How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method ?
Question : How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method ?
Answer : The Empowered Committee has accepted the recommendation for adoption of IGST model for taxation of inter-State transaction of Goods and Services. The scope of IGST Model is that Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds.
The major advantages of IGST Model are:
a) Maintenance of uninterrupted ITC chain on inter-State transactions.
b) No upfront payment of tax or substantial blockage of funds for the inter-State seller or buyer.
c) No refund claim in exporting State, as ITC is used up while paying the tax.
d) Self monitoring model.
e) Level of computerisation is limited to inter-State dealers and Central and State Governments should be able to computerise their processes expeditiously.
f) As all inter-State dealers will be e-registered and correspondence with them will be by
e-mail, the compliance level will improve substantially.
g) Model can take ‘Business to Business’ as well as ‘Business to Consumer’ transactions into account.
- What is the justification of GST?
- What is GST? How does it work?
- How can the burden of tax, in general, fall under GST?
- How will GST benefit industry, trade and agriculture?
- How will GST benefit the exporters?
- How will GST benefit the small entrepreneurs and small traders?
- How will GST benefit the common consumers?
- What are the salient features of the proposed GST model?
- Why is Dual GST required?
- How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?
- Which Central and State taxes are proposed to be subsumed under GST?
- What is the rate structure proposed under GST?
- What is the concept of providing threshold exemption for GST?
- What is the scope of composition and compounding scheme under GST?
- How will imports be taxed under GST?
- Will cross utilization of credits between goods and services be allowed under GST regime?
- How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method?
- Why does introduction of GST require a Constitutional Amendment?
- How are the legislative steps being taken for CGST and SGST?
- How will the rules for administration of CGST and SGST be framed?