Under the unveiling of GST with the One Nation One Tax propaganda, PM Modi promised to merge all the taxes under a single tax GST to make India a business friendly nation. But there are some taxes which are not covered under GST.
While it has removed a bundled indirect taxes such as VAT, CST, Service tax, and Excise. It is beneficial for the economy in the medium to long term but in short term it may increase inflation. So here is the list of taxes not covered under GST.
Taxes not covered under GST
1. Tax on electricity
Government has kept the sale and consumption of electricity out of GST, so tax on the electricity will be governed by the existing rule and state government has the right to say in it.
Entertainment tax has been imposed a 28% duty under GST but the local bodies has been given power to charge extra tax as per requirement which may lead to Double Taxation.
Under the new GST regime tax on registering for a new vehicles or renew your old vehicle will remain the same and will vary from state to state.GST will not cover the toll, entry, environment tax as from the very beginning the state government has power over these taxes.
All the taxes related to real estate have been kept outside the GST. But the construction of a new building is subject to GST.
5.Service by the employee to the employer in relation to his employment
If the employee performs duty for his employer the employer is not required to pay the service tax. But the employee is required to pay the income tax.
While you import a product the Basic Customs Duty will be charged according to current law, but the Countervailing Duty and Special Additional Duty will merged into the GST.
7.Excise on Liquor
Alcohol needs a constitutional amendment to move it under GST. So it has been kept outside GST.