Levy and Collection of duties not covered under GST

29/07/2020 0 By indiafreenotes

There are certain activities which are items not covered under GST. They are beyond the scope of GST, i.e., GST will not apply on them. These are classified under Schedule III of the GST Act as “Neither goods nor services”.

1.Services by an employee to the employer in relation to his employment

Related parties include employer-employee which raised many concerns whether employment now attracted GST.  This clarification has been brought in to clarify whether GST is not applicable on employment. An employee will still pay income tax on salary earned .

  1. Court/Tribunal Services including District Court, High Court and Supreme Court

Courts will not charge GST to pass judgement.

  1. Duties performed by:

  • The Members of Parliament, State Legislature, Panchayats, Municipalities and other local authorities
  • Any person who holds a post under the provisions of the Constitution
  • Chairperson/Member/Director in a body established by the government or a local body and who is not an employee of the same
  1. Services of a funeral, burial, crematorium or mortuary including transportation of the deceased

There are no taxes on funeral services for any religion.

  1. Sale of land and sale of building

Construction of a new building is subject to GST (being works contract).

  1. Actionable claims (other than lottery, betting and gambling)

Actionable Claims’ means claims which can be enforced only by a legal action or a suit, example a book debt, bill of exchange, promissory note. A book debt (debtor) is not goods because it can be transferred as per Transfer of Property Act but cannot be sold. Bill of exchange, promissory note can be transferred under Negotiable Instruments Act by delivery or endorsement but cannot be sold. 

Actionable claims are neither products nor services. They can be considered as something in lieu of money. So GST will not apply on these.

Lottery, betting, and gambling attract 28% GST.

  1. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India*.
  2. Supply in Customs port before Home consumption*:
    (a) Supply of warehoused goods to any person before clearance for home consumption;
    (b) Supply of goods by the consignee to any other person, by an endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.
  3. Petroleum Product, Alcohol

One of the biggest burdens for home buyers is that they will have to bear both GST and Stamp Duty. This is because Stamp Duty was not subsumed under the GST. As a result, they are paying both the taxes which is a burden.

Since GST does not cover road tax, Vehicle Tax was not subsumed under GST. So, vehicle buyers still need to pay road tax as per the Motor Vehicle Act.

In order to bring alcohol under the purview of GST, a constitutional amendment is needed. Hence, Excise on Liquor was not covered under GST.

The Tax on sale and consumption of Electricity is not covered by GST. So, states still charge VAT and centre charges Central Excise on electricity bills.

Toll Tax, environment tax and all other taxes that are directly paid by the users are still levied by the states as they do not come under GST.

Entertainment tax collected by the Local Bodies is not covered under GST. As a result, users will have to pay extra tax in addition to GST which leads to an increase in the price of things like movie tickets.

All the above taxes are a burden on the users or consumers, hence they want the government to levy a single tax to avoid double taxation.