The process to roll out a nationwide Goods and Services Tax (GST) has entered the final stage. The government plans to introduce the Constitution Amendment Bill in the current budget session of Parliament that ends on March 25.
The draft Bill, a copy of which is with Hindustan Times, lays down the contours of the proposed regime. It was approved by the Union Cabinet on Tuesday.
The Bill stipulates that an all-powerful GST council will be created that will act as a joint forum for the Centre and states. The council will be headed by the finance minister and will have finance ministers of each state as its members.The council will decide on tax rates, exemptions and threshold limits.
"The council shall make recommendations on taxes, cesses and surcharges levied by the Centre, states and local bodies, which may be subsumed in GST," the Bill said.
If adopted, GST can dramatically alter tax administration by giving a one-shot solution to levies such as excise, value-added tax and octroi.
The Bill has proposed a dual GST structure - one for the Centre and the other for states - but has steered clear of making commitment on rates.
The proceeds of the central GST would be shared between the Central government and states on the basis of the devolution formula recommended by the Finance Commission.
GST will also be levied on imports based on the "principle of destination" and the state within which imported goods and services consumed will earn the revenue as per the state GST of the particular product and service.
The GST council will be set up through a Presidential order within two-months after the passage of the Bill in Parliament and state assemblies.