The Cabinet on Monday approved four supporting GST legislations - Compensation Law, the Central-GST (C-GST), Integrated-GST (I-GST) and Union Territory-GST (UT-GST), a government official said.
The Cabinet on Monday approved four supporting GST legislations – Compensation Law, the Central-GST (C-GST), Integrated-GST (I-GST) and Union Territory-GST (UT-GST), a government official said. The bills are likely to be taken up by the parliament this week as Prime Minister Narendra Modi rushes to roll out the new law, after years of delays.
Once approved by Parliament, the states would start taking their SGST bill for discussion and passage in the respective state assemblies. The GST Council, in its previous two meetings, had given approval to the four legislations as also the State-GST (S-GST) bill. While the S-GST has to be passed by each of the state legislative assemblies, the four other laws have to be approved by Parliament.
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Passage of all the legislations would pave the way for the introduction of Goods and Services Tax (GST) from July 1. The government is hoping the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current session of Parliament and the S-GST by each of the state legislatures soon. While a composite GST will be levied on sale of goods or rendering of services after the new indirect tax regime is rolled out, the revenue would be split between the Centre and the states in almost equal proportion.
This is because central taxes like excise and service tax and state levies like VAT will be subsumed in the GST. While the C-GST will give powers to the Centre to levy GST on goods and services after Union levies like excise and service tax are subsumed, the I-GST is to be levied on inter-state supplies.
The S-GST will allow states to levy the tax after VAT and other state levies are subsumed in the GST. The UT-GST will also go to Parliament for approval. The Council has already finalised a four-tier tax structure of 5, 12, 18 and 28 per cent, but the model GST law has kept the peak rate at 40 per cent (20 per cent to be levied by the Centre and an equal amount by the states) to obviate the need for approaching Parliament for any change in rates in future.
The GST Council has already cleared all five draft laws – the Central GST, Integrated GST, state GST, Union territory GST and rules on compensating states for revenue losses. There would be four tax slabs of 5, 12, 18 and 28 percent, plus a levy on taxes on items like cars, aerated drinks, and tobacco products to compensate states for any revenue losses in the first five years. GST is expected to boost the rate of economic growth by about 0.5 percentage points, broaden the revenue base and cut compliance cost for firms.