One Nation One Tax

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Information about One Nation One Tax
Finance

Published on September 16, 2008

Author: thadeshvar

Source: slideshare.net

Vikram B. Thadeshvar Rohan Tamrkar [email_address]

Introduction The government namely collection of tax revenue and; vertical and horizontal devolution of such resources. Vertical devolution refers to distribution between the center and the states Horizontal devolution refers to inter-state distribution. Finance Commission, a constitutional body, recommends for the distribution of such revenues. The new indirect tax regime that may come into operation from 2010 that is Goods and Services Tax (GST). [email_address]

The government namely collection of tax revenue and; vertical and horizontal devolution of such resources.

Vertical devolution refers to distribution between the center and the states

Horizontal devolution refers to inter-state distribution.

Finance Commission, a constitutional body, recommends for the distribution of such revenues.

The new indirect tax regime that may come into operation from 2010 that is Goods and Services Tax (GST).

What is GST? GST (Goods and Services Tax ) is a broad based and a single comprehensive tax levied on goods and services consumed in an economy. GST is levied at every stage of the production-distribution chain It is basically a tax on final consumption. To put at a single place, GST may be defined as a tax on goods and services, which is leviable at each point of sale or provision of service, in which at the time of sale of goods or providing the services the seller or service provider may claim the input credit of tax which he has paid while purchasing the goods or procuring the service. GST may neutralize the existing problem of taxes being levied on top of taxes. [email_address]

GST (Goods and Services Tax ) is a broad based and a single comprehensive tax levied on goods and services consumed in an economy.

GST is levied at every stage of the production-distribution chain

It is basically a tax on final consumption.

To put at a single place, GST may be defined as a tax on goods and services, which is leviable at each point of sale or provision of service, in which at the time of sale of goods or providing the services the seller or service provider may claim the input credit of tax which he has paid while purchasing the goods or procuring the service.

GST may neutralize the existing problem of taxes being levied on top of taxes.

How it works? (Example) When a shoe company produces a pair of shoes, the Central Government charges an excise duty on them as they leave the factory. At the retail level, the state where the outlet is located, charges VAT (different states charge different rates of VAT) without giving credit on the excise duty levied earlier (the state tax is levied on top of a Central tax). In the GST system, both Central and state taxes may be collected at the point of sale. Both components (the Central and state GST) may be charged on the manufacturing cost. [email_address]

When a shoe company produces a pair of shoes, the Central Government charges an excise duty on them as they leave the factory.

At the retail level, the state where the outlet is located, charges VAT (different states charge different rates of VAT) without giving credit on the excise duty levied earlier (the state tax is levied on top of a Central tax).

In the GST system, both Central and state taxes may be collected at the point of sale.

Both components (the Central and state GST) may be charged on the manufacturing cost.

Centre and States States want to have a pie in inter-state services such as telecom and financial services that form 80% of the total service tax revenue. The Centre feels the power to collect tax on inter-state services To keep disputes at the minimum level and to prevent evasion. There is a large consensus that the country must move towards a national level GST that must be shared between the center and the states. With the help of Value Added Tax (VAT) which was successfully introduced in almost all the states and continuous increase in number of services under the service tax , Finance Minister hopes that by 2010, revenue deficit may be completely eliminated as per the goals set out in the Fiscal Responsibility and Budget Management Act, 2003 [email_address]

States want to have a pie in inter-state services such as telecom and financial services that form 80% of the total service tax revenue.

The Centre feels the power to collect tax on inter-state services

To keep disputes at the minimum level and to prevent evasion.

There is a large consensus that the country must move towards a national level GST that must be shared between the center and the states.

With the help of Value Added Tax (VAT) which was successfully introduced in almost all the states and continuous increase in number of services under the service tax , Finance Minister hopes that by 2010, revenue deficit may be completely eliminated as per the goals set out in the Fiscal Responsibility and Budget Management Act, 2003

Centre and States ctd As per the recommendations of the empowered committee, states should collect tax from assesses falling below Rs 1.5 crore. The Centre from those with a higher turnover. Sources pointed out this could create issues when a taxpayer registered with a state government on account of his lower turnover moves to Centre when he records higher turnover. The Centre also wants to include purchase tax and other state levies in the proposed GST, which the states are opposing. The 13th Finance Commission, which is to look into the likely impact of the proposed implementation of GST (Goods & Service Tax), has also sought details of the proposed model being worked out by the Centre and the states. [email_address]

As per the recommendations of the empowered committee,

states should collect tax from assesses falling below Rs 1.5 crore.

The Centre from those with a higher turnover.

Sources pointed out this could create issues when a taxpayer registered with a state government on account of his lower turnover moves to Centre when he records higher turnover.

The Centre also wants to include purchase tax and other state levies in the proposed GST, which the states are opposing.

The 13th Finance Commission, which is to look into the likely impact of the proposed implementation of GST (Goods & Service Tax), has also sought details of the proposed model being worked out by the Centre and the states.

Conclusion This system is basically designed to simplify current level indirect tax system. It integrates the union excise duties, customs duties, service tax and state VAT into a single levy known as GST. GST may be rightly termed as national level VAT on goods and services with only one difference that in this system not only goods but also services are involved and the rate of tax on goods and services are generally the same. GST is proposed to be introduced from April 1, 2010, to integrate all indirect taxes on goods and services at the state and the central level. [email_address]

This system is basically designed to simplify current level indirect tax system.

It integrates the union excise duties, customs duties, service tax and state VAT into a single levy known as GST.

GST may be rightly termed as national level VAT on goods and services with only one difference that in this system not only goods but also services are involved and the rate of tax on goods and services are generally the same.

GST is proposed to be introduced from April 1, 2010, to integrate all indirect taxes on goods and services at the state and the central level.

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