GST is levied on all transactions such as sale, transfer, purchase, barter, lease, or import of goods or services. India will adopt a dual GST model, meaning that taxation is administered by both the Union and State Governments.

GST is a consumption based tax, therefore, taxes are paid to the state where the goods or services are consumed not the state in which they were produced

two systems of GST i.e., Unified GST and Dual GST

Goods and Services Tax (GST) is a system of indirect taxation in India merging most of the existing taxes into single system of taxation. 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.

Stage of

Supply

Chain

Purchas

e Value

Of

Input

Value

Additio

n

Value at

Which

Supply

of

Goods

and

Services

Made to

Next

Stage

Rate of

GST

GST on

Output

Input

Tax

Credit Net

GST=G

ST on

output

-Input

Tax

Credit

Manufact

urer

100 30 130 10% 13 10 13–10

= 3

Whole

Seller

130 20 150 10% 15 13 15–13

= 2

Retailer 150 10 160 10% 16 15 16–15

= 1

PARTICULARS AMOUNT ( )

Example of CarCost of ManufactureExcise duty @10%VAT @ 12%Dealer InvoiceDealer Cost(4,00,000+40,000)Margin @ 10%Dealer sale priceVAT @ 12%Price to Customer

Net VAT(58,080 – 52,800)

4,00,00040,00052,8004,92,800

4,40,00044,0004,84,00058,0805,42,080

5,280

PARTICULARS AMOUNT

Example of CarCost of ManufactureCGST @11%SGST @ 11%Dealer InvoiceDealer CostMargin @ 10%Dealer sale priceCGST @11%SGST @ 11%Price to Customer

Net VAT(96,800 – 88,000)

4,00,00044,00044,0004,88,004,00,00040,0004,40,00048,40048,4005,36,800

8,800

To ensure One country- One Tax To remove the loopholes of the existing indirect

tax system(cascading effect and complexity) To ensure Consumption based tax instead of

Manufacturing To ensure Uniform GST Registration, payment and

Input tax Credit To eliminate the cascading effect of Indirect taxes

on single transaction: To Subsume all indirect taxes at Centre and State

Level To reduce tax evasion and corruption

To Increase productivity

To Increase Tax to GDP Ratio and revenue surplus

To Increase Compliance

To reduce economic distortions

availability of input credit

To reduce the complication in tax administration

To reduce the tax slab rates

According to Goods and Services Tax Act, 2017, “GST is a tax on goods and services with value addition at each stage having comprehensive and continuous chain of set of benefits from the producer’s / service provider’s point up to the retailer’s level where only the final consumer should bear the tax.”

Dual Goods and Service Tax Destination – based Consumption Tax Taxable event Taxes to be subsumed GST on exports GST on imports Threshold limits Computation of GST on the basis of invoice credit method Payment of GST Goods and services Tax network (GSTN): Input tax credit (ITC) set off: Maintenance of records Administration of GST GST Council Inter-State Transactions and the IGST Mechanism Accounts would be settled periodically

Rate of Tax applicable to all the transactions all goods and services Rules for taking and utilisation of credit

uniform procedure for collection Refund of tax electronic commerce operators self-assessment Audit of registered persons

three (3) years for short-payment or non-payment of tax or erroneous refund and its adjudication in normal cases.

five (5) years -fraud, suppression or willfulmisstatement.

Arrears of tax to be recovered

Goods and Services Tax Appellate Tribunal

penalties

Advance Ruling Authority

An anti-profiteering clause

PAN-linked taxpayer

Central Excise Duty (CENVAT) The Excise Duty levied under the Medicinal and

Toiletries Preparations (Excise Duties) Act 1955 Service Tax Additional Customs Duty, commonly known as

Countervailing Duty (CVD) Additional Duties of Excise (Goods of Special

Importance) Additional Duties of Excise (Textiles and Textile

Products) Special additional duty of customs Surcharges and cesses levied by Centre (cess on

rubber, tea, coffee, national calamity contingent duty etc.)

