VALUE ADDED TAX (VAT) vs GOODS AND SERVICES TAX (GST):
- Value Added Tax, is precursor to the GST regime.
- Value Added Tax is applicable at the sale of goods while GST is applicable for both goods and services.
- Value Added Tax and Goods and Services Tax (GST), both are charged on the increase in value of an article at each stage of its production or distribution.
GOODS AND SERVICES TAX (GST):
- Goods and Services Tax (GST) is single indirect tax for the whole nation, making India one unified common market.
- Goods and Services Tax (GST) was implemented on 1st July 2017
- Goods and Services Tax (GST) replaced the multiple indirect taxes and surcharges eliminating the cascading effects of taxation.
Central Indirect Taxes which are included in GST regime:
- Central Excise duty,
- Central Sales Tax
- Additional duties of excise,
- Excise duty levied under Medicinal & Toilet Preparation Act,
- Additional duties of customs (CVD & SAD) ,
- Service Tax and Surcharges & Cess
State Indirect Taxes which are included in GST are :
- State VAT / Sales Tax
- Purchase Tax
- Entertainment Tax (other than those levied by local bodies)
- Luxury Tax
- Entry Tax (All forms)
- Taxes on lottery,
- betting & gambling and
- Surcharges & Cess.
PRINCIPLES OF GST:
- The Centre will levy and collect the Central GST.
- The States will levy and collect the State GST on the supply of goods and services within a state.
- The Centre will levy the Integrated GST (IGST) on the interstate supply of goods and services.
- A part of Integrated GST (IGST) is given to the state where the good or service is consumed.
Main Features of GST :
Applicable On supply side:
GST is
applicable on ‘supply’ or consumption side of goods or services unlike the previous concept of Excise Tax on the
manufacture of goods or on sale of goods .
Destination based Taxation:
GST is
based on the principle of destination-based taxation as against the
present principle of origin-based taxation.
Dual GST:
- GST can be imposed by the Centre and the States simultaneously .
- GST levied by the Centre is called Central GST (CGST) and GST levied by the States is called State GST (SGST).
- Integrated GST (IGST) is to be levied upon Interstate sale.
- Import of goods or services is treated as inter-state supplies and hence subjected to Integrated Goods & Services Tax (IGST) in addition to the applicable customs duties.
GST rates to be mutually decided:
CGST, SGST & IGST are levied at rates to be mutually agreed upon in GST Council.
Multiple Rates:
- GST slabs for any regular taxpayers are pegged at 0% (nil-rated), 5%, 12%, 18% & 28%.
- Lesser-used GST rates are at 3% and 0.25%.
There are certain taxes which are still not under GST:
- Alcohol and Tax on Petroleum Product
- Entry Taxes, Mandi Charges, and Toll
- Entertainment Tax (Levied by Local Bodies)
- Road Tax or Vehicle Tax,
- Tax on Sale and Consumption of Electricity
- Stamp Duty and Custom Duty
