The salient features of GST are as under: (i) GST would be applicable on supply of goods or services as against the present concept of tax on the manufacture of goods or on sale of goods or on provision of services. (ii) GST would be a destination based tax as against the present concept of origin based tax . (iii) It would be a dual GST with the Centre and the States simultaneously levying it on a common base. The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the State s would be called State GST (SGST). (iv) An Integrated GST (IGST) would be levied on inter - State supply (including stock transfers) of goods or services. This would be collected by the Centre so that the credit chain is not disrupted. (v) Import of goods or servic es would be treated as inter - State supplies and would be subject to IGST in addition to the applicable customs duties. (vi) For an initial period of two years or as further extended on the recommendation of the GST Council, a non - vatable A dditional Tax not exceeding 1% on inter - State supply of goods would be levied and collected by the Centre and assigned to the originating State. (vii) CGST , SGST & IGST would be levied at rates to be mutually agreed upon by the Centre and the States under the aegis of the GST Council . (viii) GST would replace the following taxes currently levied and collected by the Centre: a) Central Excise duty b) Duties of Excise (Medicinal and Toilet Preparations) c) Additional Duties of Excise (Goods of Special Importance) d) Additional Duties of Excise (Textiles and Textile Products) e) Additional Duties of C ustoms (commonly known as CVD) f) Special Additional Duty of Customs (SAD) g) Service Tax h) Cesses and surcharges insofar as far as they relate to supply of goods or services (ix) State taxes that would be subsumed within the GST are: a) State VAT b) Central Sales Tax c) Purchase Tax d) Luxury Tax e) Entry Tax ( All forms ) f) Entertainment Tax (not levied by the local bodies) g) Taxes on advertisements h) Taxes on lotteries, betting and gambling i) State cesses and surcharges insofar as far as they relate to supply of goods or services (x) GST would apply to all goods and services except Alcohol for human consumption. (xi) GST on petroleum products would be applicable f r o m a date to be recommended by the Goods & Services Tax Council. (xii) Tobacco and tobacco products would be subject to GST. In addition, the Centre could continue to levy Central Excise duty . (xiii) A common threshold exemption would apply to both CGST and SGST . Taxpayers with a turnover below it would be exempt from GST . A compounding option (i.e.to pay tax at a flat rate without credits) would be available to small taxpayers below a certain threshold. The threshold exemption and compounding provision would be optional. (xiv) The list of exempted goods and services would be kept to a minimum and it would b e harmonized for the Centre and the States as far as possible . (xv) Exports would be zero - rated. (xvi) Credit of CGST paid on inputs may be used only for paying CGST on the output and the credit of SGST paid on inputs may be used only for paying SGST. In other words, the two streams of input tax credit (ITC) cannot be cross utilised , except in specified cir cumstances of inter - State supplies , for payment of IGST . The credit would be permitted to be utilised in the following manner: a) ITC of CGST allowed for payment of CGST ; b) ITC of SGST allowed for payment of SGST ; c) ITC of CGST allowed for payment of CGST & IGST in that order ; d) ITC of SGST allowed for payment of SGST & IGST in that order ; e) ITC of IGST allowed for payment of IGST, CGST & SGST in that order . (xvii) ITC of Additional Tax would not be permitted. (xviii) Accounts would be settled periodically between the Centre and the State to ensure that the S GST used for payment of IGST is transferred by the Centre to the D estination State where the goods or services are eventually consumed. Similarly the IGST used for payment of SGST would be transferred by the originating State to the Centre. (xix) The laws, regulations and procedures for levy and collection of CGST and SGST would be harmonized to the extent possibleent possible

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