STATE TAXES THAT ARE SUBSUMED WITHIN SGST:

VAT / Sales tax Central Sales Tax Entry Tax (other than those in lieu of octroi) Luxury tax Purchase Tax Entertainment and Amusement Tax (except

when levied by the local bodies) Taxes on advertisements Taxes on lotteries, betting and gambling State Surcharges and Cesses so far as they

relate to supply of goods or services

Basic Customs Duty:

Exports Duty: This duty is imposed at the time of export of certain goods which are not available in India in abundance.

Road & Passenger Tax: These are in the nature of fees and not in the nature of taxes on goods and services.

Toll Tax: Property Tax

Stamp Duty

Electricity Duty

Taxes on professions, trades, callings and employments

ITEMS NOT SUBJECT TO GST:

Petroleum and petroleum products

tobacco and tobacco products

alcoholic liquor for human consumption,

◦ For Traders/Business/Industry/ Assessee:

Easy compliance Uniformity of tax rates and structures Removal of cascading/ Mitigation of

cascading/double taxation Elimination of multiple taxes and

double taxation Mitigation of ill effects of cascading Improved competitiveness boost export and manufacturing

activity Gain to manufacturers and exporters

Harmonization of laws, procedures and rates of tax:

tax burden on companies is likely to come down

Reduction in compliance costs

Reduction in multiplicity of taxes.

More efficient neutralization of taxes especially for exports.

Development of common national market.

Simpler tax regime-fewer rates and exemptions.

Simple and easy to administer

Better controls on leakage

Higher revenue efficiency

Buoyancy to the Government revenue

Improved compliance & revenue collections (tax booster)

Efficient use of resources

Automation of compliance procedures to reduce errors and increase efficiency

A unified common national market

Boost to ‘make in India’ Initiative

Boost to export/manufacturing activity

Reduction in compliance costs

Single and transparent tax proportionate to the value of goods and services

Relief in overall tax burden poverty eradication by generating more

employment Simpler tax system. Reduction in prices of goods and services due

to elimination of cascading. Uniform prices throughout the country. Transparency in taxation system. Increase in employment opportunities.

real estate market.

CGST(Central GST), SGST(State GST) are nothing but new names

retail products

The aviation industry

Adoption and migration to the new GST system

GST is not applicable on liquor for human consumption

The service industries have adversely affected

Stamp duty will not fall under the GST regime

Change in Business Software

GST Compliance

Increase in Operating Costs

Policy Change During the Middle of the Year

Online Procedure

Higher Tax Burden for Manufacturing SMEs

No Clarity on Tax Holidays

Disruption to Business

Common threshold limit across the country

Continuity of tax credit across the supply chain till it reaches the consumer

Elimination of tax cascading effect in the supply chain

Pan Based Registration

Point of taxation will be ‘Supply’

Valuation method broadly as ‘Transaction Value’

Branch transfers taxable and credit eligibility

Tax Credit on Interstate Inward supply of goods

France was the first country to introduce this value added tax system in 1954 devised by a public servant.

STRUCTURE OF GST/ DUAL GST: GST is a dual concept tax system. Under this system, tax is administered, collected and shared by both Centre and states based on the nature of transaction

CGST: stands for Central GST

This is applicable on supplies within the state

Tax collected will be shared to centre

SGST: SGST stands for State GST

This is applicable on supplies within the state

Tax collected will be shared to sate

IGST: IGST stands for Integrated GST

This is applicable on interstate and import transactions

Tax collected will be shared between centre and state

reduction in the number of taxes at the Central and State level

decrease in multiple tax rate for many goods

removal of the current cascading effect of taxes

reduction of transaction costs of the taxpayers through simplified tax compliance

increased tax collections due to wider tax base and better compliance

Who would be impacted Applicability to service providers Taxable event Applicability of both CGST and the SGST on all

transactions Applicability of other indirect taxes GST collection model Applicability of taxes on imports of goods Tax on import of services and person liable to

pay Carry forward of Input Tax Credits (ITC) and

CENVAT Credit (CC) balances Refund of un-utilised CC on inputs and input

services Cross utilization of credits between goods and

services:

Position with regard to investors who enjoy area-based exemptions or who have entered into a Memorandum of Understanding with the Governments in respect of exemption, subsidy etc.:

