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GST would replace/Subsume Many Central and State Taxes

 The various Central, State and Local levies were examined to identify their possibility of being subsumed under GST. While identifying, the following principles were kept in mind:


(i)    Taxes or levies to be subsumed should be primarily in the nature of indirect taxes, either on the supply of goods or on the supply of services.

(ii)   Taxes or levies to be subsumed should be part of the transaction chain which commences with import/ manufacture/ production of goods or provision of services at one end and the consumption of goods and services at the other.

(iii)  The subsumation should result in free flow of tax credit in intra and inter-State levels.

(iv)  The taxes, levies and fees that are not specifically related to supply of goods & services should not be subsumed under GST.

(v)   Revenue fairness for both the Union and the States individually would need to be attempted.


On application of the above principles, it is recommended that the following Central Taxes should be, to begin with, subsumed under the Goods and Services


(i)    Central Excise Duty

(ii)    Additional Excise Duties

(iii)   The Excise Duty levied under the Medicinal and Toiletries Preparation Act

(iv)   Service Tax

(v)    Additional Customs Duty, commonly known as Countervailing Duty (CVD)

(vi)   Special Additional Duty of Customs - 4% (SAD)

(vii)  Surcharges, and

(viii) Cesses.


Following State taxes and levies would be, to begin with, subsumed under GST:

(i)    State VAT

(ii)   Central Sales tax

(iii)  Purchase Tax

(iv)  Entertainment tax (unless it is levied by the local bodies).

(v)   Luxury tax

(vi)  Taxes on lottery, betting and gambling.

(vii)  Entry tax

(viii) State Cesses and Surcharges in so far as they relate to supply of goods and services.



Ø GST would apply to all goods and services except Alcohol for human consumption. Only alcoholic liquor for human consumption has been excluded from the ambit of GST Constitutionally. All other forms of alcohol like alcohol for industrial use and medicinal and toilet preparation containing alcohol which falls in the taxing domain of the Central Government have been included in GST. This exclusion has been done to address the strong concern of the states regarding loss of revenue if potable alcohol was to be subsumed under GST.


Ø GST on petroleum products (petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel) would be applicable from a date to be recommended by the Goods & Services Tax Council.


Ø Tobacco and tobacco products would be subject to GST. In addition, the Centre could continue to levy Central Excise duty.


Ø The sale or consumption of electricity will be outside the preview of GST, hence existing tax system of tax on the same will continue.


Ø The sale or transfer of immovable property will also be outside the preview of GST, hence existing tax/duty system of stamp duty/ registration fee on the same will continue.


Disclaimer: Though full efforts have been made to compile this article correctly, yet we are not responsible / liable for any loss or damage caused to anyone due to any mistake / error / omissions in the above and contrary views/ opinions are welcomed.