17.Goods and Services Tax Flashcards
What are the two types of taxes based on their application?
Origin-based tax and destination-based tax.
Where is origin-based tax levied?
Origin-based tax is levied where goods or services are produced.
Where is destination-based tax levied?
Destination-based tax is levied where goods and services are consumed.
What concern arises with destination-based tax?
States that produce more but consume less are concerned about losing money because states with higher consumption receive more tax revenue.
What was the initial reaction of some states to the implementation of Goods and Services Tax (GST)?
Some states were not in favor of accepting GST because they believed they would lose money due to its destination-based nature.
How did the Government of India address the concerns of the states?
The government assured to compensate the states by implementing a GST Compensation Cess.
What is the purpose of the Goods and Services Tax (Compensation to States) Act, 2017?
The act was enacted to levy Compensation Cess to provide compensation to the states for the loss of revenue due to the implementation of GST.
When did the implementation of the Central Goods and Services Tax Act (CGST) come into force?
The CGST provisions came into force on July 1, 2017.
How long was the Compensation Cess supposed to be applicable?
The Compensation Cess was to be applicable for a period of five years or as prescribed by the GST Council.
What is the concept of Revenue Neutral Rate?
The concept of Revenue Neutral Rate means that the tax rate under GST should be designed in a way that tax collection remains neutral or does not decrease.
What was the taxation scenario before the implementation of GST?
Both the central government and state governments had the freedom to impose taxes as per their discretion.
What is the purpose of the National Anti-Profiteering Authority (NAPA)?
The purpose of NAPA is to ensure that any reduction in tax rates or benefit of input tax credit is passed on to the recipients by reducing prices accordingly.
What has been the experience in many countries after the introduction of GST?
Despite the availability of input tax credit and the potential to reduce prices, there has been a noticeable increase in inflation and commodity prices.
Why did prices not decrease as expected after the introduction of GST?
Suppliers were not passing on the benefits to consumers, engaging in illegal profiteering.
Who established the National Anti-Profiteering Authority (NAPA)?
The Central Government constituted the National Anti-Profiteering Authority.
What is the role of the National Anti-Profiteering Authority (NAPA)?
NAPA examines whether the benefits of input tax credit or reduction in tax rates have resulted in a corresponding reduction in prices for consumers.
What is the GST Network (GSTN)?
The GST Network (GSTN) is a government enterprise that provides IT infrastructure and services for the implementation of GST in India.
What is the purpose of the Goods and Services Tax Network (GSTN)?
The GSTN has built an Indirect Taxation platform for GST to assist taxpayers in preparing, filing returns, making payments, and complying with indirect tax requirements.