INDIA’S GST EXPLAINED
Top-5 changes in rates — GST versus current regime
India’s biggest tax reform since Independence is expected to revolutionise the way the country does business. It also holds out the promise of prosperity. The government is gung ho about its prospects, while sceptics in the opposition are unconvinced. How will it affect the average Indian?
Where GST is not applicable?
The Goods and Services Tax (GST) is not applicable on alcoholic drinks, electricity and five petroleum products — crude, petrol, diesel, natural gas and aviation turbine fuel, at the moment, but these will continue to attract VAT and central excise.
Which indirect taxes does GST replace?
GST is going to replace some of the indirect taxes across the country. Central taxes: All central excise and additional duties of excise, service tax, countervailing duty in the case of customs duty and special additional duty of customs, central surcharges and cesses. State taxes: State VAT, central sales tax, luxury tax, all forms of entry tax, entertainment and amusement tax — excluding those levied by local bodies, taxes on advertisements, purchase tax, tax on lotteries, betting and gambling, state surcharges and cesses.
Who decides the rates?
The GST Council will decide the rates for new levy. It also decides all other issues related to GST.
What is GST Council?
The union finance minister and the finance ministers of all states are members of GST Council. Decisions are taken by a majority of three-fourth of the weighted votes of members present and voting.
How voting works at GST Council?
In GST Council, the votes of all the states have a weight of two-thirds of the votes cast and that of the centre one-third. So, there can be no unilateral decision on the tax rates by the central government.
Can states set their own rates?
Any state can decide to set their own GST rates if it feels it is losing out in revenues or needs more revenues because of higher expenditures. Each state has to pass its own GST law and notify the GST rates separately. But, states have voluntarily given up their right to levy tax to the GST Council.