A COMPARATIVE VIEW ON GOODS AND SERVICES TAX

This contrast is based upon the recommendations of the First Discussion Paper produced by the Empowered committee of nations finance ministers (hereafter called EC) and the Report of the Task Force on GST constituted by the Thirteenth Finance commission.

Prior to going on dialogue we ought to define GST and the Goal supporting it.

What is GST?

GST is a tax on goods and services with comprehensive and continuous chain of set-off advantages from the Producer’s point and Service supplier’s point upto the merchant level. It’s fundamentally a tax only on value addition at each stage and a supplier at each point is allowed to set-off through a tax credit mechanism. Under GST construction, all different stages of manufacturing and distribution can be interpreted as a mere tax pass through and the tax essentially sticks on final consumption within the taxing jurisdiction.

Objective behind GST

A) The incidence of tax simply falls on domestic consumption. B ) The efficiency and equity of the system is already optimized. C ) There shouldn’t be any export of taxation across taxing authorities. D) The Indian marketplace ought to be incorporated into a single common market. E) It enriches the cause of co-operative federalism.

Our comparative discussion will be based only on significant points constructing overall GST.

GST MODEL

A dual structure was recommended from the EC. The Task Force has also suggested for its double lie imposed simultaneously by the centre and the nations, but to promote co-operative federalism. Both the CGST and SGST should be levied on a common and indistinguishable base.

Both have suggested for consumption type GST, that is, there should not be a differentiation between raw materials and capital goods in allowing input tax credit. The tax base should comprehensively extend over all services and goods upto final consumption stage.

Additionally Tax consultants chennai are of the opinion that the GST should be ordered on the destination principle. According to Task Force this will result in the shift in production to consumption where imports will probably be liable to both CGST and SGST and exports should be relieved of the load of products and services tax by zero evaluation. Consequently, revenues will accrue to the condition where the consumption occurs or is deemed to take place.

This will facilitate elimination of the cascading impact at different phases of production and distribution.