Goods and Services Tax (India)

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Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into single system of taxation. It was introduced as The Constitution (One Hundred and First Amendment) Act 2016. The GST is administered & governed by GST Council and it's Chairman is Union Finance Minister of India Arun Jaitley.

GST would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the central and state governments.

This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity. Taxable goods and services are not distinguished from one another and are taxed at a single rate in a supply chain till the goods or services reach the consumer. Administrative responsibility would generally rest with a single authority to levy tax on goods and services.[1] Exports would be considered as zero-rated supply and imports would be levied the same taxes as domestic goods and services adhering to the destination principle in addition to the Customs Duty which will not be subsumed in the GST.

The introduction of Goods and Services Tax (GST) would be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax [2] would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25%-30%, free movement of goods from one state to another without stopping at state borders for hours for payment of state tax or entry tax and reduction in paperwork to a large extent.

What changes there would be if India launches GST- “The tax rate under GST may be nominal or zero rated for the time being. It has been proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products.” The central government has assured states of compensation for any revenue losses incurred by them from the date of introduction of GST for a period of five years.[3]

As India is a federal republic GST would be implemented concurrently by the central government and by state governments.[4]

The Constitution (One Hundred Twenty Second Amendment) Bill, 2014 proposes a national Value Added Tax to be implemented in India.[5] The taxes which will be subsumed into GST include central excise duty, services tax, additional customs duty, surcharges and state-level value added tax.[6] Other levies which are currently applicable on inter-state transportation of goods are also likely to be done away with in GST regime.[7]

A 21-member select committee was formed to look into the proposed GST law.[8]

Present Indirect structure is marked with following problems:[9][better source needed]

Tax Regime in India.png

Presently, the Constitution empowers the Central Government to levy excise duty on manufacturing and service tax on the supply of services.[10][better source needed]

GST shall subsume the following taxes in the times to come once the law is in force:[11]


GST will be applicable from 01 July 2017.[11]


The government is planning to introduce three bills for GST in the parliament in winter session 2016 viz. CGST law, IGST law and compensation law.[12][13] There will be no GST on the sale and purchase of securities. That will continue to be governed by Securities Transaction Tax (STT).[14]

Proposed regime[edit]

GST threshold was set at 5 lakh (US$7,400) for the north-east and hill states and 10 lakh (US$15,000) for other states in the first GST council meet.[15] Centre and states agreed that assessee up to 1.5 crore (US$220,000) will be assessed by states and above that will be assessed by centre and states.[16]

As per the decisions made by all will of GST Council on November 3, 2016, tax rates would be at 4 slabs of 5%, 12%, 18% and 28%.[7][11] Luxury and demerit goods will be taxed at 28% plus cess.[13] daily needs will be taxed at 5%.

In March 2017, the GST council approved two crucial legislations - the state GST and the union territory GST bills. As the next step, the bill will be sent to Cabinet and Parliament for approval. Given the recent progress, the implementation should be complete by 1st July 2017.[17]


Goods and Services Tax Network (GSTN) is a nonprofit organisation formed to create a platform for all the concerned parties i.e. stakeholders, government, taxpayers to collaborate on a single portal. The portal will be accessible to the central government which will track down every transaction on its end while the taxpayers will be having a vast service to return file their taxes and maintain the details. The IT network will be developed by private firms which are being in tie up with the central government and will be having stakes accordingly. The known authorised capital of GSTN is 10 crore (US$1.5 million) in which Central government holds 24.5 percent of shares while the state government holds 24.5 percent and rest with private banking firms.[18]

Migration of the existing taxpayers to GST regime[edit]

All the existing taxpayers registered under VAT, Service Tax, and Excise are required to furnish the details at GST Common portal for the purpose of migrating themselves into GST regime. To begin with, the taxpayers registered under the State Vat Department needs to provide their details and period for furnishing these details are specified for every state.Once the taxpayers provide their details there will be no need for them to register again with the State or Center once the GST Act is implemented. Enrollment process for other existing taxpayers not registered with VAT will be started at a later date.[19][better source needed]

As the migration process has peaked up in various states, the first step is to enroll within the structure on a specified date assigned to each and every state. The business units must enroll themselves within the time period in order to get listed in the GST framework. The IT platform created by the Goods and Service Tax Network will be securing all the details filled up and will create unique IDs in the name of every dealer enrolled. This will help the tax department to figure out every business unit and can create a different login mark along with calculations of annual tax return accumulated on the particular business unit. The government announced specified dates for each state to enroll all its designated dealers within it and wanted them to furnish the details within a required specific time period. The dealers will be getting provisional IDs after the enrollment and by the help of which one can login into the GST portal.

The enrollment dates are specified by the government for each state separately and the administration demands every state must enroll themselves within the given specified time. The enrollment process was started from 8 November 2016 and end date as per the schedule is fixed 31 March 2017. States commencing for the enrollment process were Sikkim Puducherry on 8 November 2016 while the last state to enroll was Delhi which was enrolled from 16 December 2016.[20]

See also[edit]


  1. ^
  2. ^ "Which of the existing taxes are proposed to be subsumed under GST? - GST India Forum". Retrieved 2017-01-02. 
  3. ^ "'States on Board, GST Launch from April '16'". 
  4. ^ "Power to levy GST - GST India Forum". Retrieved 2017-01-02. 
  5. ^ "Goods and Services Tax (GST) Bill, explained", The Indian Express, 19 October 2016 
  6. ^ "GST may swallow all taxes but cess", Business Standard, 20 September 2016 
  7. ^ a b "On Notes Ban, Firm Warning From West Bengal To Centre: GST Now At Risk", NDTV, 30 November 2016 
  8. ^ Nair, Remya (8 June 2015), Rajya Sabha panel to hear GST concerns on 16 June 
  9. ^ CA Gaurav Gupta. "GST India, Service Tax, News, FAQ, Reference, Presentations, Reports". Retrieved 2016-09-29. 
  10. ^ "Where is the power to levy GST derived from". Retrieved 2016-12-29. 
  11. ^ a b c "Finance minister Arun Jaitley may hike service tax to 16-18% in Budget", The Times of India, 30 January 2017 
  12. ^ "Parliament Winter Session: Govt keen on proper discussion on GST Bills", The Indian Express, 29 November 2016 
  13. ^ a b "GST law to have anti-profiteering clause, rate capped at 28%", Hindustan Times, 27 November 2016 
  14. ^ "GST draft makes it must for companies to pass tax benefit to consumers", The Times of India, 27 November 2016 
  15. ^ "GST threshold fixed at Rs 11000 lakh in GST council's meet, rate to be decided in October", The Economic Times, 24 September 2016 
  16. ^ "GST roll-out from April in jeopardy", Business Standard, 4 December 2016 
  17. ^ "Fight between States and Center over GST". NewsBytes. Retrieved 2017-03-17. 
  18. ^ "About GSTN". 
  19. ^ "GST Registration/Migration Process For Existing Taxpayers (VAT, Service Tax, Excise )". 
  20. ^ "GST Enrollment or Registration Dates for Indian States". 

External links[edit]