Meaning of Non-GST taxes

What is Non-GST taxes


This post explains about Non-GST taxes.  

Non-GST taxes

The new Goods and Services Tax (GST) is the biggest indirect tax reform in India since independence. It is often assumed to be a complete unification of all indirect taxes currently levied in India by Central and State governments, but the reality is a little different. Though it is true that most major indirect taxes will be subsumed under GST, there are still certain products on which the indirect taxes will not be covered. Typically, this is when the taxes are either outside the purview of the GST constitutional amendment, or there is an agreement between Centre and States to defer their inclusion.

In this article will take a closer look at taxes outside the purview of GST and their expected impact on business owners.

Taxes under GST Regime

First, it’s good to have an idea of which taxes will be subsumed under the GST.  The following Central Taxes will no longer be calculated separately, and will instead be computed using GST laws:

  • Central Excise Duty
  • Additional Excise Duties
  • The Excise Duty levied under the Medicinal and Toiletries Preparation Act
  • Service Tax
  • Additional Customs Duty, commonly known as Countervailing Duty (CVD)
  • Special Additional Duty of Customs – 4% (SAD)
  • Surcharges, and
  • Cusses

Several State taxes will also be included in GST:

  • VAT / Sales tax
  • Entertainment tax (unless it is levied by the local bodies).
  • Luxury tax
  • Taxes on lottery, betting and gambling.
  • State Cesses and Surcharges in so far as they relate to supply of goods and services.
  • Entry tax

Taxes on products not under GST

The following tax and product types are not covered under GST. Business owners making sales or purchases of these products should make sure they understand the specific tax requirements that will still be imposed beyond GST assessments.

Tax on items containing alcohol

Alcoholic beverages for human consumption would be kept out of the purview of GST as an exclusion mandated by constitutional provision. Sales Tax/VAT could be continued to be levied on alcoholic beverages as per the existing practice. VAT is levied on alcohol purchases in some states, and there will be no objection to that. Excise duty, which is presently levied by the states, may also be unaffected.

Tax on Petroleum Products

The full range of petroleum products, including crude oil and motor spirits including Aviation Turbine Fuel (ATF) and High Speed Diesel (HSD), would be kept outside GST, as is the prevailing practice in India. Sales tax could continue to be levied by the states on these products with the prevailing floor rate. Similarly, Centre could also continue its levies. A final opinion on whether natural gas should be kept outside the GST will be issued after further deliberations.

As for petroleum products, although the GST constitutional amendment provides for levying GST on these products, it allows the timeframe for their inclusion to be decided by the GST Council. Therefore, in the initial years of GST, petroleum products will remain out of the scope of GST.

The existing taxation system under VAT and the Central Excise Act will continue for both of the commodities listed above.

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