FAQ 1: WHAT IS GST?
Goods and Services Tax (GST) is an indirect tax throughout India to replace indirect taxes
levied by the central and state governments. Exports and direct taxes
like income tax, corporate tax and capital gain tax will not be affected by
GST. It is a single tax which impose on the sale of goods and supply of services.
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.
GST would replaces following indirect taxes:
STATE
INDIRECT TAXES
|
CENTRAL
INDIRECT TAXES
|
1 Value Added Tax (VAT),
2.
Octroi,
3.
Entry Tax,
4.
Purchase Tax,
5.
Luxury Tax,
6.
State cesses and surcharges
7.
Entertainment tax (other than
the tax levied by the local bodies).
8.
Taxes on lottery, betting
& gambling
|
1. Central Excise Duty,
2. Service Tax,
3. Counter Veiling
Duty (CVD),
4. Special Additional
Duty of Customs (SAD),
5. Central charges and
Cesses
6. Central Sales tax (levied by the Centre and collected by the States)
|
FAQ 2: HOW GST WORKS?
All Businesses who makes taxable sales
and services have to be registered under GST if their annual sales turnover has
exceeded the prescribed threshold. Only a registered person can charge and
collect GST on the taxable supplies of goods and/or services made by them. GST
is charged on the value or selling price of the products.
The amount of GST incurred on input (input tax) can be deducted from the amount of GST charged (output tax) by the registered person.. If the amount of output tax is more than the input tax in the relevant taxable period, the difference shall be remitted to the Government. However, if the input tax is more than the output tax, the difference will be refunded by the Government.
The GST will be concurrently levied by
central and state government. There are three types of GST which will be
implemented to help tax-payers to take credit against each other.
a) CENTRAL GST (CGST)
CGST
will be levied by Centre Government for Intra-state movement of Goods and/or
Services i.e. Local Sale of Goods and/or services.
b) STATE GST (SGST)
SGST
will be levied by State Government for Intra-state movement of Goods and/or
Services i.e. Local Sale of Goods and/or services.
c) INTEGRATED GST
(IGST)
IGST
will be levied by Centre Government for Inter-state movement of Goods and/or
Services i.e. Sale of Goods and/or services from one state to another. IGST
will also apply on Imports.
Example:
A dealer in Delhi sold goods to the consumer
in Delhi worth Rs. 1,000. The GST rate is 12% comprising of CGST rate of 6% and
SGST rate of 6%, in such case the dealer collects Rs. 1200 and Rs. 600 will go
to the central government and Rs. 600 will go to the Delhi government.
Now, if the dealer in Delhi had sold goods to
a dealer in Gurgaon worth Rs. 1,000. The GST rate is 12% comprising of CGST
rate of 6% and SGST rate of 6%. In such case the dealer has to charge Rs. 1,200
as IGST. This IGST will go to the Centre.
FAQ 3: HOW TO AVAIL INPUT CREDIT?
GST paid on Purchases or Input
Services can be availed and utilized at time of Payment of GSt on Output Sales
and Services.
Sequence of utilization of input tax credit of GST.
Input
GST
|
First
Setoff From Output GST
|
Second
Setoff From Output GST
|
Third
Setoff From Output GST
|
IGST
|
IGST
|
CGST
|
SGST
|
CGST
|
CGST
|
IGST
|
-
|
SGST
|
SGST
|
IGST
|
-
|
FAQ 4: INPUT CREDIT IS
ALLOWED ON ALL INPUT ITEMS?
A. In the following cases Partially Input credit will be available.
PARTICULARS
|
CONDITIONS
|
When the goods and/or services are used
partly for the purpose of any business and partly for other purpose
|
Credit shall be restricted to so much of the input tax as it
attributable to the purpose of his business.
|
When googs and services are used partly
for taxable supplies and partly for exempted supplies including reverse
charge supplies.
|
Credit
shall be restricted to so much of the input tax as it attributable to the
said taxable supplies.
|
B. In the following Input credit will be available if same category of
output supply is made.
PARTICULARS
|
CONDITIONS
|
Motor Vehicles and other Conveyance
|
a) When
Such motor vehicles and conveyances are further sold.
b) When used for Transportation of
Passangers
c) When used for imparting training on
diving, flying, navigating such vehicles or conveyances
d) When used for Transportation of Goods
|
Credit for Input Supply of food and
beverages, outdoor catering, beauty treatment, health services and cosmetic
and plastic surgery.
|
Will be available when the outward supply if
same is made by the taxpayer.
|
Works contract service
a) When used for Output Service of Works Contract
b)
When used for Movable
Goods
c)
When used for Plant
and Machinery
d) When used for immovable goods
|
Allowed
Allowed
Allowed
Not Allowed
|
C. In the following cases Input credit will not be available.
1.
Sale of membership in a club, health, fitness
centre.
2.
rent-a-cab, health insurance and life insurance
except the following:
3.
Travel benefits extended to employees on vacation
such as leave or home travel concession.
4.
Goods and/or services for construction of an
immovable property whether to be used for personal or business use.
5.
Goods and/or services where tax have been paid
under composition scheme
6.
Goods and/or services used for personal use.
7.
When goods lost, stolen, destroyed, written off
or disposed off by way of gift or free sample.
8.
Goods or services or both received by a
non-resident taxable person except for any of the goods imported by him.
9.
ITC will not be available in the case of any tax
paid due to non-payment or short tax payment, excessive refund or ITC utilized
or availed by the reason of fraud or willful misstatements or suppression of
facts or confiscation and seizure of goods.
