GST is applicable on the supply of goods or services.
In the first phase GST will not apply to:
Petroleum crude
High speed diesel
Motor spirit (petrol)
Natural gas
Aviation turbine fuel
Basic Difference between Current Tax System and GST
The GST Council will decide when GST will be levied on above items.
Tobacco and tobacco products as well as excise duty on tobacco will be included in GST.
Parliament and state legislatures are authorized to make laws on the taxation of goods and services.
The central government has the exclusive power to levy and collect GST on interstate trade or commerce, or on imports, which will be known as Integrated GST (IGST) .
Additional Tax
Center will imposed extra 1% Tax on the supply of goods on inter-state trade or commerce, which is collected by center and assigned to states from where the supply originates.
The GST Council recommended imposing this tax for two years, or for a longer period. Central government may release certain goods from such additional tax.
The law of Parliament will determine the place of origin from where the supply of such goods takes place
Benefits of GST
GST will be efficient tax system and will make both online and offline business easier. It will be more beneficial for online businesses. The advantages of GST are:
Effective tax rates will be lower
Easy remedial of tax disputes
Multiplicity taxes and their cascading effects will be eliminated
Tax structure and compliance procedures will be simplified
Center and State tax administrations will work in coordination so that duplication and compliance costs will reduce
Which Indirect Taxes Will Subsume into GST?
Central level
Central Excise Duty
Additional Excise Duty
Service Tax
Additional Customs Duty (also known as Countervailing Duty)
Special Additional Duty of Customs.
State level
State Value Added Tax (VAT) or Sales Tax
Octroi and Entry tax
Purchase Tax
Luxury tax
Taxes on lottery, betting and gambling
Entertainment Tax (other than the tax levied by the local bodies)
Central Sales Tax (levied by the Centre and collected by the States)