The GST Council expects to complete ‘legislative exercise’ in the next meeting on March 16 with the approval of State GST (SGST) and Union Territory GST (UTGST)
The path to goods and services tax (GST) implementation was further cleared on Saturday with the GST Council, represented by Central and state finance ministers and their officials, giving a nod to two crucial draft laws – Central GST (CGST) Act and Integrated GST (IGST) Act.
With this, the unified indirect tax seemed on track for its rollout on July 1. The Council will now work on the State GST (SGST) and Union Territory GST (UTGST) in its next meeting on March 16 and then send all model laws to the Union cabinet for approval. After that, the draft legislations, except SGST and UTGST, will be placed in Parliament during the second part of the Budget session, beginning March 9.
“In a nutshell, the compensation law (for making good revenue losses of the states for the first five years due to GST) was approved in the last meeting. On Saturday, we have approved CGST and IGST laws and in the next meeting, we will be approving the UTGST and SGST laws, which will then complete the legislative exercise and enable us to take these legislations before the Parliament. So, it’s on track. July 1 now, optimistically, looks like a possibility for the implementation of the GST,” Union Finance Minster Arun Jaitley, who heads the Council, told the media after the eleventh meeting of the Council.
The national indirect tax will bring all the current indirect taxes under a single levy for which four rate slabs have been fixed – 5 per cent, 12 per cent, 18 per cent and 28 per cent. The Council has also decided to cap the peak rate at 40 per cent – 20 per cent by state and 20 per cent by Centre – to provide headroom to fixing a higher GST rate without approaching the Parliament for it.
In its zeal to stick to the July 1 deadline, the Centre has accepted most of the proposals put forth by the states.
"As many as 26 changes sought by the states have been accepted by the Centre. This shows the federalist character of India. CGST and IGST will come up for further discussion at the next meeting of the Council in mid-March," said West Bengal Finance Minister Amit Mitra post the Council meeting.
Andhra Pradesh Minister for Finance & Planning, Commercial Taxes and Legislative Affairs Yanamala Ramakrishnudu also applauded Council’s decision to allow coastal states to levy and collect tax on supplies of goods and services that occur in the territorial waters.
“Conceding the request of the minister (Ramakrishnudu), a suitable provision has been incorporated under draft CGST Law treating the transactions in territorial waters as intra state supplies. Similar provision would also be incorporated in the SGST Law which will fully empower the states to levy and collect taxes on the supplies of goods and services in territorial waters,” said a statement issued by the AP government.
Abhishek Rastogi, partner, Khaitan & Co, said the next meeting of the Council was important as SGST Act will get approved. He said big corporate houses were prepared for the new tax regime but the micro, small and medium enterprises (MSME) sector still needed to gear up for it.
Rakesh Bhargava, Director, Taxmann, feels the most difficult task for the Council would be to take a decision on phase-wise implementation of GST as suggested by some states. There are few states who were not ready with the GST software.
Pratik Jain, indirect tax leader, PwC India, said, “Now, one would hope that GST rules and rates would also be finalised quickly and put up in public domain for discussions.”
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