CGST (Central Goods and Service Tax) act has been authorized to make an arrangement for levy and collection of tax on intra-state supply of goods or/and services by the Central Government and the issues associated therewith or accidental thereto.
CGST Act objective
Under past taxation laws, Central Government imposed taxes on, production of specific goods as Central Excise duty, sale of goods as Central Sales tax.
The State Governments imposed taxes on retail deals as VAT, goods entry in the State as entry tax, luxury tax, and so on. In like manner, there is a variety of taxes that are being collected on a similar transaction. Tax Evasion and cascading effect are some of the major challenges faced under past taxation laws.
Features of CGST Act 2017
The features of CGST Act, 2017, are as per the following:
- To levy a tax on all intra-State supplies of goods or/and services;
- To widen the base of the input tax credit by making it accessible in regard of taxes paid on the purchase or supply of goods or/and services utilized or proposed to be utilized in the course or furtherance of business;
- To impose an obligation to collect TCS by the e-com operators, at such rate not surpassing 1% of the net taxable supplies, out of payments made to providers providing goods or services through their portals;
- To accommodate self-evaluation of the taxes payable by the registered individual;
- To direct audit of registered people so as to confirm compliance with the provision of the Act;
- to accommodate recovery of arrears utilizing different modes including sale of goods, movable and immovable property of defaulting taxable individual;
- To accommodate the power of assessment, search, seizure, and detention to the tax officers;
- To set up the Goods and Services Tax Appellate Tribunal by the Central Government for hearing interests against the requests passed by the Appellate Authority or the Revisional Authority;
- To make arrangement for punishments for the contradiction of the provision of the proposed legislation; and
- To accommodate an anti-profiteering clause so as to guarantee that business passes on the advantage of the reduced tax rate on goods or/and services to the customers.
CGST Law Taxonomy
The CGST Act, 2017 contains 174 Sections in 21 Chapters and three Schedules on provisions without any consideration, treatment of such goods or services which will not be considered as either goods or services.
These Schedules are as under:
Schedule I: Exchanges to be treated as supply regardless of whether such supply is made without consideration.
Schedule II: Exchanges to be treated as a supply of goods or/and services.
Schedule III: Activities which will be dealt with neither as a supply of goods nor services.