Finance Minister Arun Jaitley on Wednesday sought to highlight the widespread consent for the proposed GST (Goods and Services Tax) by pointing out that the GST council has met 12 times to ensure consensus for arguably the most ambitious tax reform in the country.
While moving the four GST bills in the Lok Sabha for debate and consideration, Jaitley said that the GST laws will be based on the recommendation of the the GST council of 32 participants including the Centre, states and Union Territories, which has made sure that the decisions related to the formulation of the bills are taken through consensus.
The four GST bills include one bill for implementation of GST at the Centre, one for States, one for Union Territories, and one for compensation to states.
Jaitley said that GST will ensure free movement of goods across the country, and will put an end to the tax differences. It may be noted that while the GST looks like a done deal, with it set to be implemented from July 1, the basis of the jurisdiction between centre and states is still to be worked out.
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The government has proposed two standard rates of 12% and 18% under the GST regime, and has provided for cess for five years to fund the compensation for the states’ loss in revenue, Jaitley said. He added that the cess would be levied on sin goods and luxury goods, and will use it to fund compensation.
Earlier this year, the government achieved a major breakthrough in its quest to bring GST with an agreement on dual control of tax assessees thrashed out between the Centre and the states.
Previously, thanks to some tough bargaining by the states, especially after the political standoff on demonetisation, GST was threatening to become a non-starter. But the thorny issue of dual control was resolved in principle with the assessees above Rs 1.5 crore turnover shared 50:50 by the Centre and the states, and those below Rs 1.5 crore turnover shared 90:10 in favour of the states.
The deadline to implement the GST was also moved further to July 1, which was seen as positive for the industry as it will give more time to prepare for the roll out and greater clarity.