The Goods and Services Tax (GST) Council, headed by Finance Minister Arun Jaitley, on Thursday approved the remaining two crucial supplementary bills — State GST (SGST) and Union Territory GST (UTGST) - moving the proposed July 1 implementation of the country's biggest tax reform closer to reality.
"The Council has granted formal approval to all five legislations," said Finance Minister Arun Jaitley after the Council's 12th meeting on Monday.
Final drafts of the three other bills — Integrated GST (IGST), Central GST (CGST) and Compensation bill — had been cleared by the Council in its previous meetings.
With all five draft laws now being given the green signal by the Council, they will next be sent to the Cabinet for approval and subsequently to Parliament, which is currently in session, for the final nod.
Consent from both Lok Sabha and Rajya Sabha would conclude the legislative requirement for the rollout of the new indirect tax regime.
Once the laws are passed, Jaitley said, two important acts remain. The first pertains to formulation of rules - five of which have already been approved. He said the Council would get the final draft of the other four rules by next week and discuss them at the GST Council's next meeting on March 31.
Jaitley said that the next step after that would be the fitment of various commodities into tax slabs. "After that [fitment], we will be ready for GST implementation," said the Finance Minister.
The industry has been particularly looking as to how items would be categorised under various slabs as they need at least two-three months to prepare themselves to adjust to the shift in tax regime.
The Council has agreed on a four-slab structure — 5, 12, 18 and 28 percent — along with a cess on luxury and "sin" goods such as tobacco. Jaitley said on Thursday that the cess has been capped at 15 percent for the four to five commodities including luxury cars and aerated drinks that fall in this category.
Under the 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 product, both the states and the Centre will get 9 percent each called the CGST and SGST rates.
The Centre will also levy and collect the IGST on all inter-state supply of goods and services. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one state to another.
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