The Goods and Services Tax Bill, considered to be the most important tax reforms since independence, has been passed.
With GST, which will subsume many of the central and state indirect taxes, is expected to transform the tax structure in the country.
An additional tax (not to exceed 1%) on the supply of goods in the course of inter-state trade or commerce would be levied and collected by the centre. Such additional tax shall be assigned to the states for two years, or as recommended by the GST Council.
The GST would result in abolition of multiple types of taxes on goods and services.
Going by global experience, the GST can be a big boon if it has right kind of rate and legislation.
Both the Centre and states will have veto powers in the council, which would be the final authority to take a call on crucial GST matters such as tax rates, exemptions, exclusions or inclusions of items in the new taxation.
The Centre can single-handedly veto any proposal put forth by the states. In the proposed council, the Centre will have one-third voting power (33.33%) and the states together will have two-third voting rights (66.67 %), according to the constitutional amendment Bill on goods and services tax (GST) passed by the Lok Sabha.
Each state, whether big or small will have the same voting percentage with it. For any proposal to be cleared by the council, it has to get 75% of the vote.
The composition of proposed GST council is Chairman( Union Finance Minister) and members(Union minister of state for finance, State finance ministers or taxation minister or any minister nominated by each state government)
The government has set April 1, 2016 as the latest deadline for implementing GST, which will subsume excise, service tax, state VAT, entry tax, octroi and other state levies.
GST Once enacted, all goods and services, with the exception of alcohol, will come under GST’s ambit.
The bill also proposes to include petroleum under GST, but has left the decision over when to start levying GST on oil products to the GST council.
Do you think that GST broadens the tax base, sharpen the competitive edge of Indian exports by several tax distortions and create a unified national market by removing inter-state barriers to trade?
“The GST can be a big boon if it has right kind of rate and legislation.” Explain.