The nationwide Goods and Services Tax (GST) rollout entered the final stage on Tuesday with the Centre introducing the Constitution Amendment Bill.
What is GST?
It is a uniform national tax to be levied across the country on all goods and services.
Why is it required?
The current indirect tax system in India is mired in a maze of multi-layered taxes levied by the Centre and states at different stages of the supply chain such as excise duty, octroi, central sales tax, value-added tax and service tax. Under GST, all these will be subsumed under a single tax.
When will it be implemented?
The plan was to roll out the regime on April 1, 2012.
What about prices?
The Finance Commission estimates prices of agricultural goods will increase between 0.61% and 1.18%, while prices of manufactured items would fall by 1.22-2.53%.
In case of a revenue loss, how will states be compensated?
A corpus of about Rs 50,000 crore is likely to be set up to compensate states for any loss of revenue due to GST implementation.
A GST council will be created, which will act as a joint forum for the Centre and states.
It will be headed by the finance minister and will have finance ministers of each state as members.
The council will decide on tax rates, exemptions and threshold limits.
A dual GST structure - one for Centre and the other for states.
The proceeds of the central GST would be shared between Centre and states on basis of the devolution formula recommended by the Finance Commission.