Goods and Service Tax (GST) - a Paradigm shift in Indirect Tax

The Goods and Services Tax (GST) is one of the most revolutionary indirect tax reforms that is being planned in India.GST is a comprehensive value added tax on the supply of goods and services. Introduced by France in 1954, it is now prevalent in over 150 countries. It’s been on the cards for some time now with constant deferrals over the past few years. However, finally the central government seems to be inching closer to an amicable agreement with the states to implement GST soon. While the date of implementation of GST is set on August 2012 GST might not be implemented before 1 April 2013.

Dual GST for India
Many countries in the world have a single unified GST system i.e. a single tax applicable throughout the country. However, in some countries like Brazil and Canada, a dual GST exists. In India, dual GST is proposed consisting of Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) to be levied on the taxable value of every transaction of supply of goods and services.

Impact on the prices of goods and services
Since GST is expected to foster increased efficiencies in the economic system, it is expected to reduce the incidence of multiple indirect taxes in force, thereby reducing the overall price of goods. For services, the prices of services may increase in near term due to increase in tax from current 12% (Service Tax) to overall 14 – 16% under GST. However, in the medium to long term, the prices of both goods and services are expected to reduce since the sellers will pass on the benefits of increased efficiencies to customers by reducing prices. All goods and services, barring a few exceptions, will be brought under GST.

Benefits of Dual GST
The dual GST is expected to be a simple and transparent system with only one or two CGST and SGST rates leading to:
• Reduction in the number of taxes at central and state level – like Central Sales Tax (CST), Octroi, State-level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity, taxes on transportation of goods and services among others. It must be noted that Imports have so far been kept outside the GST regime, thus import duties will continue to be charged.
• Decrease in effective tax rates for many goods
• Removal of current cascading effect on taxes
• Reduction in transaction cost by avoiding multiple layers of taxes and their administrative compliances
• Increased tax collection through wider base and better compliance

Response from States
Some states like Madhya Pradesh, Chhattisgarh and Tamil Nadu have mentioned that administrative infrastructure is not ready yet while others fear that since the tax rates may be lower than their existing (state) rates, this may lower their tax kitty. However, the central government have assured protecting their revenues and it is widely believed that better compliance will actually increase tax collection by the states.

Preparation by the industry
Experience of VAT implementation suggests that there may not be enough lead-time available for the industry to prepare for the implementation of GST. Consequently, the industry has started preparing for GST. The Institute of Computer Accountants (ICA) the leading training institute in India specialising in Accounts and Tax Training has already introduced GST in its Certified Industrial Accountant (CIA) curriculum to prepare the upcoming accounts and tax professionals on GST. The institute is also holding seminars for professionals to spread awareness on GST.

Process and Rates of GST
Since GST is expected to replace other taxes, it is not an additional tax burden as is feared by many. In line with most countries, the rate is expected to be between 14% and 16%.

GST is collected on the value added at each stage in the supply chain. It will be taxed on “supply” of goods and services and the concept of manufacture, sale, rendition as applicable in current regime will be irrelevant.
GST paid on procurement of goods and services is available for set off against GST payable on supply of goods and services through a tax credit mechanism. Being consumption based tax; the idea is that the final consumer will bear the GST charged to him by the last person in the supply chain.

There is expected to be separate enactments for central and state GST with each state managing its own enactment to levy and collect SGST.

Become an expert in IT…Study at ICA Infotech

ICA Infotech is India’s leading institute in providing skill-based education to aspiring students. The curriculum focuses on enriching students with relevant training and learning requisite to become competent IT professionals of today.

Understanding the growth, development and expansion of the IT industry, ICA Infotech offers wholesome learning for young aspirants. The focus here is to nurture the professionally competent individuals for the global competition in the outside world. To accomplish this purpose, the institute offers an array of study programs in various IT related fields. ICA Infotech endeavors to nurture exceptional IT talent through relevant training and education. The institute is well-known for offering comprehensive education in the promising sectors of Accounts and Finance besides imparting holistic training in other relevant fields. The coveted ISO certification adds further value to the highly acknowledged quality of education imparted at ICA Infotech.

The administration at the institute is determined to foster skill-based education to help students leapfrog the global competition. To keep abreast with the latest developments of the industry, the course is regularly updated and administered by a team of an expert faculty. ICA Infotech aims at creating plenty of job opportunities across various sectors for ambitious individuals. Thus the institute endeavors to provide industry specific education through enriching study programs that provide requisite training in the relevant fields. It provides 100%job placements to students. Courses offered by the institute include, enriching study programs in Accounts, Finance, Hardware, Networking, Share Market and many courses that are relevant to the current market needs. Thus, the institute assures promising opportunities for the skilled and competent. The institute missions to impart IT enabled training to career oriented students across the world. The courses providing quality par excellence focus on imparting skill-based and technology-based education to nurture competent professionals of tomorrow.

ICA Infotech- Making Dreams Real

Going back a few years, the hard working and ambitious at that time preferred academic-based professions like engineering, medicine etc. However, with growth in technology and newer scientific inventions, a paradigm shift in the choice of profession was witnessed all over the world. Today however, more technical and skill-based professions are also given immense consideration by the aspiring youth.

IT is one of the fastest growing sectors in the world. This industry has witnessed unprecedented growth and contributes immensely to the overall revenues of the country. The IT field is indeed an established one and offers excellent growth in future. IT based professions and careers are being recognized all the over the globe and thus offer outstanding growth for the aspiring and young individuals. This flourishing profession has indeed over shadowed other traditional professions in terms of commercial growth and revenues. Along with the evident growth and development of the industry, the number of opportunities for the skilled and competent also keeps mounting with every passing year. There is constant and immense need for well trained, qualified and skilled professionals in the IT field.

ICA Infotech intends to bridge the gap by nurturing exceptional IT talent through Industry specific and enriching study programs. The Institute is a leader in providing comprehensive education in the promising sectors of Accounts and Finance besides imparting holistic training in other relevant fields. The institute strives to graduate professional and skilled young talent capable of contributing to the growth of the IT sector. ICA Infotech offers a varied range of study programs for the skill-based careers that include Accounts, Finance, IT and Marketing. The academic curriculum is regularly updated and administered to keep pace with the ever-growing industry demands.

Moreover, the qualified, efficient and competent staff at ICA Infotech leaves no stone unturned in delivering quality par excellence. The experienced teaching faculty shares their knowledge and guides students of the institute in their struggle for accomplishing their set goals in future. The institute believes in providing value added training through a practical teaching methodology.

In addition to the excellent quality learning, ICA Infotech also endeavors to generate immense employment opportunities for the diligent and thereby provide the industry with competent human resource. The placement assistance offered at institute is outstanding, prompt and very efficient.