[ecis2016.org] The GST Bill was approved in the Lok Sabha on March 29, 2017 with four supplementary legislations, and paves the way for a more uniform tax regime. Here’s a look at how the GST will be structured, at the central and state level
The Goods and Services Tax (GST) regime has came a step closer to meet its July 1, 2017 target of rollout, with the Lok Sabha approving four supplementary legislations. The Central GST Bill, 2017; The Integrated GST Bill, 2017; The GST (Compensation to States) Bill, 2017; and The Union Territory GST Bill, 2017 were passed after negation of a host of amendments moved by the opposition parties. Replying to the seven-hour-long debate, finance minister Arun Jaitley said the GST, which will usher in a uniform indirect tax regime in the country, will make commodities ‘slightly cheaper.’
You are reading: Tax structure of the GST
He said the GST rates would depend upon whether the commodity is used by a rich person or a common man. Jaitley said once the new regime is implemented, the harassment of businesses by different authorities will end and India will be one rate for one commodity throughout the country. He said the GST Council, comprising Finance Ministers of Union and states, had agreed to take a decision on bringing real estate within the ambit of the new tax regime within a year of its rollout.
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On the impact of GST on prices, Jaitley said “Today, you have tax on tax, you have cascading effect. When all of that is removed, goods will become slightly cheaper.” On why the Council has decided on multiple GST rates, Jaitley said one rate would be ‘highly regressive as hawai chappal and BMW cannot be taxed at the same rate.’ He said currently food articles are not taxed and those will continue to be zero rated under the GST. All other commodities would be fitted into the nearest tax bracket.
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The GST Council has recommended a four-tier tax structure – 5, 12, 18 and 28 per cent. On top of the highest slab, a cess will be imposed on luxury and demerit goods to compensate the states for revenue loss in the first five years of GST implementation. However, the Central GST (CGST) law has pegged the peak rate at 20 per cent and a similar rate has been prescribed in the State GST (SGST) law, which takes the peak rate to 40 per cent which will come into force only in financial exigencies. Jaitley said the cess would be transient for a period of 5 years so that the proceeds can be utilised to compensate the states.
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The GST will subsume central excise, service tax, VAT and other local levies to create an uniform market. GST is expected to boost GDP growth by about 2 per cent and check tax evasion. The States will pass the State GST or SGST law that will allow them to levy sales tax after levies like VAT are subsumed. The fourth law introduced is on the Union Territory GST or UTGST for UTs like Chandigarh and Daman and Diu which do not have assemblies. Jaitley said all decisions on GST would be taken by the GST Council, reflecting the federal structure. The FM said the aim of the GST Council is to decide everything relating to the tax structure with consensus and this is for the first time that such an arrangement has been made, based on the principle of shared sovereignty of both the Centre and the state governments.
Allaying apprehension of a spike in prices of goods and commodities after the roll- out of the GST, Jaitley said that the tax rates will be kept at the current levels so as not to have any inflationary impact. Jaitley also explained that the legislations will have to be passed by Parliament and one by each of the state assemblies to turn India into one market with a single tax rate.
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle
