How Will New Taxation System GST Work?

When GST or goods or services tax rolls out on July 1, it will be the biggest tax reform since Independence. GST will subsume a large number of central and state taxes into a single tax, paving the way for a common national market. From free flow of goods and services to elimination of cascading of taxes, the potential benefits to Indian economy are many. It is estimated that GST could raise GDP or gross domestic product growth by 1.5-2 per cent in the long term.

Good and Service Tax

Here is a 10-point:

1. GST is a destination-based tax, as against the present principle of origin based taxation. The new tax regime follows a multi-stage collection mechanism wherein tax is collected at every stage and the credit of tax paid (input tax credit) at the previous stage is available as a set-off at the next stage of transaction. This helps to eliminate "tax on tax" or the cascading impact of tax. GST shifts the tax incidence near to the consumer and benefits the industry through better cash flows and better working capital management. From consumer point of view, GST helps to bring down overall tax.
2. Input tax credit: This means that at the time of paying tax on output manufacturers or service providers, for example, can reduce the tax by the amount they have already paid on inputs. For example, a manufacturer's total tax on output comes to Rs. 5,000 while tax paid on input (purchases) is Rs. 3,000. In this case, the manufacturer needs to deposit only Rs. 2,000 (Rs. 5,000 - Rs. 3,000) as tax, after claiming credit of Rs. 3,000, thus reducing the overall incidence of tax on final product. But credit available to the recipient (the manufacturer in this case) only if invoice is matched. So GST helps in checking evasion of taxes.
3. GST rates: GST rates on goods and services have been broadly classified into four tax rates: 5 per cent, 12 per cent, 18 per cent and 28 per cent. Some goods and services would be exempt. Precious metals like gold will attract a separate tax rate of 3 per cent. A cess will be levied over the peak rate of 28 per cent on specified luxury and sin goods. Under GST, businesses are required to file returns each month. But the government has let companies file late returns for the first two months so that they can adapt to a new online filing system.
4. CGST, SGST, IGST: The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States (including Union territories with legislature) would be called State GST (SGST). An Integrated GST (IGST) would be levied on inter-State supply (including stock transfers) of goods or services. This would be collected by the Centre. Import of goods would be treated as inter-State supplies and would be subject to IGST in addition to the applicable customs duties. Exports will be treated as zero-rated supplies which means no tax will be payable on exports of goods or services. However, exporters can claim input tax credit.
5. Who is liable to pay GST? Businesses with an annual turnover of Rs. 20 lakh (Rs. 10 lakh for special category states) would be exempt from GST. A composition scheme (to pay tax at a flat rate without input credits) is available to manufacturers and service providers having an annual turnover of up to Rs. 75 lakh. The composition scheme is optional.
6. Stocks in transition: On stocks unsold before GST rollout, manufacturers and retailers have been allowed to carry forward input tax credit for 90 days. On such goods they can claim as much as 60 per cent of the input tax credit on stocks lying unsold up to June 30.
7. Anti-profiteering mechanism: An authority will be set up to see that any reduction in rate of tax of any supply of goods or services for the benefit of input tax credit will be passed on the recipient by commensurate reduction in prices. Anti-profiteering clause in GST is a deterrent which is not intended to be used unless forced to, says Finance Minister.
8. Decision mechanism: GST Council will make recommendations on everything related to GST including laws, rules and rates etc. Union Finance Minister Arun Jaitley heads the panel while ministers of finance or taxation of each state are its members. Decisions in the Council are taken by a 75 per cent majority. Centre and a minimum of 20 states are required for majority because Centre would have one-third weightage of the total votes cast and all the States taken together would have two-thirds of weightage.
9. Not part of GST: Petroleum products such as petrol, diesel and aviation turbine fuel have been kept out of GST as of now. The GST Council will take a decision on it at a later date. Alcohol has also been kept out of GST.
10. Administrative control: To ensure single interface, all administrative control of 90 per cent of taxpayers having turnover below Rs. 1.5 crore would vest with state tax administration while 10 per cent with the central tax administration. Further, all administrative control over taxpayers having turnover above Rs. 1.5 crore will be divided equally between central and state tax administrations. States will be compensated for any revenue loss from GST implementation for five years.

Source: http://bit.ly/2s4zND6

GST effect: Nike, Adidas, Levi's offer discounts as sales season comes early

GST has brought a fresh wave of sales, with most companies offering discounts as they try to finish off their stocks before the roll out of the new tax system on July 1. The end of season sales usually begin in the end of June, but this year brick-and-mortar retailers started offering discounts from the beginning of June. There are Buy 2 Get 2, Flat 40-50% off and many other discounts on top clothing, footwear companies including top brands such as Nike, Adidas, Levi's. While these companies have not revealed when these discounts will end, the strategy could change after July 1 when the GST is rolled out.

