GST bills get President’s assent, decks clear for new tax regime from July 1.
Decks are clear now for the roll-out of Goods and Services Tax from July 1 with the President Pranab Mukherjee giving his assent to four key legislations.
After the enactment of the Central GST Act, the Integrated GST Act, the GST (Compensation to States) Act and the Union Territory GST Act, state governments now need to pass the State GST bill in their respective assemblies to switch on to the new tax regime.
On April 6, the Parliament approved four crucial GST bills. The bills were passed in Rajya Sabha on April 6 and by Lok Sabha on March 29.
More than a decade in the making, GST is seen as the biggest taxation reform since Independence, that will subsume central excise, service tax, Value Added Tax (VAT) and other local levies to create an uniform market.
The new taxation system is expected to shore up government revenue and spur economic growth by 1-2 percentage points. Though the government and it officials have gone on record to state that the tax burden will be reduced, experts point out that GST will stoke inflationary trends in the initial years.
The rates in the four-slab structure of GST will be 5%, 12%, 18% and 28%. The CGST, IGST and SGST provide for a maximum tax of 20% each. Taken any of the two taxes together, the bills provide a maximum tax burden at 40%, this, however is as an enabling provision for financial emergencies.
The Central Goods and Services Tax Act, 2017, provides for the levy of the Central Goods and Services Tax by the Centre on the supply of goods and services within the boundary of a state.
Whereas, the Integrated GST Act deals with the levy of Integrated Goods and Services Tax by the Centre on inter-state supply of goods and services.
The Goods and Services Tax (Compensation to States) Act, provides for compensation to the states for the loss of revenue arising on account of implementation of the Goods and Services Tax.
The Union Territory GST Act makes a provision for levy and collection of tax on intra-state supply of goods, services or both by the Union Territories.
The GST rates are to be discussed by the GST Council headed by finance minister Arun Jaitley on May 18-19.
Last week, FM Jaitley had said in Rajya Sabha the GST Council, comprising finance ministers of Union and states, had agreed to decide on bringing real estate within the ambit of the new tax regime within a year of its roll out.
The GST Council will also take decisions regarding inclusion of petroleum products and alcohol in the GST network, one by one, in the foreseeable future.
As regards Jammu and Kashmir, the finance minister had said the law will not apply there because of Article 370 that gives special status to the state. Jammu and Kashmir will have to legislate its own law and integrate with the GST regime, Jaitley had said.
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