Ahead of big GST debate in Parliament tomorrow, PM Narendra Modi meets his ministers, BJP MPs
Prime Minister Narendra Modi is meeting his Cabinet colleagues and senior party leaders today ahead of Wednesday's crucial debate in Parliament over the Goods and Services Tax (GST). The Modi government wants the GST Bill to roll out by the July 1 deadline. Conceptualised for the first time in 1999, GST is being described as the biggest taxation reform since Independence.
HERE'S WHAT YOU NEED TO KNOW:
Finance Minister Arun Jaitley on Tuesday (March 27) introduced in the Lok Sabha four GST bills that provide for a maximum tax rate of 40 per cent, an anti-profiteering body and arrests for evading taxes in a bid to overhaul India's fragmented indirect tax system.
With this, rollout of GST entered the last lap and its passage by Parliament will pave the way replacing the current patchwork of national, state and local levies with a single, unified value added tax system and integrating India as one market.
From providing single registration to manufacturers and suppliers of goods and services to self-assessment of tax, the new tax regime provides easier administration and some degree of self policing - a buyer can only claim a refund if the seller issues an invoice.
Besides creating an anti-profiteering authority that will see the benefit of lower taxes is passed on to consumers, the new legislations provide for setting up a Consumer Welfare Fund.
Jaitley introduced the Central Goods and Service Tax or CGST bill which will amalgamate all the indirect central government levies like sales tax, service tax, excise duty, additional customs duty (Countervailing Duty), special additional duty of customs, surcharges and cesses.
CGST provides for a maximum tax of 20 per cent. A similar tax will be levied by states through a separate State-GST law which is not part of the legislations introduced in the Lok Sabha today but would have to be brought by all states in their assemblies.
Actual rates would, however, be a four-tier tax structure of 5, 12, 18 and 28 per cent as approved by the GST Council. The peak rate of 40 per cent is only an enabling provision for financial emergencies.
A bill on Integrated-GST - to be levied and collected by the Centre on inter-state supply of goods and services - was also introduced in the Lok Sabha.
The IGST law provides for a maximum tax of 40 per cent. Jaitley also introduced a fourth legislation called GST (Compensation to States) Bill, 2017 that provides for a mechanism for making good any loss of revenue of states from introduction of GST in first five years of rollout.
The GST Council, comprising Union Finance Minister and his state counterparts, has already approved the 4 legislations over a series of 12 meetings. The Council will meet again on March 31, and will finalise the rules and formats for the new indirect tax regime.