What is GST ? What are the features of the proposed bill?

New Delhi, Nov 28 (IT) : The Good and Services Tax is the biggest indirect tax reform since 1947. This will be levied on manufacture sale and consumption of goods and services.

In the words of the Finance Minister Arun Jaitley, the GST bill will lead to the economic integration of India.

The main function of the GST is to transform India into a uniform market by breaking the current fiscal barrier between states. Thus the GST will facilitate a uniform tax levied on goods and services across the country.

Currently, the indirect tax system in India is complicated with overlapping taxes levied by the Centre and the State separately.

Framework of the GST will replace indirect taxes

The GST will have a 'dual' structure, which means it will have two components- the Central GST and the State GST. They will both have separate powers to legislate and administer their respective taxes. Thus equally empowering both.
Taxes such as excise duty, service, central sales tax, VAT ( value added tax), entry tax or octroi will all be subsumed by the GST under a single umbrella.

With passing of the GST bill, we can expect a climate of improved tax compliance.

Thus, the GST will basically have only three kinds of taxes, Central, State and another called the integrated GST to tackle inter-state transactions.

When is the proposed GST set to start functioning and what are the hurdles?

The GST regime is intended to be functional from 1st April, 2016.

The first mention of the bill was in 2009 when the previous UPA government opened a discussion on it. They were successful in introducing the bill but failed to get it passed.

On 17th December 2014, the NDA government made slight changes to it and redefined it in the Lok Sabha. The bill got cleared on May 6th this year.

However the current challenge facing the bill is that it needs two-third majority of both houses and 50 percent of the state assemblies will have to ratify it.

The bill is now stuck in the Rajya Sabha, because the current government does not hold a majority here.
The role of the opposition

The Congress demands for reforms in key areas of the GST has been stalling the process of passing the bill.

Three main concerns of the Congress over the bill are:

-one per cent additional tax as goods move across states
-the constitutional cap of 18 per cent and an independent dispute redressal mechanism.
-the party has maintained that the government was ignoring the concerns raised by the party on the legislation.

They want the Bill to be referred to a Select Committee for review.

The impact and relevance of the GST bill

According to Finance Minister Arun Jaitlety the GST will be instrumental in helping the GDP of India to grow by 2 percent.

The GST also offers a solution to the multinationals as it breaks down the indirect tax structure into one single tax payable by the companies.

Although the states have feared loss of fiscal powers, the Constitutional amendment bill has promised to solve this by giving compensation packages for three years for any kind of revenue loss.

The bill has proposed to have GST council wherein all union and state minister in charge of finance will be on a equal footing. It will also have a Dispute Settlement authority to mitigate the tensions between the centre and state smoothly.

One main contention for the state in the GST is the inclusion of petroleum products. The current consensus on this is that the states will continue to levy sales tax/VAT on these with the exception of imports and inter-state trade.

With the Modi government walking that extra mile to get consensus on implementation of the GST, we have to hold our breaths till it is functional by the proposed deadline of April 1st 2016.


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Comment on this article

  • Theo D'Silva (Kamath), Mangalore/Canada

    Sun, Nov 29 2015

    Dear Readers,
    These are all tactics of the Govt's to Tax people. But, if they harmonize the previous 1001 taxes with single tax HST (no state Govt tax). And, when they Get this tax they should look after poor people with subsidies, seniors good pensions, unemployed insurance payments. That will be called welfare state.
    Best of Luck and thanks for listening.

    DisAgree [6] Agree [4] Reply Report Abuse

  • Valerian D'souza, Udupi / Mumbai

    Sun, Nov 29 2015

    Dear Theo,
    In federal structure of India, States do not want to loose their rights to tax.
    States too want Industrialists come to them with their grievances.
    It's not only a matter of money, It's power state don't want to loose!
    Therefore dual tax system prevailing in India.
    GST is only harmonizing the systems!

    DisAgree [1] Agree [6] Reply Report Abuse

  • Jason, Pangla

    Sat, Nov 28 2015

    This is called Every dog has a day... UPA brought it in 2009 and Bjp opposed it and now BJP is on knees confront of Mr. Maun Mohan Singh( I think modi called him like dat only :-) ) and Mrs. Gandhi!!! Incredible NDA.. Following footsteps of UPA and branding them as NDA.

