GST Notes
GST Notes
GST Notes
Accrual of tax
The tax would accrue to the taxing authority which has the jurisdiction over the place of
consumption which is also termed as place of supply. Hence, GST is a destination based
consumption tax.
Double Taxation :
Earlier some items are treated both as a commodity as well as a service. Eg: software.
This resulted in double taxation of a transaction as both goods and services.
Others:
a) Non inclusion of several local levies in State VAT such as luxury tax, entertainment tax etc.
b) No CENVAT after manufacturing stage
c) Non integration of VAT and Service Tax
Existing taxes that will continue even after the introduction of GST
1. Central Excise Duty levied on manufacture / production of Tobacco, Petroleum Crude,
Diesel, Petrol, ATF and Natural Gas.
2. State Excise Duty levied on manufacture / production of Alcoholic Liquor, Opium,
Indian Hemp and Narcotics.
3. VAT levied on Intra-State sale of Petroleum Crude, Diesel, Petrol, ATF, Natural and
Alcoholic Liquor
Benefits of GST:
GST is a win – win situation for the entire country.
It brings benefits to all the stakeholders of industry, Government and the consumer.
It will lower the cost of goods and services, give a boost to the economy and make the
products and services globally competitive.
That the proceeds of the cess will be utilized to compensate States that warrant payment
of compensation;
That 50% of the amount remaining unutilized in the fund at the end of the fifth year
will be transferred to the Centre and the balance 50% would be distributed amongst the
State and Union Territories in the ratio of total revenues from SGST / UTGST of the
fifth year;
GST Compensation Cess (under section 8 of the Act) will be levied on all intra-State
and inter-State supplies of goods or services or both, including import of goods;
The Cess would not be leviable on supplies made by a person who has opted for
composition levy;
Note:
Like CGST rate, there shall be equivalent rate of SGST / UTGST payable in case of
composition levy. As a result, total GST payable shall be double of the above mentioned CGST
rates. Thus, the maximum total GST rate shall be 2 % or 5 % or 1 %, as the case may be instead
of 1 % or 2.5 % or 0.5%.
Mixed supplies
Mixed supplies means:
Two or more individual supplies of goods or services, or any combination thereof, made
in conjunction with each other by a taxable person.
For a single price where such supply does not constitute a composite supply.
The individual supplies are independent of each other and are not naturally bundled.
How to determine the tax liability on mixed supplies?
A mixed supply comprising of two or more supplies shall be treated as supply of that particular
supply that attracts highest rate of tax.
Example: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry
fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply.
Each of these items can be supplied separately and is not dependant on any other. It shall not
be a mixed supply if these items are supplied separately.
Example: A shopkeeper selling storage water bottles along with refrigerator. Bottles and the
refrigerator can easily be priced and sold separately. So, such supplies are mixed supplies