Page 48 - Plastics News September 2016

FEATURES
(vi) To the extent feasible, uniform procedure for
collection of both Central GST and State GST would
be prescribed in the respective legislation for Central
GST and State GST.
(vii) The administration of the Central GST would be with
the Centre and for State GST with the States.
(viii)The taxpayer would need to submit periodical
returns to both the Central GST authority and to the
concerned State GST authorities.
(ix) Each taxpayer would be allotted a PAN-linked
taxpayer identi?cation number with a total of 13/15
digits. This would bring the GST PAN-linked system
in line with the prevailing PAN-based system for
Income tax facilitating data exchange and taxpayer
compliance. The exact design would be worked out
in consultation with the Income-Tax Department.
(x) Keeping in mind the need of tax payers convenience,
functions such as assessment, enforcement, scrutiny
and audit would be undertaken by the authority
which is collecting the tax, with information sharing
between the Centre and the States.
Q: Why is Dual GST required ?
A: India is a federal country where both the Centre
and the States have been assigned the powers to levy
and collect taxes through appropriate legislation. Both
the levels of Government have distinct responsibilities to
perform according to the division of powers prescribed in
the Constitution for which they need to raise resources.
A dual GST will, therefore, be in keeping with the
Constitutional requirement of ?scal federalism.
Q: How would a particular transaction of goods
and services be taxe simultaneously under
Central GST (CGST) and State GST (SGST)?
A:The Central GST and the State GST would be levied
simultaneously on every transaction of supply of goods
and services except the exempted goods and services,
goods which are outside the purview of GST and the
transactions which are below the prescribed threshold
limits. Further, both would be levied on the same price
or value unlike State VAT which is levied on the value of
the goods inclusive of CENVAT. While the location of the
supplier and the recipient within the country is immaterial
for the purpose of CGST, SGST would be chargeable only
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when the supplier and the recipient are both located
within the State.
Illustration I :
Suppose hypothetically that the rate of CGST is 10% and
that of SGST is 10%. When a wholesale dealer of steel in
Uttar Pradesh supplies steel bars and rods to a construction
company which is also located within the same State for,
say Rs. 100, the dealer would charge CGST of Rs. 10 and
SGST of Rs. 10 in addition to the basic price of the goods.
He would be required to deposit the CGST component into
a Central Government account while the SGST portion
into the account of the concerned State Government. Of
course, he need not actually pay Rs. 20 (Rs. 10 + Rs. 10) in
cash as he would be entitled to set-off this liability against
the CGST or SGST paid on his purchases (say, inputs). But
for paying CGST he would be allowed to use only the
credit of CGST paid on his purchases while for SGST he
can utilize the credit of SGST alone. In other words, CGST
credit cannot, in general, be used for payment of SGST.
Nor can SGST credit be used for payment of CGST.
Illustration II:
Suppose, again hypothetically, that the rate of CGST is 10%
and that of SGST is 10%. When an advertising company
located in Mumbai supplies advertising services to a
company manufacturing soap also located within the State
of Maharashtra for, let us say Rs. 100, the ad company
would charge CGST of Rs. 10 as well as SGST of
Rs. 10 to the basic value of the service. He would be
required to deposit the CGST component into a Central
Government account while the SGST portion into the
account of the concerned State Government. Of course,
he need not again actually pay Rs. 20 (Rs. 10+Rs. 10) in
cash as it would be entitled to set-off this liability against
the CGST or SGST paid on his purchase (say, of inputs such
as stationery, of?ce equipment, services of an artist etc).
But for paying CGST he would be allowed to use only the
credit of CGST paid on its purchase while for SGST he
can utilise the credit of SGST alone. In other words, CGST
credit cannot, in general, be used for payment of SGST.
Nor can SGST credit be used for payment of CGST.
Q: Which Central and State taxes are proposed
to be subsumed under GST ?
A:The various Central, State and Local levies were
examined to identify their possibility of being