Changes in GST w.e.f 15/11/2017

Changes

 

5 Important changes with effect from 15th November 2017 pursuant to the decisions taken in the 23rd meeting of the GST Council at Guwahati.

 

  1. Eating out will be cheaper (Standalone Restaurants Only) – 5% will be the GST irrespective of whether the restaurant is Air Conditioned or not. Input tax cannot be claimed. 
  2. For Restaurants in hotel premises the GST rate will be 5% provided that the room tariff doesn’t exceed Rs.7500 per day.    Input tax cannot be claimed.
  3. For Restaurants in hotel premises where the room tariff exceeds Rs.7500 the the GST rate will be 18% however Input tax can be claimed.
  4. For Outdoor Catering the GST rate will be 18% with full Input tax credit.
  5. GST on admission charges to protected monuments will be exempted.
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GST: Taxes subsumed

To start with 15 taxes are subsumed under the GST

Central Taxes

  1. Central Excise Duty
  2. Additional Excise Duty
  3. Excise Duty on medicinal & toiletries preparations
  4. Service Tax
  5. Additional Customs Duty or CVD
  6. Special Additional Duty on Customs or SAD
  7. Surcharges & Cesses levied by centre including NCCD, cess on rubber, tea, coffee etc
  8. Central Sales Tax

State Taxes

  1. Value Added Tax
  2. Entertainment Tax
  3. Luxury Tax
  4. Taxes on gambling, betting & lottery
  5. State Cesses & Surcharges
  6. Octroi & Entry Tax
  7. Purchase Tax

GST: Salient Features of GST in India

Salient features of GST in India 

  • Centre will have the power to frame the rules and laws relating to inter-state sale of goods and services.
  • State will get a share of revenue on all sale of goods and services happening from their state
  • State tax will be called – State GST (SGST)
  • Centre tax will be called – Central GST (CGST)
  • SGST & CGST shall be levied all the sales happening within the state
  • In case of sale outside the state Integrated GST (IGST) shall be levied. A share of IGST will be given to the state as well.
  • GST will subsume 17 taxes including Central Excise, Octroi, Entry Tax, VAT, Service Tax, Luxury Tax, Entertainment Tax, Purchase Tax, Additional Customs Duty, Special additional duty etc.
  • Imports shall be levied customs duty and IGST.
  • Petroleum & Crude Oil, Alcohol are not covered currently under GST but the council have the power to include them under GST by way of a notification.
  • Administration of GST shall be done by the GST Council which shall comprise of state and central ministers

GST: Cascading Effect

Everybody is talking of removal of cascading effect in GST,. So what does Cascading effect mean and how does its removal help?

To understand how removal of cascading effect helps lets analyse an example with the present taxation regime and the GST regime.

#1: Present taxation regime:

 Sale Price         1,000
 Excise Duty @ 10%            100
 Sub Total         1,100
 VAT @ 14%            154
 Total         1,254

Cascading effect happens when VAT (an indirect tax) is levied not only the product value but also on the Excise Duty (also an indirect tax). 

#2: GST regime:

 Sale Price         1,000
 Central GST @ 12%            120
 State GST @ 12%            120
 Total         1,240

In both the cases the tax rate is assumed at 24% [10% ED + 14% VAT] in present regime and 24% [12% CGST +12% SGST] in the GST regime, however there is a difference of Rs.14 on the bill total. This is the benefit of removing cascading effect in indirect taxation.