Current Indirect Tax Vs. GST

Current Indirect Tax vs. GST

S. NO

Issues

Present Regime

GST Regime

1

One Tax for both Good and Service

Currently there are different tax for transactions related to Goods and services  separately.

Under GST- there will be one tax for both Good and Service.

2

Broad scheme

Currently there are various laws like Central excise Act, Service Tax, Central state laws, State VAT laws from.

There will be one law i.e. GST. Under GST there will be CGST, IGST, SGST.

3

Classification of Commodities

Classification of commodity plays major role for the valuation purpose and to fix the rates of tax.

Excise Duty based on HSN

It's presume that GST likely to be based on HSN

4

Registration Number

Registration number are called as TIN

Registration number are PAN based

5

Place of Taxation

Existing based tax are origin based tax.

GST will be a destination based tax.

6

Tax Base

Narrow as compared to GST

GST will be wider as comparative to existing indirect tax structure.

7

Tax burden

In present scenarios- tax burdens are very high.

Under GST- Tax burdens are expected to be less

8

Tax rates

Different tax rates levied across products and across states.

Different tax rates across states leads to economic distortions

Under GST-there will be one CGST rate and a uniform rate of SGST across all states and IGST for interstate.

Single national tax rate reduces economic distortions.

9

Inter-State Transactions

All interstate transactions for good are covered under CST while all interstate transactions for services are comes under Service tax.

All the interstate transactions for both goods and services will be charged under IGST

10

Tax on inter-State Transfer of Goods to Branch / Depot or Agent

In present scenarios- all interstate transactions are taxable and the party will get exemption against Form F

Under GST all interstate transfer of Goods will be charged and will be taxable.

11

Tax on Export of Goods & Services

Exempt / Zero-rated

No change is proposed

12

Tax on Import in India

Import Goods are taxed to Customs Duty (comprises Basic Customs Duty, CVD & SAD);

Import Services are taxed to Service Tax

Import of goods and services will be taxable which will be comprising of BCD and GST.

Basic Custom Duty on goods: No Change-

CVD & SAD on import of goods and import of services: To be subsumed in GST

13

Excise Duty

Under Current system, all the manufacture of goods are subject to excise duty if the prescribed conditions are matched. This is being controlled by Centre under separate Act, Central Excise Act, 1944.

To be subsumed in CGST; Taxable event will be sale; To be taxed up to retail level…

Though for most of the manufactured products excise duty will not be applicable, Tobacco and tobacco products will be taxable under existing excise law as of now. In future it may change to GST purview.

14

Basic Customs Duty

BCD is Imposed by Centre under separate Act, i.e., Customs Act, 1962. Taxable event is imported

There will be BCD for import. As of now, there is no change.

15

CVD/SAD

CVD and SAD is Imposed by Centre under separate Act, i.e., Customs Act 1962. Taxable event is imported

Under GST- CVD and SAD will be subsumed in CGST; Taxable event will be import

16

Service Tax

Service tax is Imposed by Centre under separate Act (Finance Act, 1994).

Under GST - service tax to be subsumed in CGST & SGST;

17

State VAT

State VAT is Imposed by States, Taxable event is sale within the State

State VAT to be subsumed in SGST; Taxable event is sale within State

18

Cascading effect

Cascading effect in various industry results in increase the cost of the product as taxes become part of cost.

GST mechanism will remove the cascading effect by providing credit.

The seamless tax credit will be available under GST.

Input credit set off will be available at all stages of production.

19

Cross-Levy set-off / adjustment

Cross set off allowed under -Excise duty and Service tax.

There will not be any cross set-off between CGST and SGST.

20

Compliance

Tax compliance is complex as there are various laws and regulations with provisions which is being followed.

It's presume that Tax compliance would be easier as there will be only one GST for both Goods as well service.

21

Concurrent Power

At present, there is no concurrent power is available for  both Centre and State on same subject,

Inter-State: Centre .
Local: State

As per the amendment in the Indian Constitution, there will be concurrent power for both Centre and State.