Service Tax

Here are the offers on top brands in Delhi-NCR:

Nike: Sporting brand Nike is offering up to 50 % discount on some products. Some products are being sold at the discount of 25% and 35%. The sales started early in Nike with the company offering discount from June 1.


Levi's: Jeans brand Levi's is offering flat 40% discounts on most of the items with some selected items on 50 % off. An earlier scheme that ran from June 7 to June 23 had a Buy  2 Get 2 offer.

Adidas: Adidas Originals is offering 50% flat discount on purchase of 3 or more items. Buyers can choose both shoes and clothes to avail the offer. On single items, the company is offering up to 40 percent off depending on the products. The sales at Adidas started in the first week of June.

Pantaloons: In Delhi-NCR, Pantaloons, which sells products from multiple brands, is offering 50% off when buyers shop worth Rs 10,0000. There are also discounts starting from 20% on different brands. The discount stretches to 50% on some brands.

Puma: Sportswear company Puma is offering a discount of up to 40 % on select merchandise. Sales started on 1 June.

Arrow: Clothing brand Arrow, like some of the other brands, is also offering  has an ongoing Buy 2 Get 2 Offer in Delhi-NCR. There's a discount of 20 % on single items. Those who shop 5 or more items can avail flat 40 % off on the total bill. There's a 30 % discount on suits and blazers.
Source: http://www.msn.com/en-in/money?ocid=iehp

GST is a week away: How to time your buys to have best of two tax regimes

Despite skeptics raising doubts about smooth transition of existing tax regime to Goods and Service Tax structure, the stage is set for GST roll out on July 1 from midnight. A special session of Parliament too has been convened for the launch of GST.

Service Tax

All states except Jammu and Kashmir have passed GST enabling laws with West Bengal having promulgated an Ordinance for the purpose. This is going to be a historic moment when existing taxes will cease to apply and new uniform taxation will take over.
There is apprehension in markets prompting many outlets to announce discounts. Online shopping sites are every day announcing new pre-GST discount sales.
But, be wise while you choose what to buy in the pre-GST and GST regimes.
GOLD AND JEWELLERY
This is perhaps the best time to buy gold jewellery. Though the tax incidence on gold remains unchanged on the two sides of GST divide, it is the making charges that are going to make gold jewellery costlier under the new taxation regime.
At present, gold attracts one per cent excise duty and two per cent VAT. From July 1, there will be three per cent GST on gold.
But, while making charges are not taxed at present, the craft would attract 18 per cent GST from July 1 making gold jewellery expensive. But, if you are looking to invest in gold bars, biscuits and the like, better check the international rates.
MOBILE PHONES
Pre-GST tax incidence on mobile phones is around 13.5 per cent while after GST roll out it will be 12-18 per cent. Chances are that the mobile phones will become costlier by 5 per cent. The impact will be more felt in the southern states.
While the rest of India has a VAT of 12 per cent on mobile phones, the southern states levy 5 per cent VAT on them. So, traders in those states fear huge loss as under the GST they cannot claim input credit for their stocks piled for over a year. This has led to clearance sale at many places in the south. Many online platforms have offered greater discount on these phones sourcing them from southern states.
The mobile phones made in India are likely to cost more in comparison to imported phones under GST regime. So, if you are looking for one of the Indian brands, this is the best time to buy one. Since, there would not be much difference in price of these phones after GST, you may wait or go for it if discount rate is more than 10 per cent.
CAR AND BIKES
This is tricky area of purchase. Smaller cars are likely to become costlier by 8-10 per cent. So, if you are planning to buy one, the next seven days are for you to execute your plans. You may also get a discount in the range of 5-10 per cent as the dealers are apprehensive about the sale equation once GST is rolled out on the midnight of June 30th.
But, if you have been waiting for SUV and luxury cars, then wait for a little longer. Big cars are will attract 28 per cent GST from July one. At present, taxes on SUV and luxury cars are over 32-33 per cent.
For those looking for two-wheeler, a wait for another week is advisable. They may purchase a bike of their choice about two per cent cheaper.
LAPTOP AND DESKTOP
Laptops and desktops are set to become costlier as the present tax incidence on them is about 15 per cent which is set to go up to 18 per cent on July 1.
The prices of branded laptops and desktops would rise by around 5 per cent in effect. Though, the difference of rates between the online stores and offline retailers would be bridged a bit after GST roll out.
But, if you are planning to buy a laptop, you may easily find some of the best discount sale as the inventory of over one year old would not bring the benefits of input credit to the traders. Clearance sale is being seen everywhere.
TV AND FRIDGE
Television and refrigerators attract differing rates of taxes in different states. Generally the tax ranges between 23 and 28 per cent. But, revenue states like Delhi do not charge entry tax or octroi, TV and fridge usually cost lower.
Under GST regime, TV and fridge would attract 28 per cent tax. So, except in places like Delhi, there would not be much difference between the pre-GST and post-GST prices of TV and fridge. There would be nominal increase of about 2-3 per cent in prices.
It is better to wait for GST roll out as the dealers would then be under pressure to clear their stock of over six months old. The consumers are likely to get more discount than at present.
Same logic applies to furniture where wooden furniture is affected by GST regime. However, furniture made up of plywood, plastic and iron-steel is likely to cost more. But, then the dealers would be under pressure to clear stock after GST roll out.
Original Source: http://bit.ly/2t2hsKS

You may consult with the Tax Consultant in India/ Tax Advisor in India for any kind of help.

