Dual GST Model | GST Details
Before discussing GST details we shall first discuss what is dual GST and why is it required. The Dual GST is assumed to be a simple tax with one or two Central Goods and Service Tax (CGST) and State Goods and Services Tax (SGST) rates.
In India both Centre and State have been assigned the powers to levy and collect taxes through appropriate legislation. Both the Centre and State Government have distinct responsibilities to perform according to the division of powers as prescribed in the Constitution that needs resources for implementation. A dual GST is therefore, is appropriately aligned with the Constitutional requirement of fiscal federalism.
Features of the proposed dual model
- GST shall have two components one levied by the Centre (referred to as Central GST), and the other levied by the States (referred to as State GST)
- Central GST and the State GST would be applicable to all transactions of goods and services
- Central GST and State GST are to be paid to the accounts of the Centre and the States individually
- Central GST and State GST are to be treated individually, therefore taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC)
- Cross utilization of ITC between the Central GST and the State GST would not be permitted except in the case of inter-State supply of goods and services Cross utilization of ITC between the Central GST and the State GST would not be permitted except in the case of inter-State supply of goods and services
- Credit accumulation on account of refund of GST should be avoided by both the Centre and the States except in the cases such as exports, purchase of capital goods, input tax at higher rate than output tax etc.
- Uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST.
- Composition/Compounding Scheme for the purpose of GST should have an upper ceiling on gross annual turnover and a floor tax rate with respect to gross annual turnover.
- The taxpayer would need to submit periodical returns, in common format as far as possible, to both the Central GST authority and to the concerned State GST authorities.
- Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 14/15 digits