Treatment of stock transfers Uniformity under the various indirect tax legislations Exemptions from GST, lists of exempted goods and

exempted services Benefits availed presently by EOUs (exemption from

excise duty and Central Sales Tax (CST) on domestic procurement of goods) :

Taxation of Inter-State sale transactions Registration of existing VAT and Service tax dealers : Single return or multiple returns

The Central Goods and Services Tax Bill, 2017 was introduced in Lok Sabha on March 27, 2017. The Bill provides for the levy of the Central Goods and Services Tax (CGST

Levy of CGST Liability to pay CGST Taxable amount (value of supply): Input tax credit: Registration: Returns: Refunds and welfare fund Prosecution and appeals Transition to the new regime Anti-profiteering measure Compliance rating

List of States Passed GST Bill 2017: Telanganabecome the first State to pass the GST Bill

Bihar becomes the second state

1st – Telangana on April 9, 2017 2nd – Bihar on April 24, 2017 3rd – Rajasthan on April 26, 2017

4th – Jharkhand on April 27, 2017 5th – Chhattisgarh on April 28, 2017 6th – Uttarakhand on May 2, 2017

7th – Madhya Pradesh on May 3, 2017 8th – Haryana on May 4, 2017 9th – Gujarat May 9, 2017

10th – Goa on May 9, 2017 11th – Odisha May 11, 2017 12th – Assam May 11, 2017 13th – Arunachal Pradesh May 12, 2017 14th – Uttar Pradesh on 16th May 2017 15th – Andhra Pradesh on 16th May 2017 16th – Puducherry on 17th May 2017 17th – Maharashtra 22 May 2017 18th – Tripura 24 May 2017 19th – Sikkim on 25th May 2017 20th – Mizoram on 26th May 2017 21st – Nagaland on 27th May 2017 22nd – Himachal Pradesh on 27th May 2017 23rd – Delhi on 31st May 2017 24th – Manipur on 5th June 2017 25th – Meghalaya on 12th June 2017 26th – Karnataka on 16th June 2017 27th – Punjab on 19th June 2017 28th – Tamil Nadu on 19th June 2017 29th – West Bengal take ordinance route for GST on 15th June 2017 30th – Kerala take ordinance route for GST on 21st June 2017 31st – Jammu and Kashmir on July 5th, 2017

UTGST is applied to union territories of India namely Chandigarh, Lakshdweep, Daman and Die, Dadra and Nagar Haveli, Andaman and Nicobar Islands.

New Delhi and Puducherry will still enjoy the SGST provisions as both states have their separate legislatures and can operate freely on the terms of SGST

The Union Territory Goods and Services Tax Bill, 2017 was introduced in Lok Sabha on March 27, 2017.

Levy of UTGST

Assistance to search, seizure and arrest

Applicability of provisions of Central Goods and Services Tax Act, 2017

Transition to the new regime

The Integrated Goods and Services Tax Bill was introduced in Lok Sabha on March 27, 2017. The Bill provides for the levy of the Integrated Goods and Services Tax (IGST) by the centre on inter-state supply of goods and services.

Levy of IGST

Apportionment of IGST revenue

Place of supply of goods

Place of supply of services

Input tax credit

Application of provisions of CGST

Name of tax Governing act Governed by Number ofacts

Governs what?

CGST Central GSTAct

CentralGovernment

One Levy of centresportion of GSTin case ofintra-statesupply

SGST/UTGST (name of theState) StateGST Act

Stategovernmentand unionterritory

31 acts Levy ofstate’s/UT’sportion of GSTin case of intr-state supply

IGST Integrated GSTAct

Centralgovernment

one Levy of GST incase of inter-state supply

SCHEME OF GST ACT(both Central and State):

Central GST Act comprises of XXV chapters which consist of 162 sections and 4 schedules and similarly to central GST law, State GST Law contains XXV Chapters which consist 162 section and 4 schedules.

