Effects and Key features of Proposed GST

As per the dual tax regime that has been announced for GST in India, there will be a Central stream for taxes and a State stream for the same taxes.In order to allow this model of taxation both the Centre and States will have to make policy changes. It is expected that the proposed concurrent dual GST system would p reserve and protect the fiscal powers and at the same time rationalize the indirect tax structure by subsuming a plethora of Central and Local Taxes into a consolidated levy.

Central GST may subsume the following indirect taxes/duties on supply of goods and services:

• Central Excise Duties (CENVAT)
• Additional Excise Duties including those levied under Additional Duties of Excise (Goods of SpecialImportance)Act, 1957
• Additional Custom Duties in the nature of countervailing duties, i.e., CVD, SAD and other domestic taxes impose on imports to achieve a level playing field between domestic and imported goods although, under the GST regime all the imports will suffer a reverse charge. 
• Cesses levied by the Union viz., Cess on rubber, tea, coffee etc.
• Service Tax
• Central Sales Tax – to be completely phased out
• Surcharges levied by the Union viz., National Calamity Contingent Duty, Education Cess, Special Additional Duties of Excise on Motor‐Spirit and High Speed Diesel (HSD).

State GST may subsume the following State taxes

• Value Added Tax
• Purchase Tax
• State Excise Duty (except on liqu or)
• Entertainment Tax (unless it is levied by the local bodies)
• Luxury Tax
• Octroi
• Entry tax in lieu of Octroi
• Taxes on Lottery, Betting and Gambling

Taxes/Duties not to be subsumed in GST:‐

In Central GST

• Basic Customs Duty
• Excise Duty on Tobacco products
• Export Duty
• Specific Cess
• Specific Central Cess like Education and Oil Cess.

In State GST

• Taxes on Liquors
• Toll Tax
• Environment Tax
• Road Tax
• Property Tax
• Tax on Consumption or Sale of Electricity – Not certain
• Stamp Duty – Not certain

Certain components of petroleum, liquor are likely to be outside the GST structure.  Further, State Excise on liquor may also be kept outside the GST. In other words, in such circumstances, all taxes and duties on these goods will be outside the scope of GST.