GST Conclave by Revenue Secretary, Dr. Hasmukh Adhia
5/20/2017 | Economic Affairs |Tax System
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Published on Apr 25, 2017 @pib
Goods and Service Tax (GST) will not fuel inflation in India unlike in other countries as India is moving from multiple taxes which had cascading effect to a single tax regime, Revenue Secretary Hasmukh Adhiya said Tuesday.
Briefing media at a GST Conclave here, he said the final price of goods will be much lower under the GST regime as a large segment of small retailers will either be exempted from paying any tax or will have to pay at a very low rate.
"It is wrong to say that GST will have inflationary impact as we are moving from a multiple tax regime to a single tax whereas the other countries of the world moved from single point tax to multiple tax regime which had a cascading impact,” Adhia said ahead of government’s plan to roll out the indirect tax regime from July one.
He said there will be no separate taxes. It will be only one GST on goods and services. The GST has unified Centre and state taxes. The inter state movement of goods will attract Integrated GST but the input credit for that will be given to the trader.
Adhia said there will be IGST on imported goods too and it will help local product competitiveness. Besides, the proposed GST will boost government’s Make in India programme.
"All imported goods will be charged IGST which is equivalent to Central GST and State GST. This will bring equality with taxation on local products,” the secretary said. He, however, said that Customs duty has been kept out of GST and it will remain as earlier.
The GSTC has been notified with effect from 12th September, 2016. GSTC is being assisted by a Secretariat. Thirteen meetings of the GSTC have been held so far. The following decisions have been taken by the GSTC:
(i) The threshold exemption limit would be Rs. 20 lac. For special category States enumerated in article 279A of the Constitution, threshold exemption limit has been fixed at Rs. 10 lac.
(ii) Composition threshold shall be Rs. 50 lac. Composition scheme shall not be available to inter-State suppliers, service providers (except restaurant service) and specified category of manufacturers.
(iii) Existing tax incentive schemes of Central or State governments may be continued by respective government by way of reimbursement through budgetary route. The schemes, in the present form, would not continue in GST.
(iv) There would be four tax rates namely 5%, 12%, 18% and 28%. Besides, some goods and services would be under the list of exempt items. Rate for precious metals is yet to be fixed. A cess over the peak rate of 28% on certain specified luxury and sin goods would be imposed for a period of five years to compensate States for any revenue loss on account of implementation of GST. The Council has asked the Committee of officers to fit various goods and services in these four slabs keeping in view the present incidence of tax.
(v) The five laws namely CGST Law, UTGST Law, IGST Law, SGST Law and GST Compensation Law have been recommended.
(vi) In order to ensure single interface, all administrative control over 90% of taxpayers having turnover below Rs. 1.5 crore would vest with State tax administration and 10% with the Central tax administration. Further all administrative control over taxpayers having turnover above Rs. 1.5 crore shall be divided equally in the ratio of 50% each for the Central and State tax
(vii) Powers under the IGST Act shall also be cross-empowered on the same basis as under CGST and SGST Acts with few exceptions.
(viii) Power to collect GST in territorial waters shall be delegated by Central Government to the States.
(ix) Formula and mechanism for GST Compensation Cess has been finalised.
(x) Four rules on input tax credit, composition levy, transitional provisions and valuation have been recommended. Further five Rules on registration, invoice, payments, returns and refund, finalized in September, 2016 and as amended in light of the GST bills introduced in the Parliament, have also been recommended.