Section 10 : The basic principle underlying the composition scheme is to minimize the burden of compliance for small taxpayers.

taxpayer whose turnover is below 1.5 crorescan choose not to register as a normal taxpayer. Instead, he may choose to get registered as a taxpayer under composition scheme and pay taxes on his supplies at a nominal rate.

A. Intimation and Effective date for Composition Levy:

1.For persons already registered under pre-GST regime

-FORM GST CMP-01, duly signed, before or within 30 days of appointed date

FORM GST CMP- 03 must also be filed within 60 days of exercise of option:◦ Details of stock◦ Inward supply of goods received from unregistered persons

held by him on the date preceding the day of exercise of option

2. For persons who applied for fresh register under GST to opt scheme: For fresh registration under the scheme, intimation in FORM GST REG- 01 must be filed.

3. Registered under GST and person switches to Composition Scheme

in FORM GST CMP- 02 for exercise option

b) Statement in FORM GST ITC- 3 for details of ITC relating to inputs

. Effective date for composition levy a) The option to pay tax under Composition

Scheme shall be effective: For persons already registered under pre-GST

regime: Appointed Day Registered under GST and person switches to

Composition Scheme: Filing of Intimation b) For persons who applied for fresh register

under GST to opt scheme: Option to pay tax under Composition Scheme shall be effective from:

Where the application for registration has been submitted within thirty days from the day he becomes liable for registration, such date.

In the above case, the effective date of registration shall be the date of grant of registration.

Merits of the Scheme

Limited Compliance

Limited Tax Liability

High Liquidity

Demerits of the Scheme

Limited Territory for Business

No Credit of Input Tax

No Collection of Tax

Penal Provision

Not applicable to the supplier supplying goods through E-commerce

neither be a casual taxable person nor a non-resident taxable person.

The goods should therefore not be classified as:

Inter- state purchase Imported Goods Branch situated outside the State Agents or Principal situated outside the State Where the taxpayers deals with unregistered

person, tax must be paid or no stock must be held

Mandatory display on invoices of the words ” composition taxable person, not eligible to collect tax on supplies”

Mandatory display of the words “Composition Taxable Person” on every notice and signboard displayed at a prominent place.

He is not a manufacturer of such goods as may be notified by the Government during the preceding financial year

Any person who opts for the scheme will be deemed to have been opted for all the places of business having the same registered PAN.

GST Council is a federal forum with both centre and states in India on board.

As per Article 279A(1) of the amended Constitution, the GST Council has to be constituted by the President within 60days of the commencement of Article 279A

Article 279A with effect from 12th September, 2016

issued on 10th September, 2016 notification dated 15-09-2016, the President of India constituted the GST

Council.

It has its Secretariat office in New Delhi. Objective: to examine issues relating to

GST and make recommendations to the Union and the States on parameters like rates, exemption list and threshold limits.

The Council shall function under the Chairmanship of the Union Finance Minister and will have the State Union Minister as its members.

2/3rd Representatives will be that of state & 1/3rd of the centre.

FUNCTION: Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, special provisions for certain States, etc

Secretary (Revenue) as the Ex-officio Secretary to the GST Council;

Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;

one post of Additional Secretary to the GST Council in the GST Council Secretariat

four posts of Commissioner in the GST Council Secretariat

entire cost for which shall be borne by the Central Government.

The Union Finance Minister -CHAIRMAN The Union Revenue or Finance MINISTER - MEMBER of

council; ONE MEMBER from each state who is Minister in

charge of Finance or Taxation or any other Minister nominated by each State Government, and anyone of them will be VICE CHAIRMAN of the GST Council who will be mutually elected by them.

The Secretary of Revenue Department will work as EX-Officio Secretary to the GST Council,

The Chairperson of Central Board of Excise and Customs will be the permanent invitee in all the proceedings of the GST Council who will not have the voting rights.

Composition of GST Council Secretariat: GST Council Secretariat shall consists of all IAS officers. All the states Value Added Tax officers are being trained by IAS Officers all over the country.

The decisions of the GST Council are made by three-fourth majority of the votes cast. The centre has one-third of the votes cast, and the states together have two-third of the votes cast. Each state has one vote, irrespective of its size or population.

The taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;

The goods and services that may be subjected to, or exempted from the goods and services tax;

Model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-sattetrade or commerce under article 269A and the principles that govern the place of supply;

The threshold limit of turnover below which goods and services may be exempted from GST;

Determination of place of supply.

The rates including floor rates with bands of goods and services tax;

Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;

Special provision with respect to the states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Nagaland, Mizoram, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and

Any other matter relating to the goods and services tax, as the council may decide.

When petroleum products should be brought in the GST Net

Distribution of revenue of IGST and CGST among union and states.

Constitution of 1% tax on supply of goods inter-state

Compensation to states for loss of revenue for period up to 5 years.

decide when GST would be levied on petroleum products initially kept out of GST.

The GST council is vested with powers to regulate all aspects relating to GST, though the roll is only recommendatory.

The GST Council may also decide upon the modalities for the resolution of disputes arising out of its recommendations.

at least 50 percent of the total number of the member should be present at the meeting.

Every decision -three-fourth of the 'weighted votes of the members present and voting', wherein Central Government -weightage of one third of the total vote cast

State Governments -weightage of two-third of the total votes cast.

VACANCY NOT TO INVALIDATE PROCEEDINGS: Any act, decision or proceedings shall not be declared as invalid on the basis of any remaining deficiency at the time of establishment of GST Council i.e.

SETTLEMENTS AND DISPUTES:

The Goods and Services Tax Council shall establish a mechanism to adjudicate

EVOLUTION OF GST ACT IN INDIAGST -adopted in 165 countries and India joins as 166th

country. The journey of GST started in the year 2003. The critical milestones are:• Before 1974: CST and Sales Tax were in existence• 1974 - L.K. Jha committee recommended VAT • 1986 - Excise duty in name of MODVAT Introduced• 1991 - VAT/GST recommended by Dr. Raja Chelliah

committee• 1st July1994 - Service Tax on 3 services @ 5% introduced • 1999-2000 - Empowered committee -State Finance

Minister - formed for common VAT Floor Rates • 2003 - Haryana - first state to Implement VAT in country • 2005-06 - More than 25 states implemented VAT • in 2005: Ashim Dasgupta, 2000 empowered committee-

introduces VAT System in 2005• 2006- Empowered committee formed under the

chairmanship of Dr. Asim Das Gupta by UPA government

2007 - FM (P. Chidambaram first time talked about GST, proposed implementation from 1.04.2010) ;CST rate reduced from 4% to 3% (1st phasing out of CST)

2007- First GST Study Released By Mr.P.Shome in Jan 2007

2007: kelkar Task Force submitted a report. 19th Nov 2007 : Report of Joint Working group

submitted 1st June 2008 - CST rate reduced from 3% to 2% (2nd

phasing out of CST) 10th Nov 2009 - First discussion paper on GST by

State Finance Ministers 15th Dec 2009 - 13th Finance commission gave

report on GST 2009: GST proposed to be implemented in 1st April

2010, by Finance Minister Pranab Mukharjee. 1-10-2009- implementation date postponed to

1/10/2010

15th Jan 2010 - Department of revenue commented on First discussion paper of GST

26-2-2010: - implementation date postponed to 1/4/2011

Later further postponed to various dates such as 1/4/2013, 1/4/2016 etc.

Feb 2011 - IT Team got setup for structure of GST

Mar 2011 - 115th Constitution amendment bill tabled for GST. Bill was referred to be reviewed by Committee on Finance of Parliament. Finance Minister and Empowered Committee set up a committee for coming up with a GST design. 115th amendment Bill was studied and reported in 2013 January

July 2012 - Negative list regime in service tax

July 2013 - Parliament standing committee submitted report on 115th Constitutional Amendment Bill

April 2014 - 115th Constitutional Amendment Bill got lapsed

19thDec 2014 - 122th Constitution Amendment bill was placed before LOK SABHA

6th May 2015 - 122th Constitution Amendment bill was passed by LOK SABHA

12th May 2015 - Bill was sent to select panel

22nd July 2015 - Select Panel submitted their report

The kelkar Task Force was constituted

Dr. Vijay Kelkar and his team - recommended a single GST

But, the Empowered Committee of State Finance Ministers has proposed a dual GST both at Central and State Level.

