Goods and Services Tax (‘GST’) has come into force with effect from July 1, 2017, and the Central Goods and Services Tax Act, 2017 (‘CGST’), The Integrated Goods and Services Act, 2017 (‘IGST’) and the Union Territory Goods and Services Tax Act, 2017 (‘UTGST’) were notified in this regard. Further, all States have notified their respective State GST laws as well. Some of the key aspects of GST are as under:

i. GST is a levy on ‘Supply’ of goods and services in India and would be computed on the value of such supply. It is structured to be a dual GST i.e. GST would be levied by both Central and State Governments on a transaction. The indirect taxes such as excise duty, service tax, and State value added taxes, entry tax, entertainment tax and similar taxes have been subsumed into GST.

ii. The threshold exemption limit prescribed under GST is INR 2,000,000 (approx. USD 30,880) and INR 1,000,000 (approx. USD 15,440) for certain special category states. The threshold exemption would not apply in certain cases e.g. a non-resident taxable person, e-commerce operator, etc.

iii. For computing GST, the value of supply of goods or services would be the ‘transaction value’, which is the price actually paid or payable for supply of goods or services. However, in case of related party transactions or other specified situations, the taxable value will be determined as per the prescribed valuation rules.

iv. Under GST, broadly the tax rates prescribed are nil rate, 5%, 12%, 18% and 28%. Applicable rates for goods and services would depend on the nature of such goods, services and classification thereof.

v. Certain supplies have been declared as non-supplies of goods and services for the purposes of GST. These include services by an employee, services by a Court or Tribunal and sale of land or building. Additionally, certain goods have also been exempted from GST.

vi. Rules dealing with, inter alia, registration, valuation, input tax credits, returns, search and seizure and maintenance of records under GST have been notified.

vii. An enabling provision on ‘anti-profiteering’ has been introduced which requires businesses to pass on any benefit obtained under GST as a result of reduction in rate of tax or input tax credit to customers by way of commensurate reduction in prices. An authority and mechanism has been set up to examine and monitor the implementation of these measures.