ACCOUNTING OF GOODS AND SERVICES TAX (GST)

           ACCOUNTING OF GOODS AND SERVICES TAX (GST)

GST is a destination based tax and levied at a single point at the time of consumption of goods or services by the ultimate consumer. GST is based on the principle of value added tax. GST law emphasizes on voluntary compliance and on accounts based reporting and monitoring system. It is a comprehensive levy and envisages tax collection on both goods and services at the same rate.
The term GST is defined in Article 366 (12A) “any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption”.
It is one tax in dual system. It is dual system as both Centre and states have their revenue.
GST amalgamated a large number of Central and State taxes into a single tax. Allowing set-off of prior-stage taxes; it would mitigate the ill effects of cascading and pave the way for a common national market.
The GST replaced the following taxes levied and collected by the Centre:
a. Central Excise duty
b. Duties of Excise (Medicinal and Toilet Preparations)
c. Additional Duties of Excise (Goods of Special Importance)
d. Additional Duties of Excise (Textiles and Textile Products)
e. Additional Duties of Customs (commonly known as CVD)
f. Special Additional Duty of Customs (SAD)
g. Service Tax
h. Central Surcharges and Cesses so far as they relate to supply of goods and services.
State taxes that are subsumed under the GST are:
a. State VAT
b. Central Sales Tax
c. Luxury Tax
d. Entry Tax (all forms)
e. Entertainment and Amusement Tax (except when levied by the local bodies)
f. Taxes on advertisements
g. Purchase Tax h. Taxes on lotteries, betting and gambling i . State Surcharges and Cesses so far as they relate to supply of goods and services.
Salient Features of GSTSalient Features of GST
The GST is applicable on the supply of goods or services. It is a destination based consumption tax. It would be a dual GST with the Centre and States simultaneously levying it on a common tax base. The GST to be levied by the Centre on intra-State supply of goods and / or services would be called the Central GST (CGST) and that to be levied by the States would be called the State GST (SGST). In case of inter-state transfer or import Integrated GST (IGST) is levied.
Scope
The GST would apply to all goods other than alcoholic liquor for human consumption and five petroleum products, viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel. It would apply to all services barring a few to be specified.
Tobacco and tobacco products would be subject to GST. In addition, the Centre would have the power to levy Central Excise duty on these products.
GST is a tax on value addition basis on the transaction value of outward supply of goods and/or services of a month computed at notified rate [0%,5%, 12%, 18%, 28%] and paid through Electronic Cash Ledger after availing Input Tax Credit on or before 20th of next month along with monthly return.

Taxability
Tax payers with an aggregate turnover in a financial year up to *₹20 lakhs/ 10 lakhs for NE states and Sikkim] would be exempt from tax.
Small taxpayers with an aggregate turnover in a financial year up to ₹ 1.50 crores shall be eligible for composition levy. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover during the year without the benefit of (ITC) Input Tax Credit.
The GST to be levied by the Centre on intra-State supply of goods and/or services is Central GST (CGST) and that by the States is State GST (SGST).
On inter-state supply of goods and services, Integrated GST (IGST) will be collected by Centre. IGST will also apply on imports. GST is a consumption based tax i.e. the tax should be received by the state in which the goods or services are consumed and not by the state in which such goods are manufactured. IGST is designed to ensure seamless flow of input tax credit from one state to another. One state has to deal only with the Central government to settle the tax amounts and not with every other state, thus making the process easier.

v  Benefits of GST

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