In 2014, NDA Government presented The constitution (122nd Amendment) Bill on GST in parliament on 19th

December 2014. The Lok Sabha passed the Bill on 6th May 2015 and Rajya Sabha on 3rd August, 2016. Finally the Bill received the assent of President on 8th September 2016 and became Constitution (101st Amendment) Act, 2016 which paved way for introduction of GST.

14th June 2016 – Draft Model GST Law on public domain 3rd Aug – Rajya Sabha passes the Bill 8th Aug –Lok Sabha passes the Bill 8th Sept – President Ascent 12th Sept – Cabinet Approval to form GST Council 16th Sept – Govt. notifies GST Council 22nd /23 rd Sept- First Council Meeting 26th Sept – Draft Rules on public Domain –Reg. Pymt. &

Tax Invoice 27th Sept –Draft Return Rules & Return Formats 26th November – Revised Draft Rules

Zero Tax rate 5% Tax slab : on items of mass consumption two standard rates of 12% and 18% All the items -28% GST rate slab. An additional cess would also be levied on luxury

cars, tobacco products & aerated drinks besides the highest tax rate (28%).

4 Bills relating to GST were introduced in Lok Sabhaon 27th March, 2017.

Central Goods and Services Tax Bill, 2017 Integrated Goods and Services Tax Bill, 2017 Union Territory Goods and Services Tax Bill, 2017 Goods and Services Tax(Compensation to Sates) Bill,

2017

April 2017 and May 20, 2017– GST Council finalised GST Rules and 4 GST Rates

These Bills were passed on 29th March 2017 and received the assent of President on 12th April, 2017.

The enactment of the Central Act is being followed by the enactment of the state GST laws by various State Legislatures, like Telangana, Rajasthan, Chhattisgarh, Punjab, Goa and Bihar are the among the first ones to pass their respective state GST laws.

Finally, by achieving consensus on all the issues relating thereto, the GST is set to be implemented from 1st July 2017 across India.

June 30th – The Union Government Rolled out GST by Finance Minister Arun Jaitley.

July 1st – GST is applicable to all states except Jammu and Kashmir

The Goods and Services tax was first adopted by France in 1954. Maurice Lauré, Joint Director of the French Tax Authority, was the first to introduce VAT on April 10, 1954.

VAT was invented because very high sales taxes and tariffs encouraged cheating and smuggling.

The Vijay Kelkar Task Force on implementation of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 - existing system of taxation of goods and services still suffers from many problems.

Kelkar Task Force had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.

In 2000, the Vajpayee Government started discussion on GST by setting up an empowered committee, headed by Asim Das Gupta, Finance Minister-task of designing the GST model and overseeing the IT back-end preparedness for its rollout.

2006-2007 Union Budget Speech-Finance Minister Mr. P. Chidambaram –GST

28th February 2006, P.Chidambaram, the Finance Minister, announced the target date for implementation of GST to be 1st April 2010 and formed another empowerment Committee of State Finance Ministers to design the roadmap and structure for the GST

In May 2007 Empowered Committee (EC) of State Finance Ministers in consultation with the Central Government, constituted a Joint Working Group (JWG), to recommend the GST model.

The committee -report - April 2008 and released its First Discussion Paper on GST in India in 2009.

EC submitted a report, titled “A Model and Road map for Goods and Services Tax(GST) in India” containing broad recommendations about the structure and design of GST

EC released its first discussion paper -on 10th

November 2009 with the objective -generating a debate and

obtaining inputs from all stakeholders and

to work on GSTN a Group under the chairmanship of Naveen Kumar

fiscal powers between the Centre and the States are clearly demarcated in the Constitution.

Introduction of GST requires amendments in the constitution so as to simultaneously empower the centre and the states to levy and collect this tax.

The constitution of India has been amended by the constitution 101st Act 2016

Article 246A -empowers the centre and the states to levy and collect the GST.

Act - presidential assent on 8th September 2016. This act paves way for introduction of GST tax by making special provisions.

