Following are the answers to the various frequently asked questions relating to GST:

Question 1.What is GST? How does it work?

Answer: GST is one indirect tax for the whole nation, which will make India one unified
common market.
GST is a single tax on the supply of goods and services, right from the manufacturer to the
consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of
value addition, which makes GST essentially a tax only on value addition at each stage. The final
consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off
benefits at all the previous stages.
Question 2. What are the benefits of GST?
Answer:The benefits of GST can be summarized as under:
For business and industry
o Easy compliance: A robust and comprehensive IT system would be the foundation of the GST
regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc.
would be available to the taxpayers online, which would make compliance easy and transparent.

o Uniformity of tax rates and structures: GST will ensure that indirect tax rates and structures
are common across the country, thereby increasing certainty and ease of doing business. In other
words, GST would make doing business in the country tax neutral, irrespective of the choice of
place of doing business.

o Removal of cascading: A system of seamless tax-credits throughout the value-chain, and

across boundaries of States, would ensure that there is minimal cascading of taxes. This would
reduce hidden costs of doing business.

o Improved competitiveness: Reduction in transaction costs of doing business would eventually

lead to an improved competitiveness for the trade and industry.

o Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST,
complete and comprehensive set-off of input goods and services and phasing out of Central Sales
Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase
the competitiveness of Indian goods and services in the international market and give boost to
Indian exports. The uniformity in tax rates and procedures across the country will also go a long
way in reducing the compliance cost.

For Central and State Governments

o Simple and easy to administer: Multiple indirect taxes at the Central and State levels are
being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and
easier to administer than all other indirect taxes of the Centre and State levied so far.
o Better controls on leakage: GST will result in better tax compliance due to a robust IT
infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the
chain of value addition, there is an in-built mechanism in the design of GST that would
incentivize tax compliance by traders.

o Higher revenue efficiency: GST is expected to decrease the cost of collection of tax
revenues of the Government, and will therefore, lead to higher revenue efficiency.

For the consumer

o Single and transparent tax proportionate to the value of goods and services: Due to
multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax
credits available at progressive stages of value addition, the cost of most goods and services in
the country today are laden with many hidden taxes. Under GST, there would be only one tax
from the manufacturer to the consumer, leading to transparency of taxes paid to the final
consumer.

o Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the
overall tax burden on most commodities will come down, which will benefit consumers.

Question 3. Which taxes at the Centre and State level are being subsumed into GST?
Answer:
At the Central level, the following taxes are being subsumed:
1. Central Excise Duty,
2. Additional Excise Duty,
3. Service Tax,
4. Additional Customs Duty commonly known as Countervailing Duty, and
5. Special Additional Duty of Customs.
At the State level, the following taxes are being subsumed:
1. Subsuming of State Value Added Tax/Sales Tax,
2. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax
(levied by the Centre and collected by the States),
3. Octroi and Entry tax,
4. Purchase Tax,
5. Luxury tax, and
6. Taxes on lottery, betting and gambling.
Question 4. What are the major chronological events that have led to the introduction of
GST?
Answer: GST is being introduced in the country after a 13 year long journey since it was first
discussed in the report of the Kelkar Task Force on indirect taxes. A brief chronology outlining
the major milestones on the proposal for introduction of GST in India is as follows:
1. In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive Goods and
Services Tax (GST) based on VAT principle.
2. A proposal to introduce a National level Goods and Services Tax (GST) by April 1, 2010
was first mooted in the Budget Speech for the financial year 2006-07.
3. Since the proposal involved reform/ restructuring of not only indirect taxes levied by the
Centre but also the States, the responsibility of preparing a Design and Road Map for the
implementation of GST was assigned to the Empowered Committee of State Finance
Ministers (EC).
4. Based on inputs from Govt of India and States, the EC released its First Discussion Paper
on Goods and Services Tax in India in November, 2009.
5. In order to take the GST related work further, a Joint Working Group consisting of
officers from Central as well as State Government was constituted in September, 2009.
6. In order to amend the Constitution to enable introduction of GST, the Constitution (115th
Amendment) Bill was introduced in the Lok Sabha in March 2011. As per the prescribed
procedure, the Bill was referred to the Standing Committee on Finance of the Parliament for
examination and report.
7. Meanwhile, in pursuance of the decision taken in a meeting between the Union Finance
Minister and the Empowered Committee of State Finance Ministers on 8th November, 2012,
a Committee on GST Design, consisting of the officials of the Government of India, State
Governments and the Empowered Committee was constituted.
8. This Committee did a detailed discussion on GST design including the Constitution
(115th) Amendment Bill and submitted its report in January, 2013. Based on this Report, the
EC recommended certain changes in the Constitution Amendment Bill in their meeting at
Bhubaneswar in January 2013.
9. The Empowered Committee in the Bhubaneswar meeting also decided to constitute three
committees of officers to discuss and report on various aspects of GST as follows:-
(a) Committee on Place of Supply Rules and Revenue Neutral Rates;

(b) Committee on dual control, threshold and exemptions;

(c) Committee on IGST and GST on imports.

