Goods and Service Tax
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 Producer’s point and Service provider’s point up to 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 central 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 up to final consumption point.
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 central 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 up to final consumption point.