A big hurdle in the way of GST has been cleared as the union cabinet passed the GST bill. This will help the government’s plan to implement GST on time. The government plans to take implement GST from July.
There are 4 GST related bills which have been approved by the cabinet. These bills are The Central Goods and Services Tax Bill 2017 (The CGST Bill), The Integrated Goods and Services Tax Bill 2017 (The IGST Bill), The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill), and The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill).
Following the approval of the union cabinet, these four bills will be taken up in the Rajya Sabha this week. Later, a separate state GST bill will be taken up in state assemblies. The government plans to table these four GST bills together in Parliament since all the bills have many clauses that require cross-referencing.
The state GST bill has been sent to the states for approval by their respective state legislatures. The government is expected to table all the four legislations as money bills in Parliament to ensure its smooth and time bound passage.
The Union cabinet on Monday gave its nod to the supporting legislations for the implementation of the goods and services tax (GST) paving the way for the bills to be tabled in the Lok Sabha this week.
The cabinet approved the Central GST bill, the integrated GST bill, the Union territory GST bill and the bill to compensate states for revenue losses arising from a transition to the GST, in another step towards meeting the 1 July rollout date for this singular tax reform.
The government plans to table these four GST bills together in Parliament since all the bills have many clauses that require cross referencing. The state GST bill has been sent to the states for approval by their respective state legislatures. The government is expected to table all the four legislations as money bills in Parliament to ensure its smooth and time bound passage.
A money bill only requires the nod of the Lok Sabha where the ruling alliance is in a majority. The Rajya Sabha, where the ruling National Democratic Alliance is in a minority, only has powers to make recommendations on the bill which the Lok Sabha can choose to accept and reject. Further, once Lok Sabha passes a money bill and sends it to Rajya Sabha for its consideration, the Upper House has to return the bill to the Lok Sabha within 14 days else the bill is presumed to be passed by Parliament.
The GST Council, comprising federal and state finance ministers, has already cleared all five draft laws – the Central GST, Integrated GST, state GST, Union territory GST and rules on compensating states for revenue losses. There would be four tax slabs of 5, 12, 18 and 28 percent, plus a levy on taxes on items like cars, aerated drinks and tobacco products to compensate states for any revenue losses in the first five years.
The new tax, biggest tax reform since India got independence in 1947 from the British colonial rule, is expected to boost the rate of economic growth by about 0.5 percentage points, broaden the revenue base and cut compliance cost for firms.
A composite GST will be levied on sale of goods or rendering of services after the new indirect tax regime is rolled out, and the revenue would be split between the Centre and the states in almost equal proportion. The reason for this is that the central taxes like excise and service tax and state levies like VAT will be subsumed in the GST.
The industry is eagerly awaiting the passage of these bills in Parliament to get some clarity on the fine print of this ambitious indirect tax regime that aims to remove barriers across states and unite the country into a common market. The government needs to give industry enough time after the finalization of the laws and rules to prepare for a smooth transition to meet the 1 July deadline.