GST Council cuts tax rate on gold jewellery making charges to 5%

In what could be a huge relief for jewellery and diamond processing industry before India's biggest tax reform kicks in from July 1, the Goods and Service Tax (GST) Council reduced the applicable rate on making charges from 18 per cent to just 5 per cent.

Good and Service Tax

"The GST Council has received 133 representations. An officers' committee made recommendations after studying these representations. The GST Council has reduced the tax levels in 66 out these 133 cases. The diamond processing and others would attract a levy of five per cent now," Union Finance Minister Arun Jaitley said while addressing a press conference after 16th GST meeting.

Earlier, All India Gem and Jewellery Federation, the India Bullion and Jewellers Association (IBJA), and other trade representatives had pressed for lower taxes on jewellery making charges.

Currently, tax is exempted on jewellery making charges. Early this month, the GST Council meeting had fixed GST on precious metals and diamonds, including jewellery, at 3 per cent. However, tax on making charges of jewellery was kept at 18 per cent.

Tax on making charges would have in turn raised tax for consumers to over 4 per cent, almost double of what was being currently charged in the form of 1 per cent each on VAT and excise on jewellery.

Among the items on which the GST rates have been reduced by the GST Council include cashew nut, sauces, pickles, insulin, children's colouring and drawing books, cutlery.

GST rates were also revised for computer printers, tractor components. Cinema tickets under Rs 100 would be taxed at 18 percent, while above Rs 100 would be charged at Rs 28 percent.

Source: http://bit.ly/2siDubt 

You may consult with the Tax Consultant in India/ Tax Advisor in India for any kind of help. 

Tax rates under GST: The gains and losses for the Indian middle class

It's only less than a month left until Goods and Service Tax (GST) sees the light of the day. India's biggest tax overhaul crossed its final hurdle last week when GST Council agreed to tax gold and silver jewellery at 3 per cent tax rate.

Tax consultant in India

With GST to be implemented from July 1, it's the ideal time to check if your monthly budget will be affected under the new tax regime. We've put down a list of goods and services that will become cheaper or costlier once GST comes into force.
Gold: GST Council has fixed the tax rate of the precious metal at 3 per cent. GST Council on June 3 created a new tax bracket for gold, diamonds and silver. The current excise duty on gold was 1 per cent and 1 per cent VAT in many states. With 3 per cent GST, Gold is set to become costlier July onward.
Banking Charges: Transaction fee on various banking and financial services are expected to go up as GST will tax these services under 18 per cent tax rate from the current 15 per cent.
Hotel Bookings: GST on hotel services will depending on the kind of room you stay in. If the room tariff is less than Rs 1,000, your stay will be tax free. However, if the room tariff is between Rs 1,000 - Rs 2,500, you'll be taxed 12 per cent. It the tariff is between Rs 2,500 to Rs 5,000, the stay will be taxed at 18 per cent. For luxury hotels, where the tariffs are more than Rs 5,000, GST rate of 28 per cent will be applicable.
Eating Out: There are different tax slabs for restaurants depending on their turnover and whether they have air-conditioning or or not.
Restaurants with a turnover of less than Rs 50 lakh will be levied a tax rate of 5 per cent. 
Non-AC restaurants will be charged 12 per cent GST on food bill. Tax rate for AC restaurants and those with liquor licence will be 18 per cent, whereas restaurants in 5-star hotels will attract a GST rate of 28 per cent.
While ordering food from your neighborhood non-AC joint may get a little costly under GST, eating out in AC restaurants is set to become cheaper as the current tax rate includes 5.6 per cent Service tax and 14 per cent VAT in some states.
Telecom Bills: Your mobile and internet bills are expected to rise once GST comes into force. Currently, there is a 15 per cent service tax on telecoms services. Under GST, the tax rate applicable will be 18 per cent. The industry, which is already stressed with the launch of Reliance Jio, is expected to pass on these charges to customers.
Currently, there is service tax on cinema and states have separate entertainment taxes. Maharashtra levies more around 50 per cent entertainment tax on movie tickets. In Uttar Pradesh (UP) entertainment tax is around 30-40 percent.
More at: http://bit.ly/2rFDxvx
You may consult with the Tax Consultant in India/ Tax Advisor in India for any kind of help.