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12
September 2016
Following presidential assent last week to
the GST Bill, the Union Finance Ministry on Monday notified the provisions of
the Constitution Amendment Act that allows for setting up the Goods and
Services Tax (GST) Council. The Total
Investment & Insurance Solutions
"The Central Government hereby appoints
the 12th day of September, 2016 as the date on which the provisions of section
12 of the said Act shall come into force," a ministry notification said. The Total Investment & Insurance
Solutions
According to the provisions of the
Constitution Amendment Act, the GST Council will have to be set up within 60
days of its notification. The
Total Investment & Insurance Solutions
It is to be chaired by the Union Finance
Minister and will include State Ministers as members.
The GST Council will decide on the tax rate,
will recommend the taxes to be subsumed and exempted from GST, the rates of
taxation and the model Central, State and Integrated GST laws.
It will also decide the threshold for levy of
the tax, as well as the dispute resolution mechanism, among other important
issues. The Total Investment &
Insurance Solutions
Noting that 20 states had already ratified
the GST, President Pranab Mukherjee said in Chennai on Saturday that it was the
GST Council's responsibility to have one uniform rate of GST tax to be
introduced all over India. The Total
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The government targets to implement the new
pan-India indirect tax regime from April 1, 2017.
The Centre will have to pass the Central GST
and Integrated GST Bills, while the states will need to approve their
respective GST legislations. The Total
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The GST is a single indirect tax that
proposes to subsume most central and state taxes like Value Added Tax, service
tax, central sales tax, excise duty, additional customs duty and special
additional customs duty. The Total
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The states will, however, be able to adopt a
GST structure that is different from that recommended by the GST Council. The
council recommendations will not be binding on the states. The Total Investment & Insurance
Solutions
The Bill says the GST Council will make
recommendations to the Centre and the states on issues such as taxes, cess and
surcharges that might be subsumed in the GST tax rate. Parliament and state
assemblies have the right to accept those recommendations in their GST Bills. The Total Investment & Insurance
Solutions
While the pan-India overhaul of India's
indirect tax regime has got the mandatory support of more than half the states,
Tamil Nadu's ruling AIADMK had walked out before the voting on the Bill began,
both in the Rajya Sabha and the Lok Sabha. The Total Investment & Insurance Solutions
The party had wanted some changes in the
Bill, such as imposition of four per cent additional tax on inter-state trade
and transfer of money thus collected to the state of origin of the goods.
The Centre is to compensate the states for
revenue losses for the first five years after the implementation of the GST if
the states' revenues come down under the new tax regime.
Meanwhile, at a meeting here with the
Empowered Committee of State Finance Ministers on GST last month, India Inc
pitched for an 18 per cent standard rate on the ground that this rate will
generate adequate tax buoyancy without fuelling inflation. The Total Investment & Insurance
Solutions
The opposition Congress had earlier demanded
an 18 per cent cap on the GST rate.
The Federation of Indian Chambers of Commerce
and Industry (Ficci) suggested that to check inflation and the tendency to
evade taxes "the merit rate should be lower and the standard rate
reasonable".
"As per the current indications and
reports, goods will be categorised as being subject to merit rates (12 per
cent), standard rates (18 per cent) and de-merit rates (40 per cent),"
Ficci said in a release following a meeting here with the Empowered Committee.
"Certain goods will be exempted from the
GST while bullion and jewellery will be charged at one-two per cent," it
said regarding classification of goods for applying GST rates.
On the implementing of GST, Ficci said that
in order to provide adequate time to trade and industry to prepare "for a
hassle-free rollout of the GST regime", a minimum of six months should be
permitted from the date of the adoption of the GST law by the GST Council.
"Additional time would be required in
case the GST law as passed by Parliament or state legislatures is significantly
different from the one adopted by the GST Council," the statement added.
In a meeting here with Revenue Secretary
Hasmukh Adhia last month, industry chambers had expressed concerns about the
draft GST law, flagging issues like dual administrative control and wide
discretionary powers for tax authorities.The Total Investment & Insurance Solutions
