GST Bill gets President’s nod, path cleared for forming council

By: |
New Delhi | Published: September 9, 2016 6:31:36 AM

The Constitution of India on Thursday stood amended to allow state governments to tax services and the Centre to tax transactions beyond the factory gate, as President Pranab Mukherjee approved the Constitution (122nd) Amendment Bill 2014 for the GST.

The Bill was sent to the President’s secretariat after as many as 18 states ratified the Bill. (PTI)The Bill was sent to the President’s secretariat after as many as 18 states ratified the Bill. (PTI)

The Constitution of India on Thursday stood amended to allow state governments to tax services and the Centre to tax transactions beyond the factory gate, as President Pranab Mukherjee approved the Constitution (122nd) Amendment Bill 2014 for the Goods & Services Tax (GST). Both Houses of Parliament and 18 state assemblies had passed the Bill earlier.

With this, the road is now clear for the Centre and states to constitute the GST Council, headed by Union finance minister Arun Jaitley and comprising state finance ministers. The council will decide on the tax rate, the threshold turnovers for businesses to come under the tax net, the exemptions list etc. Jaitley has recently said that the government will attempt to press ahead with the implementation of the GST from April 1, 2017, though he thought it was a stiff target.

The states will have two-thirds of the voting rights in the GST council while the Centre will have a one-third right. A resolution will need to be passed by a three-fourths majority.

The Bill was sent to the President’s secretariat after as many as 18 states ratified the Bill. The states that ratified the Bill include Assam, Bihar, Jharkhand, Chhattisgarh, Himachal Pradesh, Gujarat, Madhya Pradesh, Delhi, Nagaland, Maharashtra, Haryana, Sikkim, Mizoram, Telangana, Goa, Odisha and Rajasthan. The Union territory of Puducherry also ratified the Bill.

Meanwhile, parallel to the formation of the GST council, the states and the Centre have to draft the central GST (CGST), state GST and integrated GST (IGST) laws. These are expected to be laid before the winter session of Parliament.

The CGST and IGST will be drafted on the basis of the model GST law, which has already been put in the public domain. The states will draft their respective state GST (SGST) laws with minor variations, incorporating state-based exemptions. The IGST law would deal with the inter-state movement of goods and services.

“So, there is a lot of work to do and if you are able to successfully transact those issues, then in the winter session of Parliament, the central legislations, with some drafts in public domain, will have to be brought in… The states will have to pass their own legislations,” Jaitley was quoted saying recently.

Though the Centre is “fully geared” to usher in the GST from April 1, 2017, a section of industry seemed to have doubts about its own preparedness for the same and suggested it might need at least six months after the GST council had frozen its decisions.

Recently, revenue secretary Hasmukh Adhia said that he was expecting businesses to “make up their mind” and tell him what they thought was a “realistic time-frame”, although as far as the government is concerned the process was “on track”.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition