Although only a broad outline of the proposed GST has been presented through this Discussion Paper, the detailed aspects thereof are yet to be revealed. It is now up to the trade, industry, professionals and people in general to come forward and give their views and suggestions, so the same can be considered by the Government before making a final draft of the proposed Law.
The views presented by the Empowered Committee, through its First Discussion Paper on GST, may be summarised as follows :
1. It would be dual GST i.e., Central GST and State GST.
2. This dual GST model would be implemented through multiple statutes (one for CGST and SGST statute separate for each State).
3. Central GST shall be administered by the Central Government and State GST by respective State Government.
4. The Central GST and State GST are to be paid to the accounts of the Centre and the States separately.
5. Since the Central GST and State GST are to be treated separately, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilised only against the payment of Central GST. The same principle will be applicable for the State GST. A taxpayer or exporter would have to maintain separate details in books of account for utilisation or refund of credit.
6. Cross-utilisation of ITC between the Central GST and the State GST would not be allowed except in the case of inter-State supply of goods and services, which shall be liable for IGST.
7. The inter-State transactions of goods as well as services shall be liable for IGST (i.e., CGST plus SGST) with full credit in the State of destination.
8. Although CGST and SGST would be applicable to all transactions of goods and services made for a consideration, except on exempted goods and services, there would also be a list of items which shall remain out of the purview of GST.
9. The State Governments shall continue to levy excise duty and sales tax (VAT) on production/sale/purchase of goods, which are outside the purview of GST.
10. The imports shall be liable for CGST as well as SGST to be levied by Central and State Governments, respectively.
11. The Empowered Committee has recommended that certain taxes and levies, presently levied by the Central Government and the States, should be subsumed in GST, however whether to include or not certain other taxes and levies, the matter is still under consideration.
12. Although, rates of tax are yet to be decided, the Discussion Paper indicates that there may be more than two rates of tax. The rate of CGST and the rate of SGST on various goods and services may be different. The rate of tax on goods and the rate of tax on services may also differ.
13. While the threshold limit of gross annual turnover for SGST is proposed to be Rupees 10 lacs (both for goods as well as services), the threshold for CGST may be Rupees 150 lacs and a separate threshold of CGST may be worked out in respect of annual turnover of services.
14. The exemptions, remissions, etc. in relation to Special Industrial Area Schemes are proposed to be continued till legitimate expiry time both for the Centre and the States.
15. Each taxpayer would be allotted a PAN-linked taxpayer identification 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.
16. The taxpayer would need to submit periodical returns, in common format as far as possible, to both the Central GST authority and to the concerned State GST authorities.
The Empowered Committee has recommended that, to begin with, the following taxes and levies may be subsumed in the proposed Goods and Services Tax :
A. Central Taxes :
(i) Central Excise Duty
(ii) Additional Excise Duties
(iii) Excise Duty levied under the Medicinal and Toiletries Preparation Act
(iv) Service Tax
(v) Additional Customs Duty, commonly known as Countervailing Duty (CVD)
(vi) Special Additional Duty of Customs — 4% (SAD)
(vii) Surcharges, and
(viii) Cesses
B. State Taxes :
(i) VAT/Sales tax.
(ii) Entertainment tax (unless it is levied by the local bodies).
(iii) Luxury tax.
(iv) Taxes on lottery, betting and gambling.
(v) State Cesses and Surcharges insofar as they relate to supply of goods and services.
(vi) Entry tax not in lieu of Octroi.
There are several other taxes and levies on which a consensus is yet to be arrived.
