GST snippets

According to the recommendations by the empowered group in the draft discussion paper, there would be a dual rate structure -- one levied by the Center and the other by states. It has been proposed to subsume central levies like excise duty, additional excise duty, service tax, excise duty levied under the Medicinal and Toiletries Preparation Act, countervailing duty, special additional duty of customs, various surcharges and cesses.
State levies including VAT, sales tax, luxury tax, entertainment tax (except the levy by local bodies),taxes on lotteries,betting and gambling and state cesses and surcharges and the entry tax not in lieu of octroi are also proposed to be included.
What is GST?
It is a destination-based tax on goods and services that taxes only the value addition at each stage
Why is it important?
It subsumes all major Central and state taxes, reducing multiplicity and bringing down the compliance cost. It will also reduce tax burden on the end consumer.
Who are opposing it and why?
States such as Maharshtra, TN, Gujarat, Punjab and MP protest against impact on their revenues and the taking away of their right to levy taxes
What is the govt response?
There is still no agreement on of Centre compensating states which will forgo revenue on account of levying of GST. However, the 13th Finance Commission suggests the Centre does this subsumed in the GST. However, alcohol and petroleum products will not be included in the GST though tobacco would be covered in the new indirect tax regime.
"It will re-distribute the burden of taxation equitably between manufacturing and services, bringing about a qualitative change in the tax system,"Pranab Mukherjee said .The empowered committee has proposed to adopt a two-rate structure -- a lower rate for essential items and standard rate for general goods. There would also be special rates for precious metals and a list of exempted items, the discussion paper suggested.
As regard the threshold, gross annual turnover of Rs 10 lakh both for goods and services has been proposed to be adopted and and the threshold for Central GST for goods has been proposed to be kept at Rs 1.5 crore.
The paper said that both Central and state GST would be levied on imports also.All tax exemptions relating to industrial incentives should be converted into cash refund schemes after collection of tax.