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At GST meet, supporting legislation on agenda today

After a tussle between the Centre and the states over certain clauses in the draft Bills in the Goods and Services Tax (GST) Council meeting last month, the pending supporting legislation — Central GST (CGST), Integrated GST (IGST) and State GST (SGST) — will come up for discussion in the eleventh meeting of the Council on Saturday.

The finalisation of the draft Bills will be crucial for ensuring the timely introduction of these Bills in the second phase of the Budget session of Parliament, which is scheduled to commence on March 9.

The Council is slated to meet for two days, March 4 and 5, but if the Centre and the states are able to resolve all issues on the first day, the meeting is unlikely to be extended for the second day. On Friday, a technical team of officials from both Centre and the states met to discuss views of law ministry, which will be taken up for discussion in the Council’s meeting on Saturday.

Apart from CGST and IGST Bills, the Council will also do a clause by clause discussion on the SGST Bill, even though it is going to mirror the model GST law. The Council will take a final view on the taxation powers of states with respect to taxation rights over new registrants.

States have been asking that the division of administrative control over new registrants should be in the agreed upon formula of 90:10 below Rs 1.5 crore annual turnover threshold and 50:50 above the threshold, while Centre is of the view that the ratio of division should be decided only after achievement of a certain threshold by the new registrants after a certain period of time.

In its tenth meeting, the Council had approved only one draft law pertaining to compensation to states, while other Bills had got caught in a tussle between the states and the Centre. There were clashes between the Centre and the states over the drafting of minutes of the previous GST Council meeting, with a dispute over the minutes related to the wordings over the division of new registrants, permission to states to tweak division of taxpayers after consultation with the Centre and referral of disputes relating to imports and exports to the Centre.

Also, some state finance ministers had raised the issue of inclusion of certain terms in the minutes of the meeting, without them having been discussed in previous meeting. Subsequently, state officials had asked Centre to delete certain items from the minutes of the ninth meeting.

Once the Bills are cleared, the Council will decide fitment of goods and services into the four approved slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent. After the CGST law is approved by Parliament, the SGST law will have to be cleared by respective state legislatures.

GST, which will replace a plethora of Central and state taxes, is a consumption-based tax levied on sale, manufacturing and consumption on goods and services at the national level. Under it, CGST will be levied by the Centre, SGST by states and IGST on inter-state supply of goods and services.

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