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How do we compare the present indirect tax laws vis-à-vis proposed GST law regime? In this part, an attempt is being made to list down the possible differences between the present tax laws and proposed provisions under GST. This comparison is not final and is only for academic purposes to understand the differences or deviations tax base, origin, structure, approach to tax goods and services, place of provision, powers to levy tax, export and import etc.


Sr. No.ParticularsPresent TaxationProposed GST
1StructuralnArchitecture- Two separate VATnsystems operatensimultaneously atntwo levels, Centrenand State, and taxnpaid (input taxncredit) under one isnnot available as setnoff against the othern-Tax on services isnlevied undernseparate legislationnby Centre, i.e.,nFinance Act, 1994nwhich regulatesnservice taxn-No comprehensiventaxation of servicesnat the State level;nfew services arentaxed under separate enactmentsn- Import of goods innIndia are notnsubjected to StatenVATA dual tax with bothnCentral GST (CGST) &nState GST (SGST) willnbe levied on the samenbase. Thus, all goodsnand services, barringna few exceptions, willnbe brought into thenGST base.nnThere will be nondistinction betweenngoods and services fornthe purpose of taxnwith a commonnlegislation applicablento both It allowsnseamless tax creditnamongst Excise Duty,nService Tax & VAT
2Place of TaxationTaxable at the placenof manufacture ornsale of goods ornrendering of serviceIt is consumptionn(destination) basedntax
3Tax BaseComparativelynnarrowWider
4Excise DutyImposed by Centrenunder separate Act,nCentral Excise Act,n1944. Taxable eventnis manufacture;nTaxed up tonmanufacturing pointTo be subsumed innCGST; Taxable eventnwill be sale; To bentaxed up to retail level
5Basic CustomsnDutyImposed by Centrenunder separate Act,ni.e., Customs Act,n1962. Taxable eventnis importNo change isnproposed
6CVD/SADImposed by Centrenunder separate Act,ni.e., Customs Act,n1962. Taxable eventnis importTo be subsumed innCGST; Taxable eventnwill be import
7Service TaxImposed by Centrenunder separate Actn(Finance Act, 1994).nTaxable event isnprovision of serviceTo be subsumed innCGST & SGST;nTaxable event will benprovision of service
8Central Sales TaxImposed by Centrenunder CST Act, 1956.nCollection assigned tonStates; Taxable eventnis movement of goodsnfrom one State tonanotherIs being phased out
9State VATImposed by States;nTaxable event is salenwithin the StateTo be subsumed innSGST; Taxable eventnis sale within State
10Inter-StatenTransactionsImposed on goods &nservices by thenCentre (CST, ServicenTax)To be subsumed innGST and subject tonSGST & CGST
11Tax onnManufacturingnactivityAs Excise Duty bynCentreNo such powers undernGST regime
12Powers to levy Taxnon Sale of GoodsInter-State : CentrenLocal : StateConcurrent powers tonCentre & State
13Powers to levy Taxnon Provision ofnServicesService Tax by CentreConcurrent powers tonCentre & State; Statesnto tax more than 40nservices
14Tax on Import innIndiaGoods are taxed tonCustoms Dutyn(comprises BasicnCustoms Duty, CVDn& SAD);nServices are taxed tonService TaxBasic Custom Dutynon goods : No Changen- CVD & SAD onnimport of goods andnimport of services : Tonbe subsumed in GST
15Tax on Export ofnGoods & ServicesExempt / Zero-ratedNo change isnproposed
16Tax on inter-StatenTransfer of Goodsnto Branch / Depotnor AgentExempt against Form FWill be taxable
17Tax on Transfer ofnGoods to Branch ornAgent within StatesGenerally exempt butndepends upon StatenproceduresMay not be taxable, ifnBIN of transferor andntransferee is same
18Cross-Levy set-offn/ adjustmentExcise duty andnService tax : Crossnset off allowedNo cross set-offnbetween CGST andnSGST will be allowed
19Cascading EffectAllows cenvat taxncredit between ExcisenDuty & Service Tax,nbut not with VATn(cross set off is notnallowed)Allows seamless taxncredit amongst ExcisenDuty, Service Tax &nVAT
20Non-CreditablenGoodsDo existMay exist dependingnupon negative list/nexemptions etc.
21Credit on Inputsnused for ExemptednActivitiesNot allowedMay not be allowed
22VariousnExemptions -nExcise Free Zonenor VAT ExemptionAvailableMay be phased out
23Exemption forntransit Inter-StatenSale and High SeasnSaleAvailableMay be taxable
24Transactionsnagainst DeclarationnFormsAllowed under thenCST / VATForms likely to benabolished
25Taxation on Govt.nand Non-ProfitnPublic BodiesPartially taxedMay not change much
26Stamp DutyPresently taxednconcurrently by thenCentre and StateStatus not clear; Ifnsubsumed undernGST, big relief to realnestate industry : tonclaim input tax
27Excise DutynThreshold LimitPresently u20b9 1.5 croresRs.10 lacs to 20 lacsn(Turnover of u20b9 1.5ncrores & above maynbe administered bynCentre and less thannu20b9 1.5 crores may benadministered bynStates)
28VAT ThresholdnLimitPresently, u20b9 5 lacs ton10 lacsMay be u20b9 10 lacs to u20b9n20 lacs
29Service TaxnThreshold Limitu20b9 10 lacsMay be u20b9 10 lacs to u20b9n20 lacs
30Classification ofnCommoditiesExcise Duty based onnHSN VAT notnapplicableLikely to be based onnHSN
31VAT/GST RegistrationnNumberSimple TIN (somenStates : PAN onlynbased)PAN based
32Procedures fornCollection of Tax and Filing ofnReturnFor Central Excise &nService Tax, it is uniform. For VAT, itnvaries from State tonStateLikely to be uniform
33Tax AdministrationComplex due tonnumber of taxesLikely to be simplenand easy, tax friendly
34Use of ComputernNetworkJust started by thenStates; verynminimum; Centralntaxes are onlineExtensive; It will benpre-requisite fornimplementation ofnGST
35Nature of PresentnLitigations- Sale or Servicen- Classification ofngoodsn- Situs issuenbetween Statesn- Interpretationalnissuesn- Sale or worksncontractn- Valuation ofncompositentransactions, etc.n- Exemptionsn- Suppression/nlimitationLikely to be reducednprovided GSTnlegislations arenproperly drafted


February 3, 2016


  1. i have learing tally

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