The Constitution Amendment Bill for Goods and Services Tax (GST) has been approved by The President of India post its passage in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016) and ratification by more than 50 percent of state legislatures. The Government of India is committed to replace all the indirect taxes levied on goods and services by the Centre and States and implement GST by July 2017. With GST, it is anticipated that the tax base will be comprehensive, as virtually all goods and services will be taxable, with minimum exemptions. GST will be a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the tax structure, tax incidence, tax computation, tax payment, compliance, credit utilization and reporting, leading to a complete overhaul of the current indirect tax system. GST will have a far-reaching impact on almost all the aspects of the business operations in the country, for instance, pricing of products and services, supply chain optimization, IT, accounting, and tax compliance systems.
GST would bring in significant change in doing business in India. Advocacy for best practices, gearing up for changes in processes, training teams and developing IT systems for being GST compliant are the key areas to be assessed. The Government is committed to introduce GST by April 2017. Tax payers need to be GST compliant to be able to test system changes in time. Depending on the operating geographies, size and sector, the changes would be substantial and may require proactive planning with a time-bound action plan. In order to prepare for the implementation of GST, companies need to understand GST policy development and its implications for scenario planning and transition roadmap preparation.
GST has been envisaged as an efficient tax system, neutral in its application and distributionally attractive. The advantages of GST are:
The power to make laws in respect of supplies in the course of inter-state trade or commerce will be vested only in the Union Government. States will have the right to levy GST on intra-state transactions, including on services. The Centre will levy IGST on inter-state supply of goods and services. Import of goods will be subject to basic customs duty and IGST.GST is defined as any tax on supply of goods and services other than on alcohol for human consumption.Central taxes such as Central Excise duty, Additional Excise duty, Service tax, Additional Custom duty and Special Additional duty as well as state-level taxes such as VAT or sales tax, Central Sales tax, Entertainment tax, Entry tax, Purchase tax, Luxury tax and Octroi will subsume in GST.Petroleum and petroleum products, i.e., crude, high speed diesel, motor spirit, aviation turbine fuel and natural gas, shall be subject to GST - date to be notified by the GST Council.Provision will be made for removing imposition of entry tax /Octroi across India.Entertainment tax, imposed by states on movie, theatre, etc., will be subsumed in GST, but taxes on entertainment at panchayat, municipality or district level will continue.GST may be levied on the sale of newspapers and advertisements. This would mean substantial incremental revenues for the Government.Stamp duties, typically imposed on legal agreements by states, will continue to be levied.Administration of GST will be the responsibility of the GST Council, which will be the apex policy making body for GST. Members of GST Council comprise Central and State ministers in charge of the finance portfolio.
The GST structure would follow the destination principle. Accordingly, imports would be subject to GST, while exports would be zero-rated. In the case of inter-state transactions within India, State tax would apply in the state of destination as opposed to that of origin.
20 Years of Global Experience in Enterprise Technology.. He was part of SAP advisory team for products based in Palo Alto and Waldorf. He was based in UK for 18 years before moving to India in 2014. He worked in company like Capgemini, Fujitsu and Arthur Andersen.
A Chartered Accountant with over 28 years’ post qualification experience, in India and Africa, managing the overall Finance and Accounts function inclusive of Strategic Planning, Budgeting, Project Finance, Taxation, Audits, Systems Implementation and IFRS implementation. Vast knowledge in development of financial policies / guidelines for effective fund management