Goods and services tax commonly known as GST is a revolutionary indirect tax reform for the Indian economic landscape. With Lok Sabha clearing 4 bills related to GST i.e. Central GST bill, Integrated GST bill, GST (Compensation to states) bill and Union Territory GST bill, everyone including Indian government is hopeful of introducing the GST to the masses from July 1,2017. There is only one issue in GST implementation i.e. tax structure or tax slabs which is to be decided on the next meeting of GST council scheduled on May 18-19.

With the introduction of GST, all the central government as well state government taxes will be subsumed into a single tax. Let’s see which of the taxes will be accommodated within GST.

Central government taxes to be subsumed in GST are:

Central excise duty
Additional excise duty
Service tax
Additional customs duty

State government taxes to be subsumed in GST are;

State VAT/Sales tax
Entertainment tax
Entry tax
Purchase tax
Luxury taxes

Administration of GST:

There are two components of GST i.e. CGST (Central GST) & SGST (State GST) accounting for the fact that India has a federal structure of ruling. So both the governments i.e. centre and states will charge GST across the chain. Tax will be charged for every supply of goods as well as services. Centre would levy CGST and states would levy SGST on respective transactions. But the input tax credit for CGST as well as SGST can be used to discharge the CGST and SGST output liability. No cross transaction of tax credit is permitted.

GST in Inter-state transaction of goods:

For all the inter-state transactions, central government would collect taxes under Integrated GST (IGST). The IGST is believed to be roughly a sum of CGST and SGST. This IGST mechanism is designed to flawlessly ensure flow of taxes from one state to another. It is the responsibility of central government to transfer the importing state credit of IGST used for payment of SGST.

IT infrastructure for GST:

For the smooth & functional implementation of GST in the country, both central and state government have created and registered Goods & Services Tax Network (GSTN) as a non-profit and Non-government Company to provide IT services to government, taxpayers and stakeholders. The main objective of GST is to build an interface which is user friendly and efficient for taxpayers and government. GSTN is preparing and developing a state of art IT infrastructure for all the GST needs. This would ensure that all the taxes could be paid online, all the returns can be filed online without any manual intervention. The assessment of filed returns would be automatic.