1. The Parliamentary Standing Committee submitted its Report in August, 2013 to the Lok
Sabha. The recommendations of the Empowered Committee and the recommendations of the
Parliamentary Standing Committee were examined in the Ministry in consultation with the
Legislative Department. Most of the recommendations made by the Empowered Committee
and the Parliamentary Standing Committee were accepted and the draft Amendment Bill was
suitably revised.
2. The final draft Constitutional Amendment Bill incorporating the above stated changes
were sent to the Empowered Committee for consideration in September 2013.
3. The EC once again made certain recommendations on the Bill after its meeting in
Shillong in November 2013. Certain recommendations of the Empowered Committee were
incorporated in the draft Constitution (115th Amendment) Bill. The revised draft was sent for
consideration of the Empowered Committee in March, 2014.
4. The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST
introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok
Sabha.
5. In June 2014, the draft Constitution Amendment Bill was sent to the Empowered
Committee after approval of the new Government.
6. Based on a broad consensus reached with the Empowered Committee on the contours of
the Bill, the Cabinet on 17.12.2014 approved the proposal for introduction of a Bill in the
Parliament for amending the Constitution of India to facilitate the introduction of Goods and
Services Tax (GST) in the country. The Bill was introduced in the Lok Sabha on 19.12.2014,
and was passed by the Lok Sabha on 06.05.2015. It was then referred to the Select
Committee of Rajya Sabha, which submitted its report on 22.07.2015.
Question 5.How would GST be administered in India?
Answer:Keeping in mind the federal structure of India, there will be two components of GST
Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy
GST across the value chain. Tax will be levied on every supply of goods and services. Centre
would levy and collect Central Goods and Services Tax (CGST), and States would levy and
collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax
credit of CGST would be available for discharging the CGST liability on the output at each
stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on
output. No cross utilization of credit would be permitted.
Question 6.How would a particular transaction of goods and services be taxed
simultaneously under Central GST (CGST) and State GST (SGST)?
Answer :The Central GST and the State GST would be levied simultaneously on every
transaction of supply of goods and services except on exempted goods and services, goods which
are outside the purview of GST and the transactions which are below the prescribed threshold
limits. Further, both would be levied on the same price or value unlike State VAT which is levied
on the value of the goods inclusive of Central Excise.
A diagrammatic representation of the working of the Dual GST model within a State
is shown in Figure 1 below.
Figure 1: GST within State
Question 7.Will cross utilization of credits between goods and services be allowed under
GST regime?
Answer :Cross utilization of credit of CGST between goods and services would be allowed.
Similarly, the facility of cross utilization of credit will be available in case of SGST. However,
the cross utilization of CGST and SGST would not be allowed except in the case of inter-State
supply of goods and services under the IGST model which is explained in answer to the next
question.
Question 8.How will be Inter-State Transactions of Goods and Services be taxed under GST
in terms of IGST method?
Answer:In case of inter-State transactions, the Centre would levy and collect the Integrated
Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article
269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST
mechanism has been designed to ensure seamless flow of input tax credit from one State to
another. The inter-State seller would pay IGST on the sale of his goods to the Central
Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order).
The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The
importing dealer will claim credit of IGST while discharging his output tax liability (both CGST
and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST
used in payment of SGST.Since GST is a destination-based tax, all SGST on the final product
will ordinarily accrue to the consuming State.
A diagrammatic representation of the working of the IGST model for inter-State transactions is
shown in Figure 2 below.

Figure 2

Question 9.How will IT be used for the implementation of GST?

Answer:For the implementation of GST in the country, the Central and State Governments have
jointly registered Goods and Services Tax Network (GSTN) as a not-for-profit, non-Government
Company to provide shared IT infrastructure and services to Central and State Governments, tax
payers and other stakeholders. The key objectives of GSTN are to provide a standard and
uniform interface to the taxpayers, and shared infrastructure and services to Central and State/UT
governments.
GSTN is working on developing a state-of-the-art comprehensive IT infrastructure including the
common GST portal providing frontend services of registration, returns and payments to all
taxpayers, as well as the backend IT modules for certain States that include processing of returns,
registrations, audits, assessments, appeals, etc. All States, accounting authorities, RBI and banks,
are also preparing their IT infrastructure for the administration of GST.
There would no manual filing of returns. All taxes can also be paid online. All mis-matched
returns would be auto-generated, and there would be no need for manual interventions. Most
returns would be self-assessed.

Question 10.How will imports be taxed under GST?

Answer :The Additional Duty of Excise or CVD and the Special Additional Duty or SAD
presently being levied on imports will be subsumed under GST. As per explanation to clause (1)
of article 269A of the Constitution, IGST will be levied on all imports into the territory of India.
Unlike in the present regime, the States where imported goods are consumed will now gain their
share from this IGST paid on imported goods.
Question 11.What are the major features of the Constitution (122nd Amendment) Bill, 2014?
Answer :The salient features of the Bill are as follows:
1. Conferring simultaneous power upon Parliament and the State Legislatures to make laws
governing goods and services tax;
2. Subsuming of various Central indirect taxes and levies such as Central Excise Duty,
Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as
Countervailing Duty, and Special Additional Duty of Customs;
3. Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax
levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the
States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and
gambling;
4. Dispensing with the concept of declared goods of special importance under the
Constitution;
5. Levy of Integrated Goods and Services Tax on inter-State transactions of goods and
services;
6. GST to be levied on all goods and services, except alcoholic liquor for human
consumption. Petroleum and petroleum products shall be subject to the levy of GST on a
later date notified on the recommendation of the Goods and Services Tax Council;
7. Compensation to the States for loss of revenue arising on account of implementation of
the Goods and Services Tax for a period of five years;
8. Creation of Goods and Services Tax Council to examine issues relating to goods and
services tax and make recommendations to the Union and the States on parameters like rates,
taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST
laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister
and will have all the State Governments as Members.
Question 12.What are the major features of the proposed registration procedures under
GST?
Answer:The major features of the proposed registration procedures under GST are as follows:
 1. Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply
afresh for registration under GST.
2. New dealers: Single application to be filed online for registration under GST.
iii. The registration number will be PAN based and will serve the purpose for Centre and
State.

1. Unified application to both tax authorities.

2. Each dealer to be given unique ID GSTIN.
3. Deemed approval within three days.
vii. Post registration verification in risk based cases only.

Question 13.What are the major features of the proposed returns filing procedures under
GST?
Answer:The major features of the proposed returns filing procedures under GST are as follows:
1. Common return would serve the purpose of both Centre and State Government.
2. There are eight forms provided for in the GST business processes for filing for returns.
Most of the average tax payers would be using only four forms for filing their returns. These
are return for supplies, return for purchases, monthly returns and annual return.
3. Small taxpayers: Small taxpayers who have opted composition scheme shall have to file
return on quarterly basis.
4. Filing of returns shall be completely online. All taxes can also be paid online.
Question 14.What are the major features of the proposed payment procedures under GST?
Answer:The major features of the proposed payments procedures under GST are as follows:
1. Electronic payment process- no generation of paper at any stage
2. Single point interface for challan generation- GSTN
iii. Ease of payment payment can be made through online banking, Credit Card/Debit
Card, NEFT/RTGS and through cheque/cash at the bank

1. Common challan form with auto-population features

2. Use of single challan and single payment instrument
3. Common set of authorized banks
vii. Common Accounting Codes

History of GST

June 9, 2015
88293
On 6th May 2015, the Lok Sabha passed the much-delayed Constitutional Amendment Bill to
introduce Goods and Service Tax (GST), paving the way for a new bill on the uniform tax
regime, even as the Congress Party staged a walkout in protest.

