Mar 16, 2017 09:47 PM IST | Source: Moneycontrol.com

Decks cleared for GST rollout from July 1, all laws get Council nod

“The 12th meeting of the GST Council approved the SGST law and the UTGST law,” Jaitley told reporters in a post-meeting briefing. “July 1 is tentative date fixed for implementation”.

Moneycontrol news

The finance minister Arun Jaitley-headed GST council on Thursday cleared drafts of two main supplementary legislations — the State GST Bill and the UT GST Bill — marking a big step forward in India’s plans for a countrywide rollout of Goods and Services Tax (GST) from July 1.

“The 12th meeting of the GST Council approved the SGST law and the UTGST law,” Jaitley told reporters in a post-meeting briefing. “July 1 is tentative date fixed for implementation”.

The other three enabling legislations — Central GST, Integrated GST and the Compensation Law — has already been by the Council in an earlier meeting, thus concluding the legislative exercise of approving the draft legislation after months of hectic confabulations between the Centre and the states.

Four of these legislations — CGST, IGST, UTGST and the Compensation law — will now be cleared by the Union Cabinet and taken to Parliament for final approval, Jaitley said.

The fifth law — SGST Bill — will be taken by the state government through the cabinets to their respective state assemblies, the Finance Minister said.

GST, billed as independent India’s biggest reform initiative, promises to stitch together a common national market by consolidating a web of local and central taxes into a single levy.

Under GST, the states and the Centre will collect identical rates of taxes on goods and services. For instance, if 18 percent is the GST rate on a good, the states and the Centre will get 9 percent each called the CGST and SGST rates.

The Centre will also levy and collect the Integrated Goods and Services Tax (IGST) on all interstate supply of goods and services.

The IGST mechanism has been designed to ensure seamless flow of input tax credit from one state to another.

The Council has agreed on a four-slab structure – 5, 12, 18 and 28 percent— along with a cess on luxury and 'sin’ goods.

A bureaucrats’ panel (of states and the Centre) is working to classify the goods and services according to this slab structure.

Jaitley also said that the cess on luxury goods have been capped at 15 percent. While the effective cess on goods such as “luxury” cars will 12 percent, the council has decided to fix a cap to give headspace for expansion in the future.

'Sin' goods such as tobacco (cigarettes) and pan masala will attract cess rates of 290 per cent and 135 percent respectively, although the impact on current effective consumer prices will be negligible. There will be no cess on bidis as of now.

The focus will now shift to formulation of rules—a necessary step to activate laws. GST will require writing nine sets of rules, five of which involving registration, payment, refund, invoices and returns have already been approved.

The other four relating to — composition, valuation, ITC (input tax credit) and the transition process — will require approval, Jaitley said.

An officers’ committee of states and the Centre are currently working on framing these four sets of rules.

The GST council will meet next on March 31 to approve these rules, after which the focus will shift to the “classification” or “fitment” exercise — a comprehensive, if not exhaustive, list specifying the tax rate that each good and service will attract.

“Immediately after March 31, we take up the fitment of commodities of various into tax slabs,” Jaitley said.

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