Gst india in kochi - Kochi

The Goods and Services Tax (GST), the biggest reform in India’s indirect tax structure since the economy
began to be opened up 25 years ago, at last looks set to become reality. The Constitution (122nd) Amendment
Bill comes up in Raj ya Sabra today, on the back of a broad political consensus and boosted by the
‘good wishes’ of the Congress, which holds the crucial cards on its passage. Here’s how GST differs from
the current regimes, how it will work, and what will happen if Parliament clears the Bill. Also Read:
GST Bill – The day after, government hints at rate huge In a full non-GST system, there is a cascading
burden of “tax on tax”, as there are no set-offs for taxes paid on inputs or on previous purchases.Thus,
if we consider the same example as above, the manufacturer buys raw materials/inputs at Rs 100 after paying
tax of Rs 10. The gross value of the shirt (good) he manufacturers would be Rs 130, on which he pays a tax
of Rs 13. But since there is no set-off against the Rs 10 he has already paid as tax on raw materials/inputs,
the good is sold to the wholesaler at Rs 143 (130 + 13).With the wholesaler adding value of Rs 20, the gross
value of the good sold by him is, then, Rs 163. On this, the tax of Rs 16.30 (at 10%) takes the sale value of
the good to Rs 179.30. The wholesaler, again, cannot set off the tax on the sale of his good against the tax
paid on his purchase from the manufacturer.Currently, we have Value-Added Tax (VAT) systems both at the
central and state levels. But the central VAT or CENT mechanism extends tax set-offs only against central
excise duty and service tax paid up to the level of production. CENT does not extend to value addition by
the distributive trade below the stage of manufacturing; even manufacturers cannot claim set-off against
other central taxes such as additional excise duty and surcharge. Likewise, state VATs cover only sales.
Sellers can claim credit only against VAT paid on previous purchases. The VAT also does not subsume a host
of other taxes imposed within the states such as luxury and entertainment tax, Ontario, etc. Once GST comes
into effect, all central- and state-level taxes and levies on all goods and services will be subsumed within
an integrated tax having two components: a central GST and a state GST. This will ensure a complete,
comprehensive and continuous mechanism of tax credits. Under it, there will be tax only on value addition
at each stage, with the producer/seller at every stage able to set off his taxes against the central/state
GST paid on his purchases. The end-consumer will bear only the GST charged by the last dealer in the supply
chain, with set-off benefits at all the previous stages