GST JOURNEY IN INDIA IN DETAIL
GST JOURNEY IN INDIA IN
DETAIL
1. In 2000, the Vajpayee
Government started discussion on GST by setting up an empowered committee.
The committee was headed by Asim Dasgupta, (Finance Minister,Government of
West Bengal). It was given the task of designing the GST model and overseeing
the IT back-end preparedness for its rollout.It is considered to be a major
improvement over the pre-existing central excise duty at the national
level and the sales tax system at the state level, the new tax will be a
further significant breakthrough and the next logical step towards a
comprehensive indirect tax reform in the country.
2. The Kelkar Task Force on implementation of the FRBM Act, 2003 had
pointed out that although the indirect tax policy
in India has been steadily progressing in the direction of VAT principle since
1986, the existing system of taxation of goods and services still suffers from
many problems and had suggested a comprehensive Goods and Services Tax (GST)
based on VAT principle. GST system is targeted to be a simple, transparent and
efficient system of indirect taxation as has been adopted by over 130 countries
around the world. This involves taxation of goods and services in an integrated
manner as the blurring of line of demarcation between goods and services has
made separate taxation of goods and services untenable.
3. Introduction of an
Goods and Services Tax (GST) to replace the existing multiple tax structures of
Centre and State taxes is not only desirable but imperative in the
emerging economic environment. Increasingly, services are used
or consumed in production and distribution of goods and vice versa. Separate
taxation of goods and services often requires splitting of transactions value
into value of goods and services for taxation, which leads to greater
complexities, administration and compliances costs. Integration of various
Central and State taxes into a GST system would make it possible to give full
credit for inputs taxes collected. GST, being a destination-based consumption tax based on VAT principle, would also
greatly help in removing economic distortions caused by present
complex tax structure and will help in development of a common national market.
1) A proposal to
introduce a national level Goods and Services Tax (GST) by April 1, 2010 was
first mooted in the Budget Speech for the financial year 2006-07. Since the proposal involved reform/
restructuring of not only indirect taxes levied by the Centre but also the
States, the responsibility of preparing a Design and Road Map for the
implementation of GST was assigned to the Empowered Committee of State Finance
Ministers (EC). In April, 2008, the EC a report to
the titled “A Model and Roadmap for Goods and Services Tax (GST) in India”
containing broad recommendations about the structure and design of GST. In
response to the report, the Department of Revenue made some suggestions to be
incorporated in the design and structure of proposed GST. Based on inputs from
GoI and States, The EC released its First Discussion Paper on
Goods and Services Tax in India on the 10th of November, 2009 with the objective of
generating a debate and obtaining inputs from all stakeholders.
2) A dual GST module for the country has been
proposed by the EC. This dual GST model has been accepted by centre. Under this
model GST have two components viz. the Central GST to be levied and collected
by the Centre and the State GST to be levied and collected by the respective
States. Central Excise duty, additional excise duty, Service Tax, and
additional duty of customs (equivalent to excise), State VAT, entertainment
tax, taxes on lotteries, betting and gambling and entry tax (not levied by
local bodies) would be subsumed within GST.
3) In order to take
the GST related work further, a Joint Working Group consisting of officers from
Central as well as State Government was constituted. This was further
trifurcated into three Sub-Working Groups to work separately on draft
legislations required for GST, process/forms to be followed in GST regime and
IT infrastructure development needed for smooth functioning of proposed GST.
In addition, an Empowered Group for development of IT Systems
required for Goods and Services Tax regime has been set up under the
chairmanship of Dr. Nandan Nilekani.
4) A draft of
the Constitutional Amendment Bill has been prepared and
has been sent to the EC for obtaining views of the States.
The Goods and Service Tax Bill or GST Bill,
officially known as would be a Value added Tax (VAT) also passed
from Rajya Sabha on 3 August 2016 with amendments. After moving to
Loksabha, it was approved on 08 August, 2016.
GST stands for “Goods and Services Tax”, and is proposed
to be a comprehensive indirect tax levy on manufacture, sale
and consumption of goods as well as services at the national level.
It will replace all indirect taxes levied on goods and services by the Indian
Central and State governments. It is aimed at being comprehensive for most
goods and services.
Presently the Model Law i.e
Goods and Service Tax Act, 2016( CGST AND IGST) both in public domain.
In their 12th meeting
held on 16-March-2017 GST Council clears State GST and Union
Territory GST Laws.
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