At last after long wait GST has seen the light of the day. On midnight of 30th June ,2017 when most of the people in India were asleep, GST, a new indirect taxation system for goods and service, conceived 11 years ago took birth at 00.00 hrs on 1st July, 2017.
With this, GST’s rail has started rolling on its tracks. Many commodities such as alcoholic beverages, petroleum products and to-bacco products are still out of GST ambit. Multiple enactments and multiple taxation rates of NIL, 0.25%, 3%, 5%, 12%, 18% and 28% have eroded the boundaries of aforesaid concept of “one nation one tax” notwithstanding these hiccups, the biggest reform in indirect taxation since independence has to be welcomed with open arms and cherished.
One unique aspect of the GST law is that it does not have any separate tariff schedule as a part of any of 4 enactments in respect of goods. There is also no separate GST tariff act for goods. The GST would be charged at the rates recommended by GST council and notified by the government. From the notification issued, it is seen that tariff items, sub-headings, headings, chapter and rules of interpretation pertaining to customs tariff have been adopted against the description of goods mentioned in the notification. Thus the uncertainty which was prevailing on tariff after recommendations of council were placed at the web-site of the CBEC, is no longer there. It is clear that customs tariff has been adopted for the purpose of classification of goods under GST. As regards services, negative services, and declared services are already a part of the relevant acts. For others, rates as recommended by council have been notified.
The Government, therefore, was accountable for exemption granted by it. In the present regime, although provision has been made to grant exemption, since both i.e. rates of taxes to be levied and grant of exemption are to be recommended by council, the fine line between levy and exemption has gone away. This will make the exemption provisions otise, as lower rates notified by government for purpose of levy on recommendations of council, in itself amount to grant of exemption. Moreover, this affect, the transparency in system as the government will not be accountable, having followed the recommendation of council more so when the law is silent as to what extent recommendations of council are binding on government. The accountability of council is also not clear. Thus concept of exemption under GST also requires more clarity.
One more topic relating to exemption id what is known as, SSI exemption In earlier regime, manufacturers having aggregate turnover of Rs 1.50 crore were exempt from Central Excise duties by following certain conditions. Under the present GST regime, the threshold limit has been fixed at Rs 20 lakhs across the goods (whether manufactured or traded) and services for entire country except the Special Category States as defined in clause (g) of Article 279A(4) of constitution of India. Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, where this limit is Rs 10 lakh. Further method for computing aggregate turnover has also been changed in as much earlier, value of clearances of exempted and exported goods was not includible in determining this threshold while under GST, the value relating these components in includible. The only exclusion for determining limit under GST is the tax paid under reverse charge on goods and services.
Another aspect that requires special mention is the composition scheme notified vide notification no.8/2017-Central Tax dated 27-8-2017. This is an alternative method of levy of tax under GST for small tax payers whose yearly aggregate turnover in the preceding financial year did not exceed Rs 75 lakhs to pay composition tax @one percent of the turnover in case of a manufacturer, two and half percent of the turnover in case of restaurant etc. not serving alcohol and half percent of the turnover in other cases. The aforesaid limit of Rs 75 lakh is reduced to Rs 50 lakhs in respect Special Category States except Uttarakhand and Jammu & Kashmir which do not figure in aforesaid notification. Tax payers, if eligible can take benefit of this scheme. The scheme, however, is not applicable to ice cream and other edible ice, whether or not containing cocoa, Pan masala and all tobacco products.