Amendment -20 sections = Section 12 pertaining to Goods and Services Tax Council came into effect from 12th September 2016 =19 sections came into effect from 16th

September 2016.

The 122nd Amendment Bill of the Constitution of India, officially known as The Constitution (One Hundred and First Amendment) Act, 2016, introduced a national Goods and Services Tax in India from 1st July 2017.

,122nd Bill was introduced in the Lok Sabha by Finance Minister Arun Jaitley on 19th December 2014, and passes by the House on 6th May 2015.

In the Rajya Sabha, the bill was referred to a select Committee on 14th May 2015.

Committee submitted its report -22nd July 2015.

The bill was passed by the Rajya Sabha on 3rd August 2016

amended bill was passed by the Lok Sabha on 8th

August 2016.

The bill, after ratification by the states, received assent from President Pranab Mukharjee on 8th September 2016

notified in the Gazette of India on the same date. On 29th March 2017 CGST, SGS, UTGST and GST Compensation law passed in Loksabha

INTRODUCED NEW ARTICLE 246 (A): This articles provides that both parliament

and state legislatures shall have concurrent powers to make laws with respect to goods and services tax (GST). The Parliament will retain exclusive power to legislate on inter-state trade or commerce.

This amendment would subsume the taxes like Excise duty, Service tax, Central Sales tax at Central level and VAT, Entry tax, Entertainment tax etc. at State level.

The Article no 246A(2) covers the provision of Interstate supply of goods or services or both ,in such circumstances only parliament ( i.e. Central Government) can make the Law.

in case of Petroleum crude, high speed, petrol, natural gas and aviation turbine fuel shall take effect from the date recommended by GST council as constituted under Article 279A.

INTRODUCED ARTICLE 269A

269A. (1) GST on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.

proceeds such collected will not be credited to the consolidated fund of India or state but respective share shall be assigned to that state or centre. The reason for the same is that under GST, where centre collects the tax, it assigns state’s share to state, while where state collects tax, it assigns centre’s share to centre.

If that proceed is deposited in Consolidated Fund of India or state, then, every time there will be a need to pass an appropriation tax. Thus, under GST, the apportionment of the tax revenue will take place outside the Consolidated Funds.

INTRODUCED ARTICLE 279-A: This article provides for constitution of a GST council by president within sixty days from this act coming into force.

in 7th schedule of the constitution: Union List: The entry 84 of Union List earlier comprised the duties

on tobacco, alcoholic liquors, opium, Indian hemp, narcotic drugs and narcotics, medical and toilet preparations. After this amendment, it will comprise of Petroleum crude, high speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel, tobacco and tobacco products. Thus, these are now out of ambit of GST and subject to Union jurisdiction.

Entry 92 (newspapers and on advertisements published therein) has been deleted thus, they are now under GST.

Entry 92-C (Service Tax) has been now deleted from union list.

entry 52 (entry tax for sale in state) has been deleted.

Entry 54, Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92-A of List I.; has been now replaced by Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods.”

Entry 55 (advertisement taxes) have been deleted.

Entry 62 (Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling) has been replaced by these taxes only to be levied by local governments (panchayats, municipality, regional council or district council.

The residuary power of legislation of Parliament under article 248 is now subject to article 246A.

Article 249 has been changed so that if 2/3rd majority resolution is passed by Rajya Sabha, the Parliament will have powers to make necessary laws with respect to GST in national interest.

Article 250 has been amended so that parliament will have powers to make laws related to GST during emergency period.

Article 268 has been amended so that excise duty on medicinal and toilet preparation will be omitted from the state list and will be subsumed in GST.

Article 268A has been repealed so now service tax is subsumed in GST.

Article 269 would empower the parliament to make GST related laws for inter-state trade / commerce.

Important Provisions Article 264 & 293 are related to the financial relations between the Union and the State Governments. Since, the state Governments have their interests in GST, the implementation of GST cannot take place without amendment of the Indian Constitution. For this purpose, Constitution (101st Amendment) Bill, 2016 has been passed.

