The Union Cabinetchaired by Prime Minister ShriNarendra Modi on March 20 approved four supplementary bills that would have to be passed in Parliament before the Goods and Services Bill (GST) will be rolled out. The Cabinet hasgiven its nod IGST(Integrated Goods and Services Tax Bill 2017), UTGST(Union Territory Goods and Services Tax Bill 2017), CGST(The Central Goods and Services Tax Bill 2017 ) and compensation bills ( The Goods and Services Tax (Compensation to the States) Bill 2017) that would pavethe way for the largest tax reform in the country. The government expects to rollout GST in July this year.
The above four Bills have been earlier approved by the GST Council after thorough, clause by clause, discussion over 12 meetings of the Council held in the last six months.
The CGST Bill makes provisions for levy and collection of tax on intra-state supply of goods or services for both by the Central Government. On the other hand, IGST Bill makes provisions for levy and collection of tax on inter-state supply of goods or services or both by the Central Government. The UTGST Bill makes provisions for levy on collection of tax on intra-UT supply of goods and services in the Union Territories without legislature. Union Territory GST is akin to States Goods and Services Tax (SGST) which shall be levied and collected by the States/Union Territories on intra-state supply of goods or services or both.
The Compensation Bill provides for compensation to the states for loss of revenue arising on account of implementation of the goods and services tax for a period of five years as per section 18 of the Constitution (One Hundred and First Amendment) Act, 2016.
Sources said the four legislations would be taken up for discussion together in Parliament. Once approved by Parliament, the states would start taking their SGST bill for discussion and passage in the respective state assemblies. The GST Council, in its previous two meetings, had given approval to the four legislations as also the State-GST (S-GST) bill. While the S-GST has to be passed by each of the state legislative assemblies, the four other laws have to be approved by Parliament.
Passage of all the legislations would pave the way for introduction of Goods and Services Tax (GST) from July 1. The government is hoping the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current session of Parliament and the S-GST by each of the state legislatures soon.
While a composite GST will be levied on sale of goods or rendering of services after the new indirect tax regime is rolled out, the revenue would be split between the Centre and the states in almost equal proportion. This is because central taxes like excise and service tax and state levies like VAT will be subsumed in the GST. While the C-GST will give powers to the Centre to levy GST on goods and services after Union levies like excise and service tax are subsumed, the I—GST is to be levied on inter-state supplies.
The S-GST will allow states to levy the tax after VAT and other state levies are subsumed in the GST. The UT-GST will also go to Parliament for approval. The Council has already finalised a four-tier tax structure of 5, 12, 18 and 28 per cent, but the model GST law has kept the peak rate at 40 per cent (20 per cent to be levied by the Centre and an equal amount by the states) to obviate the need for approaching Parliament for any change in rates in future. Similarly, the cess to be levied on top of peak rate on selected demerit goods like luxury cars for creation of a corpus that will be used for compensating states for any loss of revenue from GST implementation in the first five years