GST “Kar”agre Vasate Laxmi!

Oct 31, 2016 by

Arjuna (Fictional Character): Krishna, All over India Godesses Lami is worshipped in Diwali. It is said that in the house where goddesses Laxmi is there money comes / stays there. It is said that GST will be implemented from 1st April 2017. Finance minister may be praying before Laxmi for GST and asking for financial growth and prosperity in India. So today we will discuss about GST.

Krishna (Fictional Character): Arjuna, wherever Laxmiji stays growth is always there. Government should get tax revenue in the form of GST for financial growth of the country that may be the prayer of finance department. GST is biggest tax reforms in India. And it is going to affect price of each and every product and service. The rules under this law, GST rates on products and service will be provided later. Business world will need lot of practice and efforts to understand GST.

 

Arjuna: Krishna, what is GST?

 

Krishna: Arjuna, GST law is applicable on products and services. It is a value added tax. Because of this, tax will be levied on each stage of value addition of the business transactions. The purchaser will get the set-off of GST paid at each stage at the time of purchase of goods and service. Eventually, the consumer of the goods or services will have to pay GST to the person from whom he has purchased the goods or services.

 

Arjuna: Krishna, what are the salient features of GST?

 

Krishna: Arjuna, the features of GST are as follows:

  1. GST is divided into two parts; a) Central GST imposed by Central Government and b) State GST imposed by State Government. But the provisions of GST law such as tax computation, tax applicability, the threshold limit for the taxpayer etc. will be the same.
  2. GST will be applicable on each and every product and service except for the exempted goods, services and if the turnover is less than specified threshold limit.
  3. While paying central GST, input tax credit of only central GST will be allowed. Similarly, while paying state GST, input tax credit of only state GST will be allowed.
  4. Simply, the input tax credit of central and state GST cannot be adjusted against each other.
  5. The way of collecting central and state GST will be kept as similar as possible.
  6. Central GST will be administered by Central Government and State GST will be administered by State Government.
  7. Taxpayers will have to file central and state GST returns after specified period.
  8. Every taxpayer will have Taxpayer Identification Number of 13 to 14 numbers which will be linked with PAN. Due to this, information exchange between GST and income tax department will increase.

Arjuna: Krishna, how will the central and state GST be levied simultaneously?

 

Krishna: Arjuna, central and state GST will be leviable at all points in the supply chain except for some goods, services and threshold limit. Both of them will be levied on value of same rate of product or service. Similarly, the place of the supplier and the place of the purchaser in the country will not make a difference for applicability of Central GST (CGST). But State GST (SGST) will be applicable when the purchaser and seller of goods or service are in the same state. For example: Assuming the rate of CGST is 10% and of SGST is 10%, if a wholesaler sells goods of Rs.100 to a company of the same state, then the dealer will have to levy Rs.10 CGST and Rs.10 SGST on it. Also, while paying CGST, the taxpayer can take credit of the CGST paid on purchase of goods and services. Similarly, SGST will have to be paid by taking the credit of input SGST.

 

Arjuna: Krishna, how and when will the GST be levied on interstate transactions of goods and services?

 

Krishna: Arjuna, Integrated GST (IGST) will be levied on interstate transactions of goods or services. In GST, both Central and State Government will levy tax on goods and services. A person effecting interstate sale will have to pay IGST on the value addition made after taking set-off of input IGST, CGST, SGST.

 

Arjuna: Krishna, what one should learn from this?

 

Krishna: Arjuna, In Diwali darkness is removed and everyone life should get enlightened. Everyone should work hard, gain knowledge and earn Laxmi with good deeds. Government gets revenue from taxes. Indian Government, Tax Authorities, etc. is trying very hard for successful implementation of GST. It is expected that the GST will be applicable from 1stApril 2017. Financial books are worshipped on the occasion of Diwali, so that upcoming year will give financial growth. Everyone should be benefitted from GST in next year. Sanskrit Shola is there “Kar”agre Vasate Laxmi”, if we link it with today’s topic then it means in GST kar (tax) there is a Laxmi (money). It should be used properly by the government and lead to growth of country.

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