A COMPARATIVE VIEW ON GOODS AND SERVICES TAX

A COMPARATIVE VIEW ON GOODS AND SERVICES TAX

This comparison is based on the recommendations of the First Discussion Paper produced by the Empowered committee of states finance ministers (hereafter referred as EC) and the Report of the Task Force on GST constituted by the Thirteenth Finance commission. Before going on discussion we should define GST and the Objective behind it. What is GST? GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the Producer's point and Service provider's point upto the retailer level. It is essentially a tax only on value addition at each stage and a supplier at each stage is permitted to set-off through a tax credit mechanism.

Under GST structure, all different stages of production and distribution can be interpreted as a mere tax pass through and the tax essentially sticks on final consumption within the taxing jurisdiction. Objective behind GST a) The incidence of tax only falls on domestic consumption.

b) The efficiency and equity of the system is optimized.

c) There should be no export of taxes across taxing jurisdictions.

d) The Indian market should be integrated into a single common market.

e) It enhances the cause of co-operative federalism. Our comparative discussion will be based only on significant points constructing overall GST. GST MODEL A dual structure has been recommended by the EC. The two components are: Central GST (CGST) to be imposed by the center and state GST (SGST) by the states. The Task Force has also recommended for the dual levy imposed concurrently by the centre and the states, but independently to promote co-operative federalism. Both the CGST and SGST should be levied on a common and identical base. Both have suggested for consumption type GST, that is, there should be no distinction between raw materials and capital goods in allowing input tax credit. The tax base should comprehensively extend over all goods and services upto final consumption point. Also both are of the view that the GST should be structured on the destination principle. According to Task Force this will result in the shift from production to consumption whereby imports will be liable to both CGST and SGST and exports should be relieved of the burden of goods and services tax by zero rating. Consequently, revenues will accrue to the state in which the consumption takes place or is deemed to take place. The Task Force on GST said the computation of CGST and SGST liability should be based on the Invoice credit method. i.e., allow credit for tax paid on all intermediate goods and services on the basis of invoices issued by the supplier. As a result, all different stages of production and distribution can be interpreted as a mere tax pass-through and the tax will effectively stick' on final consumption within the taxing jurisdiction. This will facilitate elimination of the cascading effect at various stages of production and distribution. For more detail and updates email us on namita@lawcrux.com or visit http://www.lawcrux.com

POST COMMENT

Genealogy services, historical data indexing Magic Submitter Review: Article Submission Service With A Twist IMS of PA Merchant Benefits of Credit Card Processing and Merchant Services How RIM has benefited from BB services and BB Messenger over the years Calgary Towing Services Find locksmiths in Beverly Hills, CA For Effective Services Require Lock And Key Services? Contact Locksmith Company in Gardena, CA Gardena Locksmith services are the Best Local lock smith in Gardena Provide Excellent Services Hermosa Beach locksmith services Are Great Call Locksmith company in Hollywood, CA For Quick Services Why Having The Right Payroll Service Is Important End The Dreadful Nightmares- Take The Help Of Hollywood locksmith services