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Features of GST

Check out some of the features of GST in India which are as follows:

  • GST would only be applied to the supply of goods or services as it is in contrast to the current concept of tax on the sale of goods or on the manufacture of goods or on the provision of services.
  • GST would be implemented on the basis of the principle of destination-related consumption taxation in contrast to the existing principle of origin-based taxation.
  • A dual GST would also be applied along with the States and the Center as well. The GST applied by the States (comprising Union territories with legislature) would be known as State GST (SGST) and the same applied by the Center would be known as Central GST (CGST). Similarly, the GST levied by Union territories without legislature would be called Union territory GST (UTGST).
  • An IGST (Integrated GST) would be applied to the supply of inter-state including goods or services or stock transfers. This tax would be accumulated by the Center without disrupting the credit chain.
  • Import of goods would be subjected to IGST and it would be treated as inter-state supplies besides the applicable customs duties.
  • Import of services would be listed under inter-State supplies and subjected to IGST.
  • When it comes to IGST, UTGST, SGST, or CGST, it would be applicable at rates to be agreed mutually by the States and the Center under the patronage of the GSTC.
  • The following taxes that are presently levied and collected by the Center would be replaced by GST:
  1. Excise Duties (Toilet and Medicinal Preparations);
  2. Central Excise Duty;
  3. Special Additional Duty of Customs (SAD);
  4. Service Tax;
  5. Additional Duties of Excise (Textiles and Textile Products and Goods of Special Importance);
  6. Surcharge and cesses insofar as they associate with the supply of goods or services;
  7. Additional Duties of Customs (commonly called CVD).
  • State taxes that would come under the list of GST are:
  1. Current Sales Tax;
  2. State VAT;
  3. Luxury Tax;
  4. Purchase Tax;
  5. Taxes on gambling, betting, and lotteries;
  6. Advertisement taxes;
  7. Taxes of entertainment (except those applied by the local bodies);
  8. Entry Tax (All forms);
  • GST would be levied on all services and goods excluding Alcohol for the consumption of humans.

Benefits of GST

Have a look at a few of the advantages of GST which are given below:

  1. For the consumers:
  • A single and transparent tax that is proportionate to the value of services and goods:

Considering the multiple taxes applied by Central or State with no or incomplete ITC accessible at continuous phases of value addition, the rate of most goods and services in the nation was burdened with a lot of hidden taxes. As per GST, there would be only one tax from the manufacturer to the customer, resulting in the transparency of taxes paid.

  • Relief in the entire tax burden:

The complete tax burden on most products will decline because of the prevention of leakage and efficiency gains. It benefits the customers a lot.

  1. For State and Central Governments:
  • The efficiency of Higher Revenue:

GST is applied to reduce the price of tax revenue collection of the Government and it, therefore, results in higher revenue efficiency.

  • Great Control on Leakages:

Due to a strong IT infrastructure, GST will lead to great tax compliance. Considering the smooth transfer of input tax credit from one phase to another in the value addition chain, there is a built-in mechanism in the GST design that would encourage tax compliance by traders.

  • Easy and Simple to Control:

GST replaces many indirect taxes at State as well as Central Level. Being an end-to-end and strong IT system, GST would be easier and simpler to administer.

  1. For Industry and Businesses:
  • Removal of Cascading Effect:

A smooth flow of tax credit across boundaries of states and throughout the value chain would make sure that there is a slight cascading of taxes. This would further decrease the hidden cost of undertaking business.

  • Easy and Simple Compliance:

A comprehensive and strong IT system would be the overall foundation of the GST Regime in the country. All services of taxpayers like payment, returns, registrations, and so on would be accessible online. It further makes compliance transparent as well as easy.

  • Competitiveness:

A decrease in the transaction price of undertaking business would gradually result in enhanced competitiveness for the industry and trade as well.

  • Structures/Development and Uniformity Tax Rates of Common National Market:

GST is applied to make sure that structures and indirect tax rates are quite general all over the nation. It would ease and increase the certainty of undertaking business.

  • Enhance to Exports:

Phasing out of Central Sales Tax (CST), full set-off of tax paid on services and goods, including major State/Central taxes in GST would decrease the locally manufactured commodities and services. This would further boost the competitiveness of Indian products and services in the international market and it further enhances Indian Exports.

Salient Features of GST

Let us discuss the salient features of GST which are as follows:

  1. Utilization of Levy:

Levies from Central GST (CGST) and State GST (SGST) would create part of the Center and State with no allowance of cross-utilization.

  1. Destination-based Tax:

When it comes to GST, it is a destination-based tax levied on the usage of goods and services. Therefore, the SGST credit would be shifted to the Destination State in the category of IGST (Integrated GST). It would be applied to all the transactions of the Inter-State.

  1. Tax Levy:

The Central GST (CGST) and State (SGST) would be applicable on all the transactions of commodities and services respectively.

  1. Scheme of Composition:

There is a composition scheme under the GST regime for small dealers with a current turnover of 75 lakhs.

  1. Transition:

It is nothing but the seamless shift of current taxpayers to the new Indirect Tax Regime rendered.

  1. Turnover Limit:

Currently, the taxable threshold limit is 20 lakhs all over the country except the North Eastern States and 10 lakhs in the North Eastern States itself.

  1. Compensation to States:

The GST regime offers payment of compensation to various States, in case, if there is any loss of revenue on implementation of Goods and Services Tax for a duration of 5 years.

  1. Measures of Anti-Profiteering:

The GST regime is expected to reduce the cost of goods and services once it is adopted. The government has implemented anti-profiteering measures to make sure that there is a transfer of such advantages to the consumers.

  1. The GST Council:

The GST Council is a quasi-judicial body of the Center and States entitled by the Finance Minister and Taxation Ministers or the State Finance Ministers of India. The main characteristic of this Council is to recommend different provisions of GST regimes to the Center and the State.

  1. Assessment:

The registered taxable person would be enabled to evaluate the payable taxes as per the GST laws and provide a return for every tax period.

  1. GST Identification Number:

Every dealer which even comprises importers as well as exporters would be provided with a PAN-based TIN number which would be a common thing for both Central and State GST.

  1. Accessibility of Tax Credit:

It is applied with regards to payment of taxes done on any distribution of goods or services or both intended to be utilized in the business course.