    DisAgree [4] Agree [22] Reply Report Abuse

  • Joseph F. Gonsalves, Bannur, Puttur / Mangalore

    Sat, Nov 28 2015

    The congress rightly introduced GST / GOODS SERVICE TAX bill in its correct form during the UPA rule.

    Now the BJP/NDA wanted to introduce GOU SALES TAX / GST BILL over the citizens of India.

    DisAgree [5] Agree [12] Reply Report Abuse

  • Valerian D'souza, Udupi / Mumbai

    Sat, Nov 28 2015

    Indian accounting systems are adopted as per GAAP (Generally accepted Accounting Practices)
    Now it is gradually getting converged as per IFRS (International Financial Reporting Standard)
    Like international language English common to all,
    converging our accounting statement formats to IFRS standard will help overseas investors to understand our accounts better.
    Benefits of economic liberalization will be realized, when our systems are made easy to understand.
    GST is one of the best and simplified indirect tax collection system, prevailing in several countries, not new in this universe!
    If implemented would be far better for our businessmen, economy, overseas investors point of view and to our people looking for Finance / Accounts related jobs abroad!

    DisAgree [1] Agree [10] Reply Report Abuse

  • NN, USA

    Sun, Nov 29 2015

    GAAP (Generally Accepted Accounting Principles) that is.

    DisAgree Agree [5] Reply Report Abuse

  • john mathias, kinnigoli

    Sat, Nov 28 2015


    DisAgree [4] Agree [44] Reply Report Abuse

  • kumar, kinnigoli

    Sat, Nov 28 2015


    DisAgree [36] Agree [9] Reply Report Abuse

  • Nithin Poojary, Mangalore

    Sat, Nov 28 2015

    then commerce minister Anand Sharma flew to Gandhi nagar to convince the then CM of Gujarth the Current PM to convince regarding GST...But Modi refused to support GST just because the credit will got congress...

    DisAgree [6] Agree [43] Reply Report Abuse

  • Nithin Poojary, Mangalore

    Sat, Nov 28 2015

    Sorry it was Jairam Ramesh not Anand Sharma

    DisAgree [2] Agree [27] Report Abuse

  • Neville Fernandez, Mangalore/Antigua

    Sat, Nov 28 2015

    "Thus, the GST will basically have only three kinds of taxes, Central, State and another called the integrated GST to tackle inter-state transactions".

    I still see "three taxes" here. Old wine in new bottle?

    DisAgree Agree [18] Reply Report Abuse

  • Henry Sequeira, Shirva, Miraroad

    Sat, Nov 28 2015

    It is not Good and Services Tax. It is Goods and Services Tax

    DisAgree Agree [8] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sat, Nov 28 2015

    Any single achievement which BJP can say ORIGINAL ...

    DisAgree [3] Agree [30] Reply Report Abuse

  • Peter, Bangalore

    Sat, Nov 28 2015

    I dont understand economics.
    My question is from April 2016 , my beer rate increases or decreases ?

    DisAgree [3] Agree [37] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sat, Nov 28 2015

    Peter, your blood pressure will definitely INCREASE ...

    DisAgree [1] Agree [16] Reply Report Abuse

  • Mms, mangalore

    Sat, Nov 28 2015

    The Joint Committee on Business Process for #GST has submitted its Report on GST Return.
    The salient features for proposed #GSTReturn are as below:

