Q 1. What is Goods and Service Tax (GST)?
It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as a setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.
Q 2. What exactly is the concept of destination based tax on consumption?
The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.
Q 3. Which of the existing taxes are proposed to be subsumed under GST?
The GST would replace the following taxes:
Taxes currently levied and collected by the Centre:
State taxes that would be subsumed under the GST are:
Q 4. Which are the commodities proposed to be kept outside the purview of GST?
Alcohol for human consumption, Petroleum Products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel& Electricity.
Q5. Why is Dual GST required?
India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.
Q6. Which authority will levy and administer GST?
Centre will levy and administer CGST & IGST while respective states will levy and administer SGST.
Q7. What is IGST?
Under the GST regime, an Integrated GST (IGST) would be levied and collected by the Centre on inter-State supply of goods and services. Under Article 269A of the Constitution, the GST on supplies in the course of interState trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
Q 8. Who will decide rates for levy of GST?
The CGST and SGST would be levied at rates to be jointly decided by the Centre and States. The rates would be notified on the recommendations of the GST Council.
Q9. How will the goods and services be classified under GST regime?
HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2 digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4 digit code. Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices. Services will be classified as per the Services Accounting Code (SAC)
Q 10. How will imports be taxed under GST?
Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off 14 15 will be available on the GST paid on import on goods and services.
Q11. How will Exports be treated under GST?
Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters.
Q12. What is the taxable event under GST?
Supply of goods and/or services. CGST & SGST will be levied on intra-state supplies while IGST will be levied on inter-state supplies. The charging section is section 7 (1) of CGST/SGST Act and Section 4(1) of the IGST Act.
Q13. Is the reverse charge mechanism applicable only to services?
No, reverse charge applies to supplies of both goods and services.
Q14. What is advantage of taking registration in GST?
Registration under Goods and Service Tax (GST) regime will confer following advantages to the business:
Q15. Can a person without GST registration claim ITC and collect tax?
No. A person without GST registration can neither collect GST from his customers nor claim any input tax credit of GST paid by them.
Q16. Who is a Casual Taxable Person?
Casual Taxable Person has been defined in Section 2 (21) of MGL. It means a person who occasionally undertakes transactions in a taxable territory where he has no fixed place of business.
Q17. Who is a Non-resident Taxable Person?
A taxable person residing outside India and coming to India to occasionally undertake the transaction in the country but has no fixed place of business in India is a non-resident taxable person in terms of Section 2 (69) of the MGL.
Q18. Who is an ISD?
ISD stands for Input Service Distributor and has been defined under Section 2 (56) of MGL. It is basically an office meant to receive tax invoices towards receipt of input services and further distribute the credit to supplier units proportionately.
Q19. Will ISD be required to be separately registered other than the existing taxpayer registration?
Yes. The ISD registration is for one office of the taxpayer which will be different from the normal registration.
Q20. Can a taxpayer have multiple ISDs?
Yes. Different offices of a taxpayer can apply for ISD registration.
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