GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi- stage, destination-based tax that is levied on every value addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.
GST is one indirect tax for the entire country.
Goods and Services Tax (GST) is the biggest indirect tax reform of India. GST will subsume Central Excise Law, Service Tax Law, State VATs, Entry Tax, Luxury Taxes, Octroi etc. Earlier, there were so many taxes which were levied on goods such as Excise, VAR, entry tax, octroi. Similarly, service tax, entertainment tax, luxury tax were levied on services. Now, there will be only single tax i.e. GST and it will make dream of One Nation, One Tax feasible.
What are the Central / State Indirect Taxes and Levies which would be merged in GST?
Central Indirect Taxes:
Following Central Indirect Taxes and Levies would be subsumed in GST:
· Central Excise Duty
· Additional Excise Duties
· Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955
· Service Tax
· Additional Customs Duty commonly known as Countervailing Duty
· Special Additional Duty of Customs
· Central Surcharges and Cess, so far as they relate to the supply of goods and services.
State Indirect Taxes:
Following State Indirect Taxes and Levies would be subsumed in GST:
· State Value Added Tax/Sales Tax
· Entertainment Tax (other than the tax levied by the local bodies)
· Central Sales Tax (levied by the Centre and collected by the States)
· Octroi and Entry Tax
· Purchase Tax
· Luxury Tax
· Taxes on lottery
· Betting and gambling
· State cess and surcharges insofar as they relate to supply of goods and services.
The above taxes are directly relatable to the supply of goods and services and fall in the supply chain from the point of procurement of the raw material to the consumption of the goods and services by the end customer
8 Indirect Taxes That Are Not Covered Under GST!
There are several taxes which are going to be levied by the local bodies, and the GST is not going to cover them. Here are
1. Custom Duty
The Countervailing Duty (CVD) and Special Additional Duty (SAD) will subsume under GST, but the Basic Customs Duty (BCD) will be charged according to current law only and not GST.
2. Stamp Duty
The buyer has to the pay stamp duty for the registration of the property, and GST will not cover Stamp duty and will be subsumed as per the tax levied by the government.
3. Vehicle Tax
GST does not cover road tax, so the Vehicle Tax will not be charged under GST, and will remain under the Motor Vehicle Act.
4. Excise on Liquor
For the time being, Liquor has been kept outside the GST. Alcohol needs a constitutional amendment to be brought under the ambit GST. Though Industry Experts suggest, the GST will impact the sector negatively in the future.
5. Tax on Sale and Consumption of Electricity
GST will not affect the Electricity Bills as of now, and the existing tax system of VAT and Central Excise will prevail on Electricity Bills. The state will charge the VAT and Centre will levy the Central Excise.
6. Entry Taxes and Toll
GST will not cover the Toll Tax as such taxes like road tax, toll tax, environment tax and others are directly paid by users and will be levied by States directly.
7. Entertainment Tax (Levied by Local Bodies)
The imposition of the extra tax by local bodies is not covered under GST. Hence, in addition to 28 per cent GST, the local body extra tax will lead to Double Tax. This will indirectly lead to a sharp increase in the price of the tickets.
8. Road Tax
GST will not cover the Road Tax as such taxes like toll tax, road tax, environment tax and others are directly paid by users and will be levied by States directly.