The Cabinet on Monday approved four draft laws on Goods and Services Tax (GST) needed to implement the country’s biggest tax regime from July 2017.
“The Bills will now be introduced in the Parliament any time this week,” a finance ministry official told Hindustan Times.
The Cabinet, chaired by Prime Minister Narendra Modi, discussed threadbare the four draft legislation--Central GST (CGST), Integrated GST (IGST), Compensation Rule and Union territories GST (UT-GST) Bills--and approved them at a meeting.
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.
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 the Constitution (One Hundred and First Amendment) Act, 2016.
“The government is committed to early introduction of GST, one of the biggest reforms, in the country as early as possible,” an official statement said.
The GST Council has decided 1st July as the date of commencement of GST.
The GST legislation will be taken up as money bills in Parliament this budget session, which restarted on March 9 after a month-long recess. The Rajya Sabha can’t reject money bills as it only has powers to make recommendations on such legislation, which the Lok Sabha can choose to accept or reject.
The Narendra Modi government is racing against time to roll out GST from July, after successive governments have missed several deadlines.
The GST Council headed by finance minister Arun Jaitley has cleared all the five draft laws--CGST, IGST), Compensation Rule, SGST and Union Territory UT-GST bills in successive meetings in the past one month.
In the last meeting, the GST Council capped cess on demerit goods and luxury products at 15%.
The Modi government has been able to bring all states on board, overcoming almost a decade of political differences on how to replace a multi-layered set of central and state taxes and levies with a unified nationwide GST.
The ruling BJP’s victories in the latest assembly elections, especially in Uttar Pradesh, are expected to embolden the government to accelerate reforms and growth before the country heads for parliamentary polls in 2019.
The GST council has already approved two draft bills, for central and integrated GST. These will be tabled in Parliament and go to the states for ratification.
The unified tax will have four slabs of 5%, 12%, 18% and 28%. Farmers and small traders are exempt.
GST roll out is perceived to create a common market and help lower the tax burden, shore up government revenues, temper inflation and boost economic growth by at least two percentage points.
The passage of the bills will remove tax barriers, and subsume a host of indirect taxes levied by the Centre and the states, including excise, service, entertainment, entry, luxury and value-added taxes.