v
May
2015: Lok Sabha passed the much awaited Goods & Services Tax (GST) Bill,
which has been pending since last 12 years.
v
The
Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 was
introduced in the Lok Sabha on December 19, 2014 by the Minister of Finance,
Mr. Arun Jaitley.
What is GST?
Ø
GST
will implement a single tax for all goods and services sold in India, replacing
several layers of tax which are implemented by various states. Hence, taxes
such as an excise, service tax, state VAT, entry tax, octori and other state
level levies would be replaced with one single GST, which would be applicable
to all the states of India.
Ø
GST
is also said as One Nation, One Tax System as it is uniform throughout the
country
Ø
Tax
specialists are stating that the whole regime of indirect taxes across the
nation would drastically change, paving the way for more investments and more
inflow of foreign investors in the country. They also expect that, once GST is
implemented, it can boost growth India’s GDP to the tune of 1.5% – 2% points
Ø
The
Bill inserts a new Article (Article 279A)
in the Constitution to give the central and state governments the concurrent
power to make laws on the taxation of goods and services.
Current status of GST
Rajya
Sabha to pass the bill è 50% of the 29 State Assemblies to
pass the Bill (as it is a Constitutional Amendment Bill) è Bill will be sent to
President è President Signs the Bill è GST will come into
effect [Government says that by April/may 2016 GST will come into reality]
GST Council
The
President must constitute a Goods and Services Tax Council within sixty days of
this Act coming into force. The GST
Council aim to develop a harmonized national market of goods and services.
Composition of the
GST Council
The
GST Council is to consist of the following three members:
(i)
the Union Finance Minister (as Chairman)
(ii)
the Union Minister of State in charge of Revenue or Finance, and
(iii)
the Minister in charge of Finance or Taxation or any other, nominated by each
state government.
Functions of the GST
Council
These
include making recommendations on:
(i)
taxes, cesses, and surcharges levied by the centre, states and local bodies
which may be subsumed in the GST;
(ii)
goods and services which may be subjected to or exempted from GST;
(iii)
model GST laws, principles of levy, apportionment of IGST and principles that
govern the place of supply;
(iv)
the threshold limit of turnover below which goods and services may be exempted
from GST;
(v)
rates including floor rates with bands of GST;
(vi)
special rates to raise additional resources during any natural calamity;
(vii)
special provision with respect to Arunachal Pradesh, Jammu and Kashmir,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and
Uttarakhand; and
(viii)
any other matters.
Resolution of
disputes
The
GST Council may decide upon the modalities for the resolution of disputes
arising out of its recommendations.
Restrictions on
imposition of tax
The
Constitution imposes certain restrictions on states on the imposition of tax on
the sale or purchase of goods. The Bill
amends this provision to restrict the imposition of tax on the supply of goods
and services and not on its sale.
Additional Tax on
supply of goods
An
additional tax (not to exceed 1%) on the supply of goods in the course of
inter-state trade or commerce would be levied and collected by the centre. Such additional tax shall be assigned to the
states for two years, or as recommended by the GST Council.
Compensation to
states
Parliament
may, by law, provide for compensation to states for revenue losses arising out
of the implementation of the GST, on the GST Council’s recommendations. This would be up to a five year period.
Goods exempt
Alcoholic
liquor for human consumption is exempted from the purview of the GST. Further, the GST Council is to decide when
GST would be levied on: (i) petroleum crude, (ii) high speed diesel, (iii)
motor spirit (petrol), (iv) natural gas, and (v) aviation turbine fuel.
History of GST Bill
|
2000
|
Vajpayee
Government started discussion on GST by setting up an empowered committee.
The
committee was headed by Asim Dasgupta.
It
was given the task of designing the GST model and overseeing the IT back-end
preparedness for its rollout
|
|
2007-08
|
Union
Finance Minister P Chidambaram during the central budget of 2007–2008 said that
GST would be introduced from April 1, 2010 and that the Empowered Committee
of State Finance Ministers, on his request, would work with the Central
Government to prepare a road map for introduction of GST in India
|
|
Empowered
Committee of State Finance Ministers decided to set up a Joint Working Group
|
|
|
The
Joint Working Group, after intensive internal discussions as well as
interaction with experts and representatives of Chambers of Commerce and
Industry, submitted its report to the Empowered Committee on November 19,
2007.
|
|
|
2014
|
The
Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 was
introduced in the Lok Sabha by Finance Minster Arun Jaitley on 19 December
2014
|
|
2015
|
The
Bill was passed by the Lok Sabha on 5 May 2015 [Except AIADMK all voted for
the bill; Congress abstained)
|
|
The
Government attempted to move the Bill for consideration in the Rajya Sabha on
11 May 2015. However, members of the Opposition repeatedly stalled the
proceedings of the House.
|
|
|
In
order to appease the Opposition's demand for further scrutiny of the Bill,
Jaitely moved a motion to refer the Bill to a Select Committee. The 21 member
Committee is expected to give its report by the end of the Monsoon session.
|
Panels to facilitate GST
rollout
Arun
Jaitley has approved the formation of 2 committees to facilitate the
implementation of GST.
(01)
A Committee under the Chairmanship of Arvind Subramanian (Chief Economic
Adviser): will recommend the possible tax rates under the GST
(02)
A steering committee chaired by Additional Secretary (Dept of Revenue): will
monitor the setting up of IT infrastructure for the GST network, the Central
Board of Excise and Customs and other tax authorities.
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