Amendment of Article 248(1) (residuary Power of legislation):- Amendment of Article 249 (1) (Power of Parliament to legislate

with respect to a matter in the State List in the national interest):- Parliament

Amendment of Article 250(1) (Proclamation of Emergency) Amendment of Article 268 (1) (Duties levied by the union but

collected by the States): Amendment of Article 268A (Service tax levied by union

government and collected and appropriated by Union & States):- Amendment of Article 269 and Insertion of New Article 269A

(Inter State Sale and Purchase) Amendment of Article 286 (Restriction on Imposition of tax) Levy of addition 1% tax by States:- Compensation to States for Revenue Loss:- Translation Provision:- Power of president to remove the difficulty

Amendment of Article 248(1) (residuary Power of legislation):-Under Article 248(1) Parliament has exclusive power in to make any law in respect of any item not covered under State List and Concurrent List subject to provision Article 246A

Amendment of Article 249 (1) (Power of Parliament to legislate with respect to a matter in the State List in the national interest):- Parliament under article 249(1) can make the law in respect of any item specified in the state list in the national interest, if the Council of States has declared by resolution and supported by 2/3rd of member present and vote. Now this also includes goods and service tax under article 246A i.e. Parliament of India can make the GST law for the whole or any part of India subject to approval 2/3rd members of each state.

Amendment of Article 250(1) (Proclamation of Emergency) :- In the event of announcement of emergency, Parliament of India has power to make the laws in respect of any item covered under state list for the whole India or part of the India under article 250(1). Goods and service tax under article 246A i.e. Parliament of India can make the GST law in case of emergency.

Amendment of Article 268 (1) (Duties levied by the union but collected by the States): –Article 268 (1) provides the provision of levy of stamp duty and excise duty on medicinal and toilet preparation by union government and collection by state (In case of State) or by union (In case of union territory). Now, the duties of excise on medicinal and toilet preparation has been omitted and same is been amalgamated in GST.

Amendment of Article 268A (Service tax levied by union government and collected and appropriated by Union & States):- Article 268A provides power to government of India to levy the service tax and collected and apportioned by government of India and State. Now, this article has been omitted.

Amendment of Article 269 and Insertion of New Article 269A (Inter State Sale and Purchase) :-Article 269 (1) facilities the levy and collection of tax on sale of goods or consignment of goods in the course of Interstate trade or Commerce. Now, the provision of this clause is subject to new article 269A. As per Article 269A Goods and Service tax shall be levied and collected by Government of India and apportioned between States in the manner as provided in the law by parliament on the recommendation of GST council.

Further, Parliament of India will formulate the law in respect of tax on interstate trade of goods and services. In addition to above import of goods or Services or both will also be equally treated as Supply of the goods and services in the course of Inter-State trade or Commerce. This will give power to central government to levy IGST on the Import transaction instead of CVD levied under existing Act

Amendment of Article 286 (Restriction on Imposition of tax) :- Article 286 restricts the state laws from imposition of any tax on sale or purchase of goods outside the state or in the course of the import of the goods into, or export of the goods out of, the territory of India. Now, Supply of goods or service or both will be covered by this clause. This clause will restrict the states from imposition of Interstate GST and same will be levied by union government under Article 269A as mentioned earlier.

Levy of addition 1% tax by States:- To protect the revenue loss of manufacturing state additional 1% tax shall be levied by state on sale or purchase in the course of interstate for the period of 2 years of such extended period as allowed by GST council. Entire revenue from such addition levy will kept by the state from where supply of goods take place. The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax

Compensation to States for Revenue Loss:-Parliament may by law and with the recommendation of GST council provide compensation to state on account of implementation of GST. The period of compensation is restricted upto 5 years.

Translation Provision:- If the provision of state Law is inconsistent with constitution after commencement of these act shall be valid till the amendment by competent legislator or authority or one from commencement of these act whichever is earlier.

Power of president to remove the difficulty:–If any difficulty arises after commencement of these act, the president may by order remove such difficulty. Provided that no such order is made after the expiry of three years from commencement of these act.

Amendment of Article 270(1)(Levy and Distribution between union and state): Revenue of GST other than IGST

Amendment of Article 271: (Surcharge on taxes by union