We must share with all netizens and professionals of India that various implementations had already been carried out in the existing frame of indirect taxation to launch Goods & Service Tax (GST) in India .
A.Foundation of GST via Empowered Committee Recently , Kerala Finance Minister Shri K.M.Mani was appointed as Chairman of the Empowered Committee of State Finance Ministers on the project Goods & Service Tax Implementation in India . It is pertinent to note that on 12th August, 2004, the Government of India had reconstituted the Empowered Committee and included the State Finance and/or Taxation Ministers of every States as its member. Whereas, initially the Committee , constituted in 2000, had few State Finance Ministers as its member .
B.Consensus For Revenue Neutral Rate It seems that Revenue Neutral Rate would be decided around 24% since 27% which was recommended by National Institute of Public Finance and Policy (NIFP) wont be a feasible rate at all from any perspective of the trade . I still maintain that any rate higher than the slab of 16% to 18% will be an unbearable rate for service sector of India . Even , I must reiterate that there are reports that any rate of tax beyond 16% will not be healthy for service industry .
C. Changes in Existing Excise & Service Tax Laws The entire aspect of GST runs on supply of goods & services , time of supply place ,input tax credit, establishment , consideration etc . After an in depth analysis of various GST models of prominent countries of the world , I have found that various changes have already been implemented, in recent past ,in the existing excise and service tax rules . The prominent amongst them are as below :
Reverse Charge Mechanism
Place of Provision of Service
Place of Removal of Goods
Point of Taxation of Services
Definition of establishment
Non Excisable Goods
There are many hidden aspects of GST , which I shall be taking up in my subsequent articles .
D.Exemption Limit Oflate , it has been confirmed that the states have zeroed on threshold limit for an exemption under GST regime. It must be known that the Centre has always emphasized that Rs 25 lakhs should be set as threshold limit for exemption . Centre has also recommended that even during exemption the traders should be registered , whereas, it looks that the same has not be considered by the Empowered Committee . It must be noted that the more than half of the current traders, in the tax net, would have been out of the GST had the threshold limit was fixed at Rs 25 lakhs . However ,the following looks to be nearing reality :
Traders with a turnover below Rs 10 lakhs a year wont require registration and will be exempted from GST arena
Traders with annual sales between Rs 10 to Rs 50 Lakhs will have a concessional rate of GST i.e a rate lower than normal GST rate
The exemption for manufacturers will remain upto Rs 1.5 Crore as what is prevailing even as on date.