Goods and Services Tax (‘GST’) is one of the most widely prevalent indirect tax across the globe. In the last 50 years, more than 160 countries have adopted GST. India is preparing itself for ushering GST perceived as a major landmark reform in the Indian Tax System.
In the current tax regime on goods and services in India, tax is on a taxable event like manufacture, sale, entry and provision of service. The tax is collected by the Federal or Central Government or the Regional or State Governments in accordance with the Constitutional scheme. The proposed GST would entail a simultaneous levy of tax by both the Governments on the same ‘supply’ of goods or services or both. The current levies like Central Excise Duty, Service Tax levied by the Central Government in the present form, Central Sales Tax (CST), Value Added Tax (VAT), Octroi, Entry Tax and such other levies will be subsumed in the new GST.
The Federal or Central Government will levy Central GST (‘CGST’) and the Regional or State Governments will levy State GST (‘SGST’). Inter-State supplies would attract Integrated GST (‘IGST’).
The Indian Government has, on 14th of June 2016, released the Model GST Law. This Model law is in furtherance of four Reports of the Joint Committee on Business Processes for GST on Registration, Payment, Returns and Refunds released by the Government of India in October 2015.
As the fundamental basis for taxation is proposed to be changed, Indian Constitution has to be amended and for this purpose, the Constitutional (One Hundred and Twenty-Second) Amendment Bill, 2014 has been passed by the Indian Parliament. This Bill is required to be ratified by majority of State Legislatures and after receiving President's assent it will come into force.
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