Goods and Service Tax

Goods and Service Tax (GST)

Goods And Service TaxChange the introduction as “Goods and Services Tax (GST), is an Indirect tax that has replaced various indirect taxes levied at both Central and State level, and has unified them all under one national market across India. It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. It is indirectly levied on the supply of goods and services. Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. Inter-state sales are chargeable to Integrated GST. The most important feature of GST is that it removes the cascading effect on the sale of goods and services. However, GST in a federal structure like India is very complex and faces numerous challenges in its proper implementation. We, at Khurana & Khurana, provide consulting & assistance in the proper implementation of GST. We also provide a review of the GST implementation done by a company.

Central (Duties and Taxes) merged under GST:

  1. Central Excise Duty (including Additional Excise Duty) – Central Excise is a duty imposed on the manufacturing of goods in India and the collection of this duty is done by the Central Board of Excise and Customs.
  2. Service Tax – Service Tax is a tax that is levied by the government on the services provided and it is actually borne by the customers. It is an indirect tax, wherein the service provider collects the tax from the service receiver and pays to the Government.
  3. Additional Customs Duty – It is a duty equivalent to Central Excise Duty which is imposed on manufacturing. It is calculated on the value base of goods including landing charges and basic customs duty (excluding anti-dumping duty, safeguarding duty, etc).
  4. Special Additional Duty of Customs – It is payable at 4% on the goods imported and this is instead of VAT/ Sales Tax.
  5. Central Surcharges and Cess – Surcharge is a charge on tax and as the name suggests, it is an additional charge and it is basically on personal income tax (on high-income slabs) and on corporate income tax. Cess is imposed by the central government and is levied for a specific purpose.

State (Duties and Taxes) merged under GST:

  1. Value Added Tax (VAT) – VAT is an indirect tax on the goods and services that are provided at the state or domestic level. It is imposed at each stage in the chain of distribution and production from the raw materials till the valuation of the product and it is borne by the end-users (customers) in the Distribution channel.
  2. Central Sales Tax – CST, is levied on sales, which is affected by inter-state trade. CST is an indirect tax on consumers. As it is centrally levy, so it is administered by the concerned state where the sales originated.
  3. Octroi & Entry Tax – Octroi is a tax which is charged by local authority say, Municipality and Entry Tax is charged by State.
  4. Purchase Tax – Purchase tax is a tax that is imposed on the purchase of goods by the state government, and it is applied to a wide range of goods.
  5.  Luxury Tax – A Luxury Tax is levied on articles that are either expensive or optional
  6.  Taxes on lottery, betting and gambling – Tax which is imposed on Lottery winnings, Gambling and Betting calculated as Tax Deduction at Source and it is deducted from Income.
  7. Entertainment Tax – Entertainment Tax is a tax levied by the government on things related to entertainment like movie tickets, commercial shows, etc.