Amid speculations over the finalization of the model GST law, the Goods and Service tax council, headed by Finance Minister Arun Jaitley, has today approved the Draft Compensation Bill.
Amid speculations over the finalization of the model GST law, the Goods and Service tax council, headed by Finance Minister Arun Jaitley, has today approved the Draft Compensation Bill. Confirming the approval of the Bill, Finance Minister Arun Jaitley said that on the next meetings on March 4 and 5, legally vetted drafts for all important bills will be presented to Council. The Finance Minister further stated that the council did not discuss the anti-profiteering clause in today’s meeting. Jaitley also said that the council will be approving its C-GST, I-GST and S-GST laws at its next meetings and after that there will be another major meeting to give approval to putting goods and services in different tax slabs. Following the 10th meeting of the GST council, comprising representatives of all states, sources had confirmed that the government will be bringing this bill in the next parliamentary session.
Earlier, the law ministry had sent the approved language and draft of the Model GST Law, which outlines how the new national sales tax will be levied on goods and services. The law ministry-approved draft and the language were discussed on Friday by the Council’s sub-committee comprising central and state officials.
The government is keen to roll out the new regime from July 1 but for that, it will have to get two laws – the Central GST (CGST) Act and Integrated GST (IGST) Act – approved by Parliament and each of the state legislatives have to pass the State GST (SGST) Act. The Model GST Law provides a common draft of CGST Act, SGST Act. Besides, there is an IGST law and Compensation law.
Officials said that the government is keen to pass benefit of lower taxes to consumers and so an anti-profiteering measure has been incorporated in the draft law. It provides for constituting an authority to examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him. For example, a good or service is to be levied with a GST of 5 percent.
But in course of supply, a 20 percent tax is paid, whose input credit is taken. So, the final consumer will be levied only 5 percent tax and not 25 percent, as the input credit of 20 percent is already taken, an official explained.
(With inputs from agencies)