News Worms
News Worms

State GST and Union Territory GST get council's nod

State GST and Union Territory GST get council's nod

The Goods and Service Tax Council on Thursday approved the State GST and Union Territory GST laws which were the final two draft laws that needed to be passed.

With the Council having already cleared three other GST laws - pertaining to central GST, integrated GST and the compensation to be paid to states for loss of revenue - this paves the way for the Centre and the states to pilot the new indirect tax system proposed to be introduced from July 1, through the Parliament and state assemblies, respectively.

Central GST, IGST, UGST and compensation law will now need to be approved by the Union Cabinet and after which it will be brought in the Parliament. The Council will now be discussing the formulation of rules that will govern the new tax, Jaitley said, adding that the committee will be meeting again on March 31 to approve four of those regulations while it will also consider the changes to five others that were approved earlier. Jaitley said that tax rates for various goods and services will be considered after rules preparation.

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The GST Council on Thursday paved the way for rolling out the new tax regime from July, clearing all legislations required for one of the most ambitious reform measures since Independence. The cess on colas and cars has been capped at 15%, which means that the total tax incidence on sweetened drinks and cars can not be more than 43% (tax rate of 28%+cess of 15%).

The GST council had so far approved the law related to legislation, payment, refunds, invoices, returns in their previous meeting.

Apart from tobacco, aerated drinks, luxury cars and environment cess, the GST Council has kept the option open for levy of 15 per cent cess on "all other supplies". "Not an extraordinary headspace, but only a marginal headspace", Arun Jaitley said after the meeting.

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Mr Jain also said the roll-out time line still seems tough as the rules are still to be finalised and rates are to be determined over next couple of months. The draft is being circulated to state assemblies.

Giving an example, he said if a luxury vehicle at present commands a total tax of 40 per cent, under the new indirect tax regime, a GST of 28 per cent plus 12 per cent cess would be levied to keep the tax incidence at the same level. For this, the next meeting has been called on March 31. Procurement of supplies by SEZs will be zero-rated. "They can do it either under bond and not pay tax or they can pay IGST and take refund", the official said.

"Capping of cess has been done".

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The GST council has meet from time to time to resolve the issues regarding the implementation of the pan-India tax regime.


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