The Goods and Services tax (GST), one of the key reforms undertaken by the Modi government, is expected to be implemented starting 1 July, with the government stating to have got all the states on board.
The crucial GST Council meet, headed by Finance minister Arun Jaitley, will be held on 4-5 March, and the government is keen to get the council's approval on iGST (integrated GST), cGST (central GST) and sGST (state GST) drafts before the second half of the budget session of Parliament that begins on 9 March.
The draft compensation bill has already been approved in the Council's 18 February meeting. The four crucial bills form the enabling laws under the GST constitutional amendment, and the passage of these bills would pave way for the implementation of India's biggest indirect tax reform.
What to expect from the council meet in the next two days:
The government is keen to roll out the new regime from 1 July, but for that it will have to get two laws - the Central GST (CGST) Act and Integrated GST (IGST) Act -- approved by Parliament and each of the state legislatives have to pass the State GST (SGST) Act.
The Centre plans to introduce in Parliament the Central GST (CGST) Bill in the forthcoming session beginning 9 March. After it is ratified, the states will introduce the State GST (SGST) Bill in their respective legislative Assemblies.
In the last meet held in February, the council had cleared the draft compensation law which will requires the Centre to fully compensate states for any revenue loss for five years after migrating to the new tax system.
The central and state officials will soon start the exercise to determine which goods and services should fall in which tax bracket and the same will be taken to the Council for approval soon.
Together with this, they will also decide the goods and services that would attract a cess on top of the peak rate to create a corpus that can be used to compensate states for any loss of revenue from implementation of GST in the first five years.
The model GST law provides a common draft of CGST Act, SGST Act. Besides, there is an IGST law and Compensation law. Officials said that the government is keen to pass benefit of lower taxes to consumers and so an anti-profiteering measure has been incorporated in the draft law.
It provides for constituting an authority to examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.
For example, a good or service is to be levied with a GST of 5 percent. But in course of supply, a 20 percent tax is paid, whose input credit is taken. So, the final consumer will be levied only 5 percent tax and not 25 percent, as the input credit of 20 per cent is already taken, an official explained.
The GST Council has agreed to keep the upper band of the rate in the law at 20 percent from the existing 14 precent, which may lead to a peak GST levy move up to being as high as 40 percent (20 percent central and 20 percent state).
Another step remaining is to slot all the commodities under the GST tax slabs: 5 percent, 12 percent, 18 percent and 28 percent. Each item has to be fitted under a particular slab. After the 4-5 March meeting, GST officers will do the slotting.
With PTI inputs
Published Date: Mar 03, 2017 16:21 PM | Updated Date: Mar 03, 2017 16:21 PM