Goods and Services Tax (GST) that was introduced on the 1st July 2017 in India is an indirect/consumption tax levied on practically all goods and services. It seeks to be comprehensive, subsuming most levies such as octroi and sales tax;barring some state levies. It is also multistage in nature since it is imposed at every step in the production processes, although it allows refund once the final consumer has been duly levied. As such it is a destination based tax, being collected from point of consumption and not point of origin as per previous tax regimes.
GST Rates
There are five basic slabs for rates of taxes levied on Goods and Services. These are: 0%, 5%, 12%, 18% and 28% respectively.However, with more than 1300 categories of goods and 500 categories of services and the complications of special rates for some and scores of differing rules governing treatment, added to which is the fact that rules are constantly modified, GST in India can be an extremely complicated affair to handle.
For example, there is a special rate of 0.25% on rough precious and semi-precious stones, but 1.5% on silver and 3% on gold. How then, is one to determine the tax rate on jewelry that may be crafted from all three?
Another example: All manufacturers are supposed to be entitled to Input Tax Credit (ITC), but, this is not allowed for electricity, although it is taxed – with states enforcing their own various rates.
To very briefly touch upon some features:
The purview of the GST Act does not extend to: Electricity; Alcohol for human consumption (i.e., not for commercial use); Petrol and petroleum products such as petroleum crude, high-speed diesel, motor spirit (petrol), natural gas and ATF. Multiple taxes, Central and State are levied upon them.
The GST Council is apex governing body of GST to modify, reconcile or promulgate all laws and regulations regarding goods and services tax in India. It is chaired by the Union Finance Minister with every state (and UT) being represented by its Minister of States for Revenue or Finance.
GSTN stands for "Goods and Services Tax Network", is a company jointly owned by state and central government. It operates the Information Technology network based on software developed by Infosys Technologies enabling it to handle the huge traffic generated by well over a crore stakeholders, enabling Tax authorities to track down every transaction, and taxpayers to transact their tax returns and related matters.
Section 122(1)(xi) of CGST Act, 2017 defines who are legally bound to register under GST. In the case of violation, the penalties are: Per section 122(2)(a): If for a reason other than fraud, willful misstatement or suppression of facts to evade tax, the violator shall be liable to a penalty of Rs.10,000 OR 10% of the taxes due, whichever is higher Per section 122(2) (b): If otherwise, it is Rs.10,000 OR the amount of tax evaded, whichever is higher.