Page 47 - Plastics News September 2016

FEATURES

The much awaited GST

Despite doubts raised by the Opposition over a new tax the GST will have two components: one levied by the
regime's ?nancial implications for the state's revenues, Centre (hereinafter referred to as Central GST), and
the Maharashtra legislature unanimously rati?ed the the other levied by the States (hereinafter referred
Constitutional amendment bill on the goods and services to as State GST). This dual GST model would be
tax (GST). implemented through multiple statutes (one for CGST
and SGST statute for every State). However, the basic
The Goods and Services Tax (GST) is one of the most features of law such as chargeability, de?nition of
signi?cant reforms introduced in the history of the Indian taxable event and taxable person, measure of levy
?scal evolution. It is de?nitely a progressive and pragmatic including valuation provisions, basis of classi?cation
approach to taxation that will improve ease of doing etc. would be uniform across these statutes as far as
business in the country. That being said, the government practicable.
could only muster consensus on the nature of levies that
shall be subsumed in the GST. There is no consensus on (ii) The Central GST and the State GST would be
the ?nal GST rate; which is key to determine the impact. applicable to all transactions of goods and services
except the exempted goods and services, goods which
Chief minister Devendra Fadnavis tried to convince the are outside the purview of GST and the transactions
legislative council of no adverse ?nancial implications of which are below the prescribed threshold limits.
the GST on state revenue and that municipal corporations,
especially the BMC, will not be dependent on the state (iii) The Central GST and State GST are to be paid to the
for funds. Fadnavis promised that ground work for accounts of the Centre and the States separately.
transparency and ease will be done before the GST is rolled
out in April 2017. The Opposition's concern was whether (iv) Since the Central GST and State GST are to be treated
implementing the GST will lead to a dip in the state's separately, in general, taxes paid against the Central
revenue, raise in?ation and make the BMC ?nancially GST shall be allowed to be taken as input tax credit
dependent on the state. (ITC) for the Central GST and could be utilized only
against the payment of Central GST. The same
Q: How will GST benefit the common principle will be applicable for the State GST.
consumers?
(v) Cross utilisation of ITC between the Central GST and
A:With the introduction of GST, all the cascading the State GST would, in general, not be allowed.
effects of CENVAT and service tax will be more
comprehensively removed with a continuous chain of
set-off from the producer’s point to the retailer’s point
than what was possible under the prevailing CENVAT and
VAT regime. Certain major Central and State taxes will
also be subsumed in GST and CST will be phased out.
Other things remaining the same, the burden of tax on
goods would, in general, fall under GST and that would
bene?t the consumers.

Q: What are the salient features of the proposed
GST model?

A:The salient features of the proposed model are as
follows:

(i) Consistent with the federal structure of the country,

47 S e p t e m b e r 2 0 1 6 | Plastics News