The Bill is set to be sent to a Parliamentary committee for review by the Rajya Sabha.
The opposition Congress has said that it favours the GST Bill, but wants the amendments made
to it by the BJP government to be vetted by a select committee of the Rajya Sabha, where it has a
majority.

In the Lok Sabha the main Opposition party walked out as the Bill was voted on clause by
clause, objecting that the changes made by BJP have not been referred to a standing committee
before being brought to the house.

The bill, conceived twelve years ago, being a constitutional amendment, has to passed by both
the houses of parliament by a two-third majority, and once passed, it needs ratification of more
than half of the 29 states before its scheduled rollout in April 2016. It has been kept pending
because there were some changes required in the basic bill and all the states were not in favour of
various provisions of the Bill, particularly in sharing of the revenue collected through GST.

Finance Minister, Arun Jaitley vowed to compensate states for any revenue loss and assured that
the new uniform indirect tax rate will be much less than 27% recommended by an expert panel.
The minister said, GST, which is proposed to be implemented from April 1st, 2016, will subsume
excise, service tax, state VAT, entry tax, octroi and other state levies. It would provide great
relief to the already tired taxpayers.

He said, GST would ensure seamless and uniform indirect tax regime besides lowering inflation
and promoting growth in the long run as he sought to allay concerns of the states that they would
be hurt by its implementation. Meanwhile, reactions coming in from the industry welcomed the
passage of the bill, and sounded confident that the deadline of April 1, 2016 will be met.

GST is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well
as services at the national level. It will replace all indirect taxes levied on goods and services by
the Indian Central and State governments. It is aimed at being comprehensive for most goods and
services.

It would mitigate cascading or double taxation in a major way and pave the way for a common
national market. 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%.
Introduction of GST would also make our products competitive in the domestic and international
markets. GST is having transparent character and it would be easier to administer.
History of GST

In 2000, the Vajpayee Government started discussion on GST by setting up an empowered

committee, headed by Asim Dasgupta, (Finance Minister, Government of West Bengal). The
committee was given the task of designing the GST model and overseeing the IT back-end
preparedness for its rollout.

Later in 2006, Union Finance Minister Shri P. Chidambaram moved towards GST in his Budget,
and proposed to introduce it by 1st April, 2010. However, the Empowered Committee of State
Finance Ministers (EC) released its First Discussion Paper (FDP) on the GST in November,
2009. This spells out the features of the proposed GST and has formed the basis for discussion
between the Centre and the States so far.

GST and Media & Entertainment Industry

The media and entertainment industry has been pestering the government for lower tax rates and
freedom from multiple taxation since many years.

The different taxes levied on various sectors across the Media & Entertainment industry are as
high as 40 to 60%. It is seen that the consumers in different states pay different prices for the
same content with variation in the entertainment tax.

Currently entertainment and services are taxed as follows:

According to the Federation of Indian Chambers of Commerce and Industry (FICCI) the
programmes transmitted by the Cable TV and DTH provider are taxed as services tax by the
Central Government , while the same programmes are considered as entertainment services by
the state governments and are being taxed as entertainment tax. Thus, these services suffer
double taxation. So it recommended that DTH and Cable TV services should be included in the
negative list of service tax till the Goods and Service Tax (GST) is implemented. The film
industry too has been stuck with high and different entertainment tax rates in different states.
This varies between 15% and 50%.

The 15% to 50% tax is a drain on the revenue of studios. Hope these will be subsumed by the
GST (goods and services tax), said Sujit Vaidya, chief financial officer at film company Disney
UTV. He also added that films which are produced jointly are also taxed under association of
persons apart from being taxed as joint venture partners.

Direct-to-home and cable, the distribution sector of the media and entertainment industry, also
ends up paying dual taxes on set-top boxes, which are now required to access television
channels. The set-top boxes attract both service tax and VAT. There is service tax and VAT
application on recharge coupons also. The DTH industry has been asking for a reduction in the
license fee from 10% to 6%, and wants to bring DTH and Cable TV on the negative list and get
exemption from Service Tax.

However, to ensure proper growth and development of this sector, the multiple levies / taxation
structure needs to be rationalized.

Effects on Media fraternity

Although the media fraternity has welcomed the idea of GST in India, but industry is skeptical
about its implementation.

Dish TV CEO, RC Venkateish says, GST will be good for the DTH sector. At present we are
victims of multiple taxation system where we pay various taxes in entertainment tax, service tax
etc. With GST, it will all get rolled under one. If it is approved and rolled out, we will have a tax
reduction of 3 to 3.5 per cent and hence it will be a good move for the sector.

According to Times Network CEO, MK Anand, GST brings uniformity and transparency and
therefore better administration. However, in the short term, there are expected to be issues. The
state wise registration and filing of GST as against the current centralized filing is also an
additional activity that we will now have to account for and so it increases costs to some extent.

Although GTPL Hathway COO, Shaji Mathew supports the concept behind GST but has doubt
on its successful implementation. According to him, Government has been the major gainer so
far from digitisation and they have been trying to shift the tax burden on to the consumer.
However, the consumer is not ready to take it and hence operators have been bearing the brunt of
it all. With GST, the concern is over entertainment tax, which varies from state to state. No clear
information is provided whether entertainment tax will be included in GST and if yes, then at
what slab. Since the government hasnt made any efforts to rationalise taxation, the
implementation is something that remains to be observed closely. Last the Government does not
consider the tax payers point of view while implementing an amendment.

However, the Government is very confident to get the Bill cleared in the Monsoon Session and
bring GST into effect by April 2016.

Source: http://www.cablequest.org/articles/item/7107-gst-goods-and-service-tax.html

After the implementation of GST, a hike in taxes on gold sales in India could pressure short-term

demand in India, the World Gold Council (WGC) said in a report.

The WGC also said a government move to ban cash transactions over 200,000 rupees (,090)
from April 1 could hurt gold demand in rural areas.
A hike in taxes on gold sales in India could pressure short-term demand from the worlds No.2
consumer of the metal, the World Gold Council (WGC) said in a report. Faltering appetite in a
country where gold is used in everything from investment to wedding gifts could drag further on
global prices, already trading near their lowest level in 7-weeks. In the short-term at least, we
believe (the tax) may pose challenges for the industry. Small-scale artisans and retailers with
varying degrees of tax compliance may struggle to adapt, the WGC said in a report published on
Thursday.

