The Constitution Amendment Bill for Goods and Services Tax (GST) has been approved by The President of India post its passage in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016) and ratification by more than 50 percent of state legislatures. The Government of India is committed to replace all the indirect taxes levied on goods and services by the Centre and States and implement GST by April 2017.
With GST, it is anticipated that the tax base will be comprehensive, as virtually all goods and services will be taxable, with minimum exemptions.
GST will be a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the tax structure, tax incidence, tax COMPUTATION, tax payment, compliance, credit utilization and reporting, leading to a complete overhaul of the current indirect tax system.
GST will have a far-reaching impact on almost all the aspects of the business operations in the country, for instance, pricing of products and services, supply chain optimization, IT, accounting, and tax compliance systems.
Any person with a taxable supply turnover of Rs.10 lakhs in northeast and hill stations and Rs.20 Lakhs in other states are required to pay GST. There is also a mechanism available for voluntory registration to help claim input tax credit. The term person under GST law includes proprietorship, partnership firms, Hindu Undivided Family, Company, LLP, Society and any other legal entity.
GST registration must be obtained within 30 days of exceeding the 19 Lakh turover limit.
In case of those having existing service tax or VAT registration, procedure would be announced for migrating the VAT or Service Tax registration as GST registration.
Is is expected that GST registration would be based on PAN. Another major advantage of GST implementation is that the same GST registration number can be used in all states across India. Under the current VAT regimen governed by the State Governments, a VAT dealer must obtain VAT registration in each of the state, incurring additional cost and compliance formalalities.