Know Gst Practically, It’s Closer To Reality

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Being the largely circulated and most read magazine, The Ply Reporter has a big role to play in spreading awareness and adoptability among suppliers and buyers of plywood and wood related materials about GST, the biggest tax reform of the country. Empowering and making aware people through this article means educating the plywood industry and trade in India largely thus reducing the hassles of plywood industry and traders on the whole.

“How GST will work for the wood panel industry and how will it affect the taxation and pricing of product” is the key concern for which all must be active and adoptable at this juncture.

GST implementation is now closer to reality. The countdown for goods and services tax regime has begun since the Centre looks strong to meet July 1 deadline. Following a seven-hour debate on the GST bill in Parliament, the Lok Sabha approved the four supplementary legislations. This is the third draft after the June and the November draft of model GST law that we are seeing and each one is definitely a much better version as compared to the previous one. The Prime Minister called it “New Year, New Law, New Bharat” as the government moved a step closer towards meeting the July 1 deadline for rollout of Goods and Services Tax in the country.

After the Parliament session is over, the GST Council will have to categorise about 5,000 goods and services in the four GST slabs. The GST Council has made a four-tier tax structure with tax slab fixed at 5 %, 12 %, 18 % and 28 % brackets. These brackets denote the total tax to be charged by the State and the Centre. Most likely, half of it would be charged by the State and balance half by the Centre. Though in case of inter states trade and imports, Centre alone would charge the tax as IGST. Exports of course would be zero rated subject to conditions.

Even if there is any hurdle, September 15 is the certain date on or before which GST has to be implemented, since thereafter, as per the 101st Constitutional Amendment, the existing taxes would come to an end and the States would loose the avenues of collecting revenue.

GST will bring down the number of taxes currently being imposed in the country. Broadly speaking, all goods andservices would only be suffering GST (CGST & SGST or IGST). Today more than 25 kinds of taxes including income tax are imposed in the country. The GST Bill is likely to reduce the number of taxes to around one third. It may however be noted that a Compensation Cess will still be imposed on luxury and what is called demerit goods like cigarettes etc. The cess will be collected for five years after rolling out of GST. This is aimed with compensating states incurring revenue deficit post GST.

Under the present taxation system, large number of agriculture produces is not taxed. The same arrangement is likely to continue under the GST. A five per cent tax will be imposed on articles of mass consumption like spices, packaged salts etc. Food grains are likely to remain untaxed under the GST. For the other about 5,000 commodities and services, the nearest tax slab will be applied. The GST Council is likely to begin fresh rounds of meetings to finalise the tax rates for goods and services. However, according to the GST Bill, services cannot be taxed over 18 per cent.

Majority of the items by masses will be taxed at 12-18 per cent rate which is going to benefit the common man most. Items like toothpaste, soap, household items, oil etc are likely to be placed in the 12-18 per cent bracket which is currently being taxed over 20 per cent rate. Goods that have become a necessity for middle class Indians e.g. refrigerators, washing machine, air conditioners –are likely to be brought to nearest slab of 28 per cent form current 30-31 percent once GST is rolled out.

Articles that are used for building homes like plywood,sanitary, tiles, faucets are currently taxed above 27 percent, and is expected to fall in the nearest lower slab of 18 percent but there are doubts if nearest slab criteria is considered. Presently ply boards and decorative laminates are taxed at 12.5+12.5+2.00 = 27 % but being a agro plantation base product and important while making aim for budget housing it may be considered to fall in 18% GST tax slab. Nothing is clear as yet but the representations have been made to respective panel about keeping ply boards, particle board, MDF, Doors, and other similar items in 18 percent or further lower slab.

Luxury goods and sin/demerit goods will attract 28 per cent GST plus cess. Such articles include luxury cars, tobacco products, aerated drinks and the like. There have been talks the few designer products are being considered in luxury category hence the tax slab might increase if GST committee choose them in that category. Under the GST regime, an employee, who gets free goods or services, will have to pay taxes for the same. Free or subsidized facilities like food or beverages at workplace, club or fitness centre membership, cab facilities will be brought under the tax net.

¡¡ The Goods and Services Tax would put all taxes levied by state and Central government in one basket and merge them into a single-tax system, thus doing away with multiple taxation and promoting the concept of a common market for all.

  •  The CGST omits taxes like Excise duty, Service tax even taxes under Medicinal and Toilet Preparations act, Additional Excise duties on textiles etc. The  SGST of the States would repeal State taxes like VAT, Entry taxes, Luxury taxes etc.
  • The Goods and Services Tax is governed by the GST Council which is headed by the Finance Minister.
  • Once all other taxes are removed, the cascading effect is removed, goods will become slightly cheaper.
  • The biggest challenge for a smooth GST rollout iscoordination between states and the Centre to ensure uniform tax rates for goods and services.

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