As part of a new nationwide sales tax regime that kicked in on July 1, the Goods and Services
Tax (GST) on gold has jumped to 3 percent from 1.2 percent previously. There have been fears
the tax increase could stoke under-the-counter buying and drive up appetite for precious metal
smuggled into India, where millions of people store chunks of their wealth in bullion and
jewellery.

Meanwhile, the WGC also said a government move to ban cash transactions over 200,000 rupees
($3,090) from April 1 could hurt gold demand in rural areas where farmers often purchase the
metal using cash due to limited access to cheques and electronic payment systems.

Two-thirds of Indias gold demand comes from rural areas, where jewellery is a traditional store
of wealth.

(The transactions rules) potential impact isnt entirely clear: it could curb gold purchases; it
could encourage gold shoppers to buy smaller amounts of gold spread over more transactions; or
it could push a large part of demand underground and encourage a black market in gold, said
the WGC.
The group kept its demand estimate for India at 650 to 750 tonnes for 2017, well below average
annual demand of 846 tonnes in the past five years. In the long-term, the GST will have a
positive effect on the gold industry by making the sector more transparent and improving the
supply chain, the WGC added.

Source : http://www.financialexpress.com/market/commodities/gst-impact-on-gold-short-term-
demand-may-be-dampened-world-gold-council-says/751909/

This comparison is based on the recommendations of the First

Discussion Paper produced by the Empowered committee of
states finance ministers (hereafter referred as EC) and the
Report of the Task Force on GST constituted by the Thirteenth
Finance commission.
Before going on discussion we should define GST and the
Objective behind it.
What is GST?
GST is a tax on goods and services with comprehensive and
continuous chain of set-off benefits from the Producers point and
Service providers point upto the retailer level. It is essentially a
tax only on value addition at each stage and a supplier at each
stage is permitted to set-off through a tax credit mechanism.

Under GST structure, all different stages of production 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 only falls on domestic consumption.
b) The efficiency and equity of the system is optimized.
c) There should be no export of taxes across taxing jurisdictions.
d) The Indian market should be integrated into a single common
market.
e) It enhances the cause of co-operative federalism.
Our comparative discussion will be based only on significant
points constructing overall GST.
GST MODEL
A dual structure has been recommended by the EC. The two
components are: Central GST (CGST) to be imposed by the center
and state GST (SGST) by the states.
The Task Force has also recommended for the dual levy imposed
concurrently by the centre and the states, but independently to
promote co-operative federalism. Both the CGST and SGST
should be levied on a common and identical base.
Both have suggested for consumption type GST, that is, there
should be no distinction between raw materials and capital
goods in allowing input tax credit. The tax base should
comprehensively extend over all goods and services upto final
consumption point.
Also both are of the view that the GST should be structured on
the destination principle. According to Task Force this will result
in the shift from production to consumption whereby imports will
be liable to both CGST and SGST and exports should be relieved
of the burden of goods and services tax by zero rating.
Consequently, revenues will accrue to the state in which the
consumption takes place or is deemed to take place.
The Task Force on GST said the computation of CGST and SGST
liability should be based on the Invoice credit method. i.e., allow
credit for tax paid on all intermediate goods and services on the
basis of invoices issued by the supplier. As a result, all different
stages of production and distribution can be interpreted as a
mere tax pass-through and the tax will effectively stick on final
consumption within the taxing jurisdiction. This will facilitate
elimination of the cascading effect at various stages of
production and distribution.
Treatment of Central GST and State GST
Both the EC and the Task Force on GST have recommended
treating the Central GST and the State GST separately. The CGST
and SGST should be credited to the accounts of the centre and
the states separately. Taxes paid against the CGST should be
allowed to be taken as input tax credit (ITC) for the CGST and
could be utilized only against the payment of CGST. The same
principle will be applicable to the SGST. Cross utilization of ITC
between CGST and the SGST should not be allowed.
While the Task Force on GST insisted that the full and immediate
input credit should be allowed for tax paid (both CGST and SGST)
on all purchases of capital goods (including GST on capital
goods) in the year in which the capital goods are acquired.
Similarly, any kind of transfer of the capital goods at a later stage
should also attract GST liability like all other goods and services.
Exemption from GST
The EC favoured the imposition of GST to be based on negative
list and for few exemptions if necessary but didnt provide any
list of exemption. However, the Task Force also said that there
shouldnt be any exemption from CGST and SGST but if for some
reason, it is considered necessary to provide exemption, the
centre and states should draw a common exemption which
should be restricted to the following:
a. All public services of Government (Central, state and
municipal/ panchayati raj) including civil-administration, health
services and formal education services provided by Govt. schools
and colleges, Defence, Para-military, Police, Intelligence and
Government Departments. Public services will not include the
following:
1) Railways;
2) Post and Telegraph;
3) Other commercial departments;
4) Public sector Enterprises;
5) Banks and Insurance;
6) Health and Education services.
b) Any service transactions between an employer and employee
either as a service provider, recipient or vice versa.
c) Any unprocessed food article which is covered under the
public distribution system should be exempt regardless of the
outlet through which it is sold;
d) Education services provided by non-Governmental schools and
colleges; and
e) Health services provided by non-Governmental agencies.
Tax on SIN goods (Emission fuels, tobacco products and alcohol)
According to EC alcoholic beverages should be kept out of GST.
Also crude oil, diesel, petrol and ATF will not attract GST but the
states will be free to levy taxes on them. While Tobacco Products
will be subjected to GST with input tax credit (ITC).
The Task Force on GST has recommended that the SIN-goods
comprising of emission fuels, tobacco products and alcohol
should be subject to a dual levy of GST and excise. No input
credit should be allowed for excise. However, industrial fuels
should be subjected only to GST (both central and state) with the
benefit of input credit like any other intermediate good.
Check-Post
The EC has not clarified anything about check-post whereas the
Task Force on GST has come out with something new in this
area. According to it the function of all state border check-posts
should be reduced to checking contrabands by setting up Large
scanners for trucks to pass through without any need for
physical verification. The cost of the scanners should be entirely
borne by the central government. All check-posts should be
jointly manned by both states so as to reduce the number of
check-posts and enhance efficiency in the road movement of
goods.
Inter-State transactions
The EC has suggested for adoption of IGST Model for taxation of
inter-State transaction of Goods and Services. The scope of IGST
Model is that centre would levy IGST which would be CGST plus
SGST on all inter-State transactions of taxable goods and
services with appropriate provision for consignment or stock
transfer of goods and services. The Task Force on GST is of the
view that all inter-State transactions in goods and services
should be effectively zero rated by adopting the Modified Bank
Model. (We are not going into the details here.)
Consignment Sales and Branch transfers across States
The EC has not yet provided any provision regarding the
consignment sales and branch transfers across States.
The Task Force on GST has said that the consignment sales and
branch transfers across States should be subject to treatment in
the same manner as if it was an inter-State transaction in the
nature of sale between two independent dealers.
Threshold Limit for Goods and Services
The EC has recommended for uniform threshold of annual gross
turnover of Rs.10 lakh for all goods and services for SGST
applicable for all states and Union Territories . Below this
threshold limit, State GST is not applicable. The threshold limit
for central GST may be kept at Rs.1.5 crore for goods and central
GST may be kept at higher levels for services.
Keeping in view the compliance cost and administrative
feasibility, the Task Force on GST proposed that the small dealers
(including service providers) and manufacturers should be
exempted from the purview of both CGST and SGST, if their
annual turnover (excluding both CGST and SGST) does not exceed
Rs.10 lakh. However, like in most other countries, those below the
threshold limit may be allowed to be registered voluntarily to
facilitate sales to other registered manufacturer/dealers, limit
competitive distortions and avoid inequalities. Further, the
threshold exemption limit should be uniform for both CGST and
SGST and across states.
Composition/Compounding scheme
The EC is of the view that composition / compounding scheme for
the purpose of GST should have an upper ceiling on gross annual
turnover and a floor rate with respect to gross annual turnover. In
particular there would be a compounding cut-off at Rs.50 lakh of
gross annual turnover and a floor rate of 0.5% across the states.
The scheme would also allow option for GST registration for
dealers with turnover below the compounding cut-off.
The Task Force on GST with a view to reduce administrative and
compliance burden, suggested that small dealers with annual
aggregate turnover of goods and services between 10 lakh to 40
lakh may be allowed to opt for a Compounded levy of One
percent, each towards CGST and SGST. However, no input credit
should be allowed against the compounded levy or purchases
made from exempt dealers.
GST on Precious Metals
A provision of special rate for precious metals has been
recommended by the EC. While the Task Force on GST is of the
view that certain high value goods comprising of gold, silver,
platinum ornaments, precious stones and bullions are prone to
smuggling due to high tax incidence thereby generating negative
externalities in terms of social and economic disorder. So, the
Task Force recommended that dealers in such high value items,
may subject to the threshold exemption but without the ceiling of
Rs.40 lakh, also be allowed to opt the compounded levy of one
percent, each towards CGST and SGST.
Special Industrial Area Scheme
The EC has suggested that the tax exemption, remission etc.
related to industrial incentive should be converted , if at all
needed , into cash refund schemes after collection of tax , so
that GST Scheme on the basis of a continuous chain of set-off is
not disturbed. Regarding Special Industrial Area Schemes, it is
clarified that such exemptions, remissions etc. would continue
upto legitimate expiry time both for the centre and the states.
Any new exemption, remission etc. or continuation of earlier
exemption, remission etc. would not be allowed. In such cases,
the central and the state Governments could provide
reimbursement after collecting GST.
The Task Force on GST recommended that in case it is
considered necessary to provide support to industry for balanced
regional development, it would be appropriate to provide direct
investment linked cash subsidy, while the area based exemption
in respect of CENVAT should not be continued under the GST
framework.
Taxes to be subsumed under GST
Both the EC and the Task Force on GST have got same view
regarding taxes to be subsumed under CGST whereas they differ
on SGST.
The following central taxes should be subsumed in the CGST:
a) Central Excise Duty (including Additional Excise Duty)
b) Service tax
c) Additional Customs Duty (commonly referred as CVD)d)
Surcharges and all cesses.
The following state taxes should be subsumed in the SGST.
a) VAT / Sales tax (including CST)
b) Entertainment tax (other than levied by local bodies)
c) Entry tax no in lieu of Octroi
d) Other Taxes and Duties (includes Luxury tax, Taxes on lottery,
betting and gambling, and all cesses and surcharges by states).
The Task Force has recommended for the subsumation of
following other taxes levied by the states on goods and services:
a) Stamp duty
b) Taxes on vehicles
c) Taxes on Goods and Passengers
d) Taxes on duties on electricity.
It has also suggested that all entry and Octroi duties levied by
the third-tier government should be abolished.
GST Rate Structure
The EC has decided to adopt a two rate structure- a lower rate
for necessary items and goods of basic importance and a
standard rate for goods in general. There will be also a special
rate for precious metals and list of exempted items. They havent
prescribed the exact value of the SGST and CGST rates including
the rate for services.
The Task Force has provided a clear rate structure for GST.
According to it the rate of CGST and SGST on all non-SIN goods
and services should be fixed at a single positive rate of 5% and
7% respectively. In addition, there should be a zero rate,
applicable to all goods and services exported out of the country.
GST and SEZ
The EC is of the view that Exports would be zero-rated. Similar
benefits may be given to Special Economic Zone (SEZs).
However, such benefits will only be allowed to the processing
zones of the SEZs. No benefit to the sales from an SEZ to
Domestic Tariff Area (DTA) will be allowed. However, similar is the
view of the Task Force on Exports but they are not in the favour
of any exemption for the developers of, or units in, the Special
Economic Zone.
Tax Administration
According to the EC the administration of GST shall be divided
into states and centre with a proposition to have uniform
compliance procedures across states under the respective laws.
The Task Force on GST has produced a clear cut picture
regarding tax administration.
The CBEC shall be responsible for implementing the CGST and
the state tax administrations will be separately responsible for
implementing the SGST. The various tax administrative functions
such as assessment, enforcement, scrutiny, and audit should be
undertaken by the CBEC in respect of CGST and by the state tax
administration in respect of the SGST, subject to
recommendation on Small Scale Industries.
All compliance and enforcement procedures under CGST and
SGST should be uniform (from taxpayer perspective).
The central government should establish a common IT
infrastructure which will serve the needs of both CGST and SGST.
The jurisdiction between the CBEC and the state administration
may be divided between the two in such manner that the
interface of the taxpayer is confined to one tax administration
only. The basis of division could be turnover or any other criteria
which is considered reasonable so that the compliance and
administrative burden is minimized.
All persons with annual aggregate turnover of goods and services
exceeding Rs.10 lakh (excluding CGST and SGST) should be
required to register and obtain a GST registration number. Person
with lower turnover may be allowed an option to register.
The unit of taxation for the purpose of GST should be persons as
defined under the Income Tax ACT.
For the purpose of CGST, all production units/ branches of a
person located anywhere in the country will be treated as a
single taxable entity eligible for CGST input credit across units
/branches. Whereas, for the purpose of SGST ,all production
units / branches of a person located anywhere within the state
will be treated as a single taxable entity eligible for SGST input
credit across units/ branches in that state.
Also the Task Force has suggested that the payment of tax and
the transaction reporting should be made through a combined
payment and transaction reporting statement in Form no. GST-1.
This statement should detail all business to business
transactions relating to sales. This statement should be common
for both CGST and SGST compliance and it should be mandatory
to file this statement electronically on a monthly basis while
making payment of taxes. The VAT period should be a calendar
month.
We have provided you a cursory view on different issues related
to GST without going into the details of them. We will try to give
you detailed discussions in our further updated papers on GST.

Present Taxation Vs Good and Service

Tax (GST):
S. No Basis Current Scenario (Excise/ Custom GST Scenario (Goods and Service
Duty, Service Tax, CST, VAT) Tax)

1. Architecture / Central taxes: - Excise/Custom duty,
Structural Central sales tax charged on services,
Difference surcharge and cess.
State Taxes: - VAT, Purchase, Luxury
Tax, Entertainment Tax, Tax on
Lottery, Surcharge & Cess.
A dual layered tax system with both
Central and State GST levied on same
base on all the goods and services
except petroleum, high speed diesel,
motor spirit and natural gas to be
brought at a later date subject to
recommendation of GST council.

2. Place of Taxable at the place of Taxable at the place of consumption,

taxation / basis manufacture/sale of goods. Rendering at destination based tax
of levy of services

3. Tax base Comparatively narrow Wider

4. Tax Complex due to number of taxes Tax friendly, simple and easy
administration

5. VAT / GST Decentralized registration under central Uniform e- registration process based
registration and state authorities on PAN of entity.

6. Procedure of Central excise/service tax uniform, Uniform process and common dates
collection of VAT varies from State to State for collection
tax and filing
of returns

7. Validation of Part validation by system, full System based validation and

Challan / verification subject to assessments by consistency checks on input credit
returns, input relevant Central/State authorities availed, utilization and tax payments
credit and
payment of tax

8. Excise Duty Imposed by Centre under separate Act, Replaced by CGST to be charged up
Central Excise Act, 1944. Taxable to retail level.
event is manufacture; i.e. excise duty
charged up to the point of
manufacturing.

9. Basic Custom In case of import, taxed by Centre No change

Duty under separate act, i.e. Customs Act,
1962. Taxable event is import

10. Countervailing In case of import, taxed by Centre To be subsumed under GST (CGST)
duty/ Special under separate Act, i.e., Customs Act,
Additional 1962. Taxable event is import.
Duty

11. Service Tax Charged by Centre on list of services To be subsumed under SGST based
under Finance Act on upon place of Supply Rules
payment/provision basis. Taxable event
is provision of service

12. Central Sales Imposed by Centre under CST Act, To be subsumed in IGST.
Tax 1956. Collection assigned to States.
Applicable at concessional rate of 2%
on inter-state transfers against C forms,
otherwise full rate i.e. 5% to 14.5%/.
Taxable event is movement of goods
from one state to another

13. State VAT Imposed by states; taxable event is sale To be subsumed in SGST;
within the State
14. Inter-state Currently being charged by selected No entry tax, Additional 1% of tax to
transactions / states for inter-state transfers, held as be levied on inter-state supply of
entry tax import in local area. Imposed on goods selected goods, list yet to be finalized.
& services by the Centre (CST, Service
Tax)

15. Tax on export Exempted/zero rated No change

of goods and
services

16. Tax on inter- Exempt against form F To be taxable but full credit available
state transfer to dealers.
of goods to
branch or
agent

17. Tax on Generally exempted, depends upon Might be taxable, unless TIN of
transfer of state procedure transfer and transferee is same.
goods to
branch or i.e May not be taxable, if TIN of
agent within transferor and transferee is same
state

18. Cascading Credit between excise duty & service Credit available on the full amount of
effect tax available but no set off against VAT taxes up to retailer.
on excise duty

19. Cross set-off Currently set-off of excise duty and No cross set-off between CGST and
of levy service tax is allowed SGST

20. Non- There are certain non-creditable goods No such disallowance unless
Creditable and services under both VAT & specified by GST Council.
goods / CENVAT Rules.
disallowance
of credit on
selected items

21. Exemptions- Some areas enjoy status of Excise/VAT No such exemptions, investment
excise free exemptions refund scheme may be introduced for
zone, VAT existing zones based upon
Remissions recommendation of GST Council.

22. Levy of tax on Partially taxed. Certain government Not changed.

government bodies, PSUs and Non-profit covered
bodies, NGOs

23. Threshold Central Excise- 1.5 Crores CGST- limits to be decided.

limit VAT- varies from Rs. 5 to 20 Lacs from SGST- Rs. 10 Lacs to 20 Lacs as
 state to state. recommended by GST council.
Service Tax- Rs. 10 Lacs

Sr.
Particulars Present Taxation Proposed GST
No.

1 Structural Architecture
- Two separate VAT systems A dual tax with both Central GST (CGST) &state GST (SG
operate simultaneously at two be levied on the same base. Thus, all goods and service
levels, Centre and State, and barring few exceptions, will be brought into then GST b
tax paid (input tax credit) There will be no distinction between goods and service
under one is not available as purpose of tax with a common legislation applicable to
setoff against the other-Tax on allows seamless tax credit amongst Excise Duty and Ser
services is levied under & VAT
separate legislation by Centre,
i.e., Finance Act, 1994nwhich
regulates service tax n-No
comprehensive taxation of
services at the State level; few
services are taxed under
separate enactments- Import
of goods in India are not
subjected to Staten VAT

2 Place of Taxation Taxable at the place of It is consumption(destination) based tax

manufacture or sale of goods
or rendering of service

3 Tax Base Comparatively narrow Wider

4 Excise Duty Imposed by Centre under To be subsumed inn CGST; Taxable event will be sale; To
separate Act, Central Excise
Sr.
Particulars Present Taxation Proposed GST
No.

Act 1944. Taxable event is taxed up to retail level

manufacture; Taxed up to
manufacturing point

5 Basic Customs Duty Imposed by Centre under No change is proposed

separate Act, i.e., Customs
Act,1962. Taxable events
import

6 CVD/SAD Imposed by Centrenunder To be subsumed innCGST; Taxable eventnwill be import

separate Act,ni.e., Customs
Act,n1962. Taxable event is
import

7 Service Tax Imposed by Centre under To be subsumed in CGST & SGST; Taxable event will be
separate Act (Finance Act, of service
1994).Taxable event is
provision of service

8 Central Sales Tax
Imposed by Centre under CST Is being phased out
Act, 1956.nCollection assigned
to States; Taxable event is
movement of goods from one
State to another

9 State VAT Imposed by States; Taxable To be subsumed in SGST; Taxable event is sale within St
event is sale within the State

10 Inter-State Transactions Imposed on goods & services To be subsumed in GST and subject to SGST & CGST
by then Centre (CST, Service
Tax)

11 Tax on Manufacturing activity As Excise Duty by Centre No such powers under GST regime

12 Powers to levy Tax on Sale of Inter-State : Centre Local : Concurrent powers to Centre & State
Sr.
Particulars Present Taxation Proposed GST
No.

Goods State

13 Powers to levy Tax on Service Tax by Centre Concurrent powers ton Centre & State; States to tax mo
Provision of Services 40nservices

14 Tax on Import in India Goods are taxed to Customs Basic Custom Duty on goods : No Change- CVD & SAD o
Duty (comprises Basic Customs of goods and import of services : To be subsumed in GS
Duty, CVD& SAD); Services are
taxed ton Service Tax

15 Tax on Export of Goods & Exempt / Zero-rated No change is proposed

Services

16 Tax on inter-State Transfer of Exempt against Form F Will be taxable

Goods to Branch / Depot or
Agent

17 Tax on Transfer of Goods to Generally exempt but depends May not be taxable, if BIN of transferor and transferee
Branch or Agent within States upon State procedures

18 Cross-Levy set-off/ Excise duty and Service tax : No cross set-off between CGST and SGST will be allowe
adjustment Cross set off allowed

19 Cascading Effect Allows cevat tax credit Allows seamless tax credit amongst Excise Duty, Service
between Excise Duty & Service VAT
Tax, but not with VAT (cross set
off is not allowed)

20 Non-Creditable Goods Do exist May exist depending upon negative list/exemptions etc

21 Credit on Inputs used for Not allowed May not be allowed

Exempted Activities

22 Various Exemptions -Excise Available May be phased out

Sr.
Particulars Present Taxation Proposed GST
No.

Free Zone or VAT Exemption

23 Exemption for transit Inter- Available May be taxable

Staten Sale and High
Seasonal

24 Transactions against Allowed under the CST / VAT Forms likely to be abolished
Declaration Forms

25 Taxation on Govt. and Non- Partially taxed May not change much
Profit Public Bodies

26 Stamp Duty Presently taxed concurrently Status not clear; If subsumed under GST, big relief to re
by the Centre and State industry : to claim input tax

27 Excise Duty Threshold Limit Presently Rs.10 lacs to 20 lacs (Turnover of 1.5ncrores & above m
administered by Centre and less than 1.5 crores may be
1.5 crores administered by States)

28 VAT Threshold Limit Presently May be

5 lacs to 10 lacs 10 lacs to u20b9n20 lacs

29 Service Tax Threshold Limit 10 lacs May be 10 lacs to 20 lacs

30 Classification of Commodities Excise Duty based on HSN VAT Likely to be based on HSN
not applicable

31 VAT/GST Registration Simple TIN (some States : PAN PAN based

Number only based)

32 Procedures for Collection of For Central Excise & Service Likely to be uniform
Tax and Filing of Return Tax, it is uniform. For VAT, it
varies from State to State
Sr.
Particulars Present Taxation Proposed GST
No.

33 Tax Administration Complex due to number of Likely to be simple and easy, tax friendly
taxes

34 Use of Computer Network Just started by the States; very Extensive; It will be pre-requisite for implementation o
minimum; Central taxes are
online

35 Nature of Present Litigations - Sale or Service- Classification Likely to be reduced provided GST legislations are prop
of goods- Sites issue between drafted
States- Interpretational issues-
Sale or works contract-
Valuation of composite
transactions, etc.- Exemptions-
Suppression/limitation

COMPARISON OF PRESENT TAXATION AND PROPOSED GST

GST in India vs GST in other

countries how India differs
Updated on Jun 09, 2017 - 07:37:05 PM

Goods and service tax is taking India by the storm. GST will
bring in One nation one tax to unite indirect taxes under one umbrella and facilitate
Indian businesses to be globally competitive. The Indian GST case is structured for
efficient tax collection, reduction in corruption, easy inter-state movement of goods
etc.
France was the first country to implement GST to reduce tax- evasion. Since then,
more than 140 countries have implemented GST with some countries having Dual-
GST (e.g. Brazil, Canada etc.) model. India has chosen the Canadian model of dual
GST.

GST in India vs GST in other countries

How Indian GST model compares with

GST in other countries
Particulars India (proposed) Canada UK

Name of GST in Goods and Service tax Federal Goods and Service Tax & Value Added Tax
the country Harmonized Sales Tax

Standard Rate 0% (for food staples), 5%, GST 5% and HST varies from 0% to 15% 20 %
12%, 18% and 28%(+cess for Reduced rates- 5 %,
luxury items) exempt, zero rated

Threshold 20 lakhs (10 lakhs for NE Canadian $ 30,000 (Approx Rs. 15.6 lakhs 73,000
exemption states) in INR) (Approx Rs. 61.32 lakhs)
Limit

Liability arises Accrual basis: Issue of Accrual basis: The date of issue of invoice Accrual Basis: Invoice
on invoice OR OR the date of receipt OR Payment
Receipt of payment of payment- earlier. OR Supply
-earlier -earliest
Particulars India (proposed) Canada UK

Name of GST in Goods and Service tax Federal Goods and Service Tax & Value Added Tax
the country Harmonized Sales Tax

Cash basis (T/O upto

1.35mn): Payment

Returns and Monthly and 1 annual return Monthly, quarterly or annually based on Usually quarterly. Small
payments turnover business option- annual

Reverse charge Apply on goods (new) as well Reverse charge applies to importation of Applicable
Mechanism as services (currently under services and
Service tax) intangible properties.

Exempt Manufacture of Real estate, Financial Services, Medical, Education,

services exempted goods or Provision Rent (Residence), Charities, Health, Finance, Insurance,
of exempted services (to be Education Postal services
notified)

Particulars India (proposed) Singapore Malaysia

Name of GST in Goods and Service tax Goods and Service Tax Goods And Services Tax
the country

Standard Rate 0% (for food staples), 5%, 7% Reduced rates- Zero 6%

12%, 18% and 28%(+cess for rated, exempt
luxury items)

Threshold 20 lakhs (10 lakhs for NE Singapore $ 1 million MYR 500,000

exemption states) (Approx Rs. 4.8 crore) (Approx Rs. 75 lakhs)
Limit

Liability arises Accrual basis: Issue of Accrual Basis: Issue of Accrual Basis: Delivery of goods OR
Particulars India (proposed) Canada UK

Name of GST in Goods and Service tax Federal Goods and Service Tax & Value Added Tax
the country Harmonized Sales Tax

on invoice OR invoice OR Receipt of Issue of invoice OR Receipt of

Receipt of payment payment OR Supply - earliest payment
-earlier Cash basis:(T/O upto
SGD$1mn): Payment

Returns and Monthly and 1 annual return Usually quarterly Business Large organsations- Monthly
payments option- Monthly
returns.

Reverse charge Apply on goods (new) as well Reverse charge applies to Reverse charge applies to imported
Mechanism as services (currently under supply of services services
Service tax)

Exempt Manufacture of Real estate, Financial Basic food,Health Transportation,

services exempted goods or Provision services, Residential rental Residential property, Agricultural land
of exempted services (to be
notified)

**USA does not have GST as it ensures high autonomy for the states**
Thus we find GST model across the commonwealth countries are similar with some
variations. Unlike India, other countries have a much higher threshold for GST
applicability thus reducing the burden for small businesses. This will bring in
challenges for our SMEs.
Earlier countries implemented GST and faced many problems post-implementation.
Read here to find out more.
Are you worried about how GST will impact your business? Register with us at Clear
Tax to keep yourself up to date on GST. We also have experts to help you to
smoothly transit to GST.
VAT and GST are both indirect tax whose burden shifts to final consumer. Both VAT and GST will on
the value of sale or supply of goods. But still, there are lots of differences between VAT and GST in
India which we are explaining on the basis of following points with examples.

1. Definition
VAT : VAT means Value added tax. It was converted from sales tax. Difference between VAT output
and VAT input was deposited in State Govt. Account.

GST : GST means goods and service tax which is applicable both on goods and service supply as
per GST Law. If there is not exempted goods, you have to pay 5% or 12% or 18% or 28% to Govt.
account on the supply of goods or sale value of goods which you will be collected from your
customer.

2. Valuation of Goods
VAT : For calculating VAT, we take the value on the basis of its sale price. Both Excise duty and VAT
will add in market price and on same gross value goods was sold to customer. Excise duty and VAT
was gone in the pocket of Govt. and rest in the pocket of business person.

For Example : Market value of goods is Rs. 10,000 and excise duty is Rs. 2000 and VAT is Rs. 3000.
Then value which will be taken from customer is

RS. 10,000
+ Rs. 2000
+ Rs. 3000
----------------
RS. 15000
===========

GST : Only GST will charge and add in the value of goods. For example market value of goods is
Rs. 10,000 and GST is 12%

Then

RS. 10,000
+ Rs. 1200
----------------
Rs. 11200
===========

3. Partition of Tax between State and Center

VAT : Only State govt. has right to get its whole share for welfare of state's public.

GST : Whole GST will be collected into two parts for every sale from same state

CGST : It will be half of given GST rate and will be automatically deposit in central govt. account
SGST : It will be half of given GST rate and will be automatically deposit in State Govt. account.

If sale will be out of same state, whole GST will be deposit into IGST account which is central govt.
account and then central govt. will cut its share and send rest to beneficiary state govt. account.

4. Taxation on Provided Service

VAT : VAT was not on provided or sold services. Service tax was 14.5%

GST : GST is also on provided service. It may be 12% and 18% and 28% which are mentioned on
the nature of services. Most services are coming under 15% GST.

5. Input Credit
VAT : In VAT, dealer has right to deposit on his net VAT liability by deducting Input VAT on Goods
purchased from Output VAT on Goods Sold. So, input credit was in advance

GST : Now, in GST, first Deposit GST on Service Provided. He already paid GST on Goods
purchase. System of GST portal will calculate the Input Credit which is used for payment of next
GST liability.

6. Benefit of Input Credit of Services for Goods

VAT : This facility was not available.

GST : In GST, if you have paid GST on Services which will add in total input GST and which will
compare total output GST which may be on goods sold. Now, you will get the input credit on tax of
your services from the tax of your goods.

7. Taxable Event
VAT : Taxable event is sale.

GST : Taxable event is supply of goods or service.

8. Must VAT No. and GST No.

VAT : If turnover is RS. 10 Lakh

GST : If turnover is more than Rs.20 Lakh

9. Monthly Online Return Filling

VAT : Must file return by 20th of succeeding month.

GST : Must file return for sales by 10th, purchase by 15th and payment by 20th of succeeding
month.

10. Online Payment

VAT : Online Payment was not compulsory

GST : Online payment is compulsory if tax is more than rs. 10,000