     There will be common E-Return for CGST, SGST, IGST and Additional Tax.
     Every registered person is required to file a return for the prescribed tax period. A return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period of return.
     Compounding taxpayers would have to file a quarterly return called GSTR-4 (Annexure-V)
     Annual return (GSTR-8) (Annexure-IX) will be filed by all normal / regular taxpayers. It will be based on financial records. Cut-Off date would be 31st December following the end of the FY. This statement would provide a reconciliation of the returns with the audited financial statements of the taxpayer. Since this return captures the minutest details of income and expenditure of the taxpayer, the gross profit/loss arrived on the basis of the details submitted in this statement should tally with the gross profit/loss indicated in the Profit and Loss Account of the dealer!!!
     A separate reconciliation statement, duly certified by a Chartered Accountant, will have to be filed by those taxpayers who are required to get their accounts audited under section 44AB of Income Tax Act 1961. Currently this limit is Rs 1 Crore under IT Act.
     Cut-off date for filing of details of outward supplies (GSTR-1) on or before 10th, inward supplies (GSTR-2) on or before 15th and Monthly return (GSTR-3) on or before 20th day of the succeeding month for all Monthly filers.
     There would be no revision of returns. All unreported invoices of previous tax period would be reflected in the return for the month in which they are proposed to be included. The interest, if applicable will be auto populated.
     In case of failure by the taxpayer to submit periodic returns, a defaulter list will be generated by the IT system by comparing the return filers with the registrant database.

    DisAgree [4] Agree [4] Reply Report Abuse

  • JJ,

    Sat, Nov 28 2015

    UPA kare to balatakar
    NDA kare to chamatkar...
    dear FM

    DisAgree [13] Agree [35] Reply Report Abuse

  • Gangaram, Moodabidri

    Sat, Nov 28 2015

    Introduced by UPA in 2009 BJP did not supported to pass the bil and NDA did slight changes in 2014!!!

    Always NDA trying to finalise the bill's that UPA had done key works... BJP ke paas kuch bhejah hai kya???khud kuch banane ke liye??

    DisAgree [12] Agree [65] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sat, Nov 28 2015

    If GST Bill is a Master stroke for India why did BJP oppose it all these YEARS.
    Were they scared to giving credit to the Father of all reforms Dr. Manmohan Singh

    DisAgree [14] Agree [89] Reply Report Abuse


    Sat, Nov 28 2015

    GST Bill a ‘brahmastra’ for India: All you wanted to know in 10 points
    'GST will harmonise indirect taxes by doing away with multiplicity of taxes. It will also reduce cost of production, which will be then passed on consumers, thus lowering inflation.'

    In line with trends ascribing catchy traditional names to current topics, industry body Assocham has tagged the GST bill, which has both the Congress and Bharatiya Janata Party (BJP) at loggerheads (PM Narendra Modi has finally relented and sent a tea invite to Sonia Gandhi and ex PM Manmohan Singh for this evening at 7 pm.), and tagged it a 'brahmastra' for India in challenging global times. Here are top 10 points to note:
    1. "Goods and Services Tax is a key 'brahmastra' for our GDP. Lawmakers across parties should pass the Constitutional Amendment Bill on GST without further delay."
    2. "This would send a strong signal to investors that India's economy can overcome serious global challenges with political will".
    3. "The Indian economy was affected by demand slowdown, uncertain geopolitical situation after the Paris terror attacks, and an unprecedented crash in vital commodities."
    4. More striking would be the display of a political unity and the will to rise up to national cause," he said.
    5. "Timely implementation of GST would raise the GDP by 1.5 to 2 per cent. The Opposition should not change their earlier stance."
    6. "This fiscal, Indian economy is expected to register a growth of 7.2 per cent to 7.3 per cent. It will be below 7.5 per cent this year. In 2016-17, it may increase to about 7.5 to 8 per cent and 9 per cent in 2018-19. But it will depend on so many things."
    7. "The stipulation of additional 1 per cent duty should not be imposed and the GST would help country to make 'one India rather than divide India.'"
    8. "Congress party must rise up to the national call and support the (GST) bill in Rajya Sabha."
    9. "If the Congress party or any other national or regional party has some specific concerns, the government should look into the same and address it as far as possible. There can always be a middle ground."
    10. "Critical challenge was to generate jobs for the one million Indians joining the workforce every month. For that, improving the ease of doing business, better infrastructure, affordable access to finance are critical steps."

    DisAgree [4] Agree [36] Reply Report Abuse

  • Suleman Beary, Udupi

    Sun, Nov 29 2015

    Why NDA was opposing when Congress proposed it?

    DisAgree [5] Agree [17] Reply Report Abuse

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