Goods and Services Tax (GST) Bill 2016 - Frequently Asked Questions with Answers | Download in PDF:
Dear Reader, Here we have given the Important points that you need to know about Goods and Services Tax (GST) Bill which was most expected topic in upcoming IBPS PO and Clerk exams.
ALL YOU NEED TO KNOW ABOUT - GST BILL
With main opposition Congress and most other parties on board, Rajya Sabha passed a bill to amend the Constitution to facilitate rollout of the historic GST. The Constitution (122nd Amendment) Bill, 2014 was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate during which a rare bonhomie was witnessed among the ruling and the opposition parties. Six official amendments, including scrapping of one per cent additional tax, moved by the government were approved with cent per cent votes.
Here are all the frequently asked questions on the GST Bill along with their answers
1. What is GST? How does it work?
GST is one indirect tax for the whole nation, which will make India one unified common market.
GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage.The final consumer will thus bear only the GST charged by the last dealerin the supply chain, with set-off benefits at all the previous stages.
2. What are the benefits of GST?
The benefits of GST can be summarized as under:
# For business and industry
A. Easy compliance:
A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.
B. Uniformity of tax rates and structures
GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.
C. Removal of cascading
A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.
D. Improved competitiveness:
Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.
E. Gain to manufacturers and exporters:
The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.
# For Central and State Governments
A. Simple and easy to administer:
Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.
B. Better controls on leakage:
GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an inbuilt mechanism in the design of GST that would incentivise tax compliance by traders.
C. Higher revenue efficiency:
GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.
# For the consumer
A. Single and transparent tax proportionate to the value of goods and services:
Due to multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.
B. Relief in overall tax burden:
Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.
3. Which taxes at the Centre and State level are being subsumed into GST?
# At the Central level, the following taxes are being subsumed:
A. Central Excise Duty,
B. Additional Excise Duty,
C. Service Tax,
D. Additional Customs Duty commonly known as Countervailing Duty, and
E. Special Additional Duty of Customs.
# At the State level, the following taxes are being subsumed:
A. Subsuming of State Value Added Tax/Sales Tax,
B. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
C. Octroi and Entry tax,
D. Purchase Tax,
E Luxury Tax and,
F. Taxes on lottery, betting and gambling.
4. How would GST be administered in India?
Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.
5. Will cross utilization of credits between goods and services be allowed under GST regime?
Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would not be allowed except in the case of inter-State supply of goods and services under the IGST model which is explained in answer to the next question.
6. What are the major features of the Constitution (122nd Amendment) Bill, 2014?
The salient features of the Bill are as follows:
A. Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
B. Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs;
C. Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling;
D. Dispensing with the concept of ‘declared goods of special importance’ under the Constitution;
E. Levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
F. GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council;
J. Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years;
H. Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.
7. What are the major features of the proposed registration procedures under GST?
The major features of the proposed registration procedures under GST are as follows:
i. Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply afresh for registration under GST.
ii. New dealers: Single application to be filed online for registration under GST.
iii. The registration number will be PAN based and will serve the purpose for Centre and State.
iv. Unified application to both tax authorities.
v. Each dealer to be given unique ID GSTIN.
vi. Deemed approval within three days.
vii. Post registration verification in risk based cases only.
8. What are the major features of the proposed returns filing procedures under GST?
The major features of the proposed returns filing procedures under GST are as follows:
A. Common return would serve the purpose of both Centre and State Government.
B. There are eight forms provided for in the GST business processes for filing for returns. Most of the average tax payers would be using only four forms for filing their returns. These are return for supplies, return for purchases, monthly returns and annual return.
C. Small taxpayers: Small taxpayers who have opted composition scheme shall have to file return on quarterly basis.
D. Filing of returns shall be completely online. All taxes can also be paid onine.
9. What are the major features of the proposed payment procedures under GST?
The major features of the proposed payments procedures under GST are as follows:
i. Electronic payment process- no generation of paper at any stage
ii. Single point interface for challan generation- GSTN
iii. Ease of payment – payment can be made through online banking, Credit Card/Debit Card, NEFT/RTGS and through cheque/cash at the bank
iv. Common challan form with auto-population features
v. Use of single challan and single payment instrument
vi. Common set of authorized banks
vii. Common Accounting Codes
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