President Pranab Mukherjee on Thursday gave assent to the Constitution Amendment Bill on Goods and Services Tax (GST), a major step towards rolling out the new indirect tax regime which the Modi government wants to come into effect from April 1 next year.
After the nod from the President and its Gazette notification, the process remains long in implementing the pan-India Goods and Services Tax (GST) regime:
* Parliament will once again have to take up three relevant bills — one to permit the central government to levy a Central GST, another for an Integrated GST where more than one state is involved and then a model bill to facilitate states to levy their respective State GST.
*In tandem, the states will have to enact their own legislation for their respective State GSTs. This is because the GST regime will involve the imposition of both a Central and a State levy, both at preferably identical rates.
Goods and Services Tax Council.
*The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act 2016, by order, constitute a Council to be called the Goods and Services Tax Council.
*The Goods and Services Tax Council shall consist of the following members, namely:—
(a) the Union Finance Minister…………………… Chairperson;
(b) the Union Minister of State in charge of Revenue or Finance…………….. Member;
(c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government………………..Members.
* The Members of the Goods and Services Tax Council shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide.
* The Goods and Services Tax Council shall make recommendations to the Union and the States on—
(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
(b) the goods and services that may be subjected to, or exempted from the goods and services tax;
(c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply;
(d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax;
(e) the rates including floor rates with bands of goods and services tax;
(f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
(h) any other matter relating to the goods and services tax, as the Council may decide.
* The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
* While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.
* One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.
* The Goods and Services Tax Council shall determine the procedure in the performance of its functions.
* Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:—
(a) the vote of the Central Government shall have a weightage of onethird of the total votes cast, and
(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
* No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—
(a) any vacancy in, or any defect in, the constitution of the Council; or
(b) any defect in the appointment of a person as a Member of the Council; or
(c) any procedural irregularity of the Council not affecting the merits of the case.
*The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute —
(a) between the Government of India and one or more States; or
(b) between the Government of India and any State or States on one side and one or more other States on the other side; or
(c) between two or more States, arising out of the recommendations of the Council or implementation thereof.’’
*Another main issue to be addressed is: What will be the GST rate ? This remains a matter of hot debate and the various base rates recommended by experts and stakeholders vary from around 15.5 percent to as high as 26 percent.
*The rate has to be decided by the soon-to-be-formed GST Council , which will be chaired by the Union finance minister with all state finance ministers as members.
*The GST Council also has to put in place a dispute resolution mechanism.
*The necessary IT infrastructure, too, has to be set up. Towards this, a non-government company was constituted in 2013 — Goods and Services Tax Network. This company has mandated Infosys to provide the IT backbone. The progress in this regard, officials maintain, is as per schedule.
*The Goods and Services Tax Network has targeted October for the commencement of transferring all existing assessees to the new system, along with software and hardware tests.
*Training will also begin for some 100,000 officials at the central and state levels who are involved with indirect taxes.
*The coding of items and the rates of tax into the software is to commence in December, followed by beta runs from February.
*The system, officials said, is expected to be fully functional by mid-February for trials — in time to meet the targeted roll-out date of April 1, 2017.