here total amount to be charged shall be -

       Basic cost of services      : 100000

       Service tax                       : 14000 

       Swatch bharat cess          : 500

       KKC                                : 500

                                               ______

                   total                       15000