December 14, 2018

Dual GST

Dual GST

India is a federal country where both the Centre and the States have assigned the powers to levy and collect taxes through appropriate legislation.

Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.

 Centre will levy and administer CGST & IGST while respective states will levy and administer SGST

In case of  Intra State supplies of goods and/or services in India then seller collects both CGST & SGST from the buyer, CGST needs to be deposited to Central Government and SGST with State Government.

 The Central GST and the State GST levied simultaneously on every transaction of supply of goods and services except

  • exempted goods and services,
  • goods which are outside the purview of GST and
  • the transactions which are below the prescribed threshold limits.

Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of CENVAT.

While the location of the supplier and the recipient within the country is immaterial for the purpose of CGST, SGST would be chargeable only when the supplier and the recipient are both located within the State

Inter state Supplies

IGST levied & collected by the Centre applicable to

  • Inter-State supplies of goods/services in India
  • Inter-State stock transfers of goods
  • Import of goods/services
  • Export of goods/services (if made on payment of GST under claim of rebate)

 Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters.

 

Credit of GST

Credit of                                                                            adjusted with

IGST                                                                                  IGST
                                                                                           CGST

                                                                                           SGST

 

CGST                                                                                 CGST

                                                                                           IGST

 

 SGST                                                                               SGST

                                                                                          IGST

 

Examples explaining both laws

 

Present Law

A(Delhi) sold goods to B(Delhi) amounting to Rs.1,500 on which he charged VAT @ 10% on Rs. 1,500 i.e. RS.150. Cost of goods to B Rs.1,650. B(Delhi) sold goods to C(UP) amounting to Rs.1,900 on which he charged CST @10% on Rs.1,900i.e. Rs.190. Cost of goods to C is Rs.2090. he will not get the credit of VAT against CST

Under GST

A(Delhi) sold goods to B(Delhi) amounting to Rs.1,500 on which he charged CGST @ 5% on Rs. 1,500 i.e. RS.75 and SGST @ 5% on RS.1,500 i.e. Rs.75. Cost of goods to B Rs.1,650. B(Delhi) sold goods to C(UP) amounting to Rs.1,900 on which he charged IGST @10% on Rs.1,900i.e. Rs.190 and get credit of CGST and SGST (as credit of CGST and SGST can be set off against IGST) therefore IGST=190-75-75=40 is given to Govt . Cost of goods to C is Rs.1,940.

Be the first to comment

Leave a Reply

Your email address will not be published.


*