Goods and Services Tax or GST was a revolutionary tax reformation proposed in 1999 during the tenure of Prime Minister Atal Bihari Vajpayee. It was approved during a meeting between the Prime Minister and his economic advisory panel. A committee was set up by the minister to design a GST model. This was headed by Asim Dasgupta, the then finance minister of West Bengal. In 2006, P. Chidambaram resumed work on the GST model, amid much controversy and opposition, the GST was implemented on July 1st, 2017.
GST is a comprehensive, destination-based indirect tax. It has replaced almost 17 indirect taxes that were implemented by the State and Centre. Certain taxes, such as Value-added Tax or VAT, entertainment tax, excise duty, etc. have been done away with once GST came into force. It consolidates the different taxes into a single one. However, it takes time to get around its complex structure.
GST filing can be done online with many software that is specifically designed for this purpose. This is a safer alternative than offline filing as it gives you the option to encrypt sensitive documents. You can use handy software such as emSigner to sign, send, track, achieve, and manage smart documents. You can use the emSigner for GST, which will enable you to digitally sign your GST application and GST return filing through the GST portal.
GST plays an important role in regulating unorganized businesses, curbing corruption by limiting sales without receipts, and decreasing tax evasion. It brings a sense of accountability in the business sector and also simplifies the taxation laws for businesses that provide goods and services.
The 4 Different Types of Goods and Service Tax
Central Goods and Service Tax (CGST)
This tax is collected for goods and service transactions at the intrastate level. As the name suggests, it is collected by the Central Government.
State Goods and Services Tax (SGST)
Taxes levied by the State government like state cess and surcharges, state sales tax, VAT or value-added tax, luxury tax, lottery winnings, etc. The state collects the SGST.
Integrated Goods and Service Tax (IGST)
IGST is a tax levied by the Central Government. Instead of CGST or SGST, which includes the supply of goods and services, IGST is levied on interstate transactions and is applicable all over India.
Union Territory Goods and Service Tax (UTGST)
This is the tax levied in the five Union Territories across India. They are Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu, Chandigarh, and Lakshadweep. This tax is applicable as independently elected governments rule these union territories.
GST operates under five tax slabs, 0%, 5%, 12%, 18% and 28%. Refined metals such as Gold have a rate of 3%. Unrefined diamonds and precious stones have a tax rate of 0.25%.
What is the GST Council?
There are 33 GST Council members headed by the Minister of Finance, Nirmala Sitharaman. These GST Council members are vested with the power to modify, reconcile, or procure any law or regulation on the matter of goods and services tax in India. The rest of the members include ministers of finance of various States and Union Territories.
The GST Council members are responsible for making decisions such as tax rate, tax exemption, the due date of forms, tax laws, tax deadlines, special rates and provisions for some states, etc. These are some of the fundamental decisions taken that have a very far-reaching impact on the tax structure of India. However, the primary goal of the GST Council is to determine and ensure that one uniform tax rate is implemented across the nation for goods and services.
What is the Structure of the GST Council?
The GST Council is the governing body of the Goods and Services Tax. The President of India constitutes this Council. According to Article 279 (1) of the amended Indian Constitution, the President must put together a GST Council in 60 days from the commencement of Article 279 A and personally vet all 33 GST Council members.
Article 279 A states the structure to be followed regarding the members constituting the Council. It dictates that it will be a joint forum of the Centre and State. The members of the Council will include the Union Finance Minister, who will also be the Chairperson. The Union Minister of State will be a member who is in charge of the Revenue of Finance. Other members are the Ministers of Finance of each state or any other Minister nominated by the State Government.
What are the Duties of the GST Council?
The GST Council is entrusted with two particular laws, making recommendations and holding GST meetings. The GST council is responsible for implementing rules regarding GST registrations, payment of GST, valuation, GST return, input tax credit, transitional provisions, composition, invoice and claiming a refund, etc. Here is an in-depth look into the primary duties of the GST Council members.
The Council must decide which goods and services will be charged and exempted from GST. Article 279A (4) lays down the provisions for the GST Council to make recommendations to the State and Union Government regarding GST related affairs.
GST Council Meetings
The GST Council should meet regularly and discuss the GST rules and laws. The strengthening of the National Anti-Profiteering Authority under the GST law is the main aim of setting up such a committee. Many such meetings have taken place, and many important decisions have been made. Here are some of the significant decisions that the Council has taken so far.
- Extension of the deadline for filing GSTR-1.
- Exemption from GST for special category status to be determined with a threshold of INR 10 lakhs.
- Composition levy cannot be availed on goods like tobacco, ice cream, pan masala, etc. However, restaurants are exempted from this and can avail of composition levy for goods and manufacturing activities.
- Change in composition schemes. The GST exemption threshold limit for the Indian States is set at 1.5 cr. For the North Eastern States and Himachal Pradesh, the limit has been brought down to INR 50 lakhs for exemption from GST.
- The GST rate lowered to 5% on non-affordable houses and 1% on affordable homes. This changed rate applies to properties that are under construction.
- Realty estate developers can choose the older GST rate of 12% on non-affordable houses. GST rate of 8% can be chosen in case of affordable homes until May 10, 2019.
- The builder who chooses to go with the old GST rates cannot claim the input tax credit.
It is the duty of the GST Council to settle disputes and create mechanisms for the same. The nature of conflicts coming under the jurisdiction of the GST Council are:
- When the Central Government and State Government fail to agree.
- When the Central Government and one or more States on one side and one or more States on the other side are in a dispute.
- Disputes that arise from the implementation of any recommendations of the GST Council.