By Ashok Kumar
The Goods and Services Tax (GST) was rolled out in India on
1st July, 2017 with great fanfare and has been touted as a ‘game changer’. It was given a slogan “One Nation, One Market and One tax” but owing to some reasons “one Tax” was dropped from the slogan. The GST was first proposed by the Congress Govt in 1996 thereafter, the Vajpayee Government took it up, and then again the UPA government proposal was shot down time and again by the BJP members.
On 17th July top officers of the Department of Economic Affairs; Ministry of Finance addressed a gathering of knowledgeable people who were inquisitive to learn more about the new law that was implemented just a fortnight ago. The team was lead by Mr. S Selvakumar, Joint Secretary, Ministry of Finance, and comprising Mr. Siddhartha Jain and Mr. Gaurav Maddesan. Mr. Jain advised that under the GST has been divided into three categories; IGST or integrated GST, Central GST and State GST.
Mr Jain, at the outset briefed the gathering about the new tax system followed by a question and answer session. As the audience was not sure of the complexities of the new system would entail it got all doubts clarified from Mr. Jain.
Some asked about the different rate of taxes when it was touted as one tax system. Mr. Jain clarified that the rates depended on the different types of products. Some products were exempted from the tax. All exports whether of goods or services and supplies to SEZ have been categirised as “Zero rated supplies in the IGST.
When asked that if international visitor buys goods from the market after paying the GST, will the visitor get back the GST amount at the airport, Mr. Jain said, “Yes, he will get the GST amount back, however, the mechanism has been introduced in Section 15 of the IGST Act whereby an international tourist refers to any person who is not a resident and does not stay for more than six months in India for legitimate non-immigrant purposes.”
As happens in other countries, when a visitor is at the airport there’s a counter set up for the refund but India has yet to make arrangement for such a counter. For other types of refunds, every claim has to be filed online on a standardised form that will be acknowledged within 14 days of the receipt of form completed in all respects.
Zero rating Supplies, the supplier will be entitled to claim input tax credit and refund thereof under the provision of section 54 of CGST, 2017
Some felt that it is not known which country’s model is applied in India while some felt that a survey should have been carried out in the country to give a realistic rate of GST. Now with the professed ‘one rate’ the Government has diversified the GST into five slabs of 0, 5, 12, 18 and 28. In the earlier system paper receipts used to be issued and that was kept for up to 20 years and destroyed thereafter. But with the new digital system, the receipts cannot be destroyed and will stay for ages. According to Mr. Jain, about 30 million receipts will be issued in a year and matching them is a herculean task. The task has, therefore, been outsourced to a private company INFOSYS. There is no guarantee that the confidentiality will be ensured.
When the Constitution was being framed, the Constituent Assembly gave power to the states to decides the rates of tax as per their needs (as per the video clippings from RS TV’s ‘Making of the Constitution.) ‘But now, if the States want to change the GST rate will have to approach the GST Council. Mr. Jain clarified that the GST Council will obtain a consensus to make changes to the rates. It will not be out of place to mention that States do most of governance. It looks after the Police, Schools, Hospital and most importantly the agriculture. With the new GST regime it has lost the flexibility.