New Delhi: Goods and Services Tax (GST) will come into effect from July 1. It will completely transform the indirect taxation landscape in the country involving both the Central and State levies. In a departure from the normal practice, GST will be administered together by the Centre and States.
To commemorate the occasion, a function will be held in the Central Hall of Parliament at midnight. President, Vice President, Prime Minister, Lok Sabha Speaker and Union Finance Minister, among other dignitaries, will be present.
According to official sources, GST will pave the way for realization of the goal of One Nation – One Tax – One Market. It will benefit all stakeholders namely industry, government and consumer. It will lower the cost of goods and services, boost economy and make products and services globally competitive, giving a major boost to ‘Make in India’ initiative.
Under the GST regime, exports will be zero-rated in entirety unlike the present system where refund of some of the taxes does not take place due to fragmented nature of indirect taxes between the Centre and the States.
GST is largely technology driven and will reduce the human interface to a great extent. GST is expected to improve ease of doing business in India, the sources added.
Journey of GST after the Constitutional Amendment Act, 2016
The GST Council was constituted on September 15, 2016, after the 101th Constitutional Amendment Act, 2016, came into existence.
Since its formation, the council has held 18 meetings. The Finance Ministers of all states or their representative along with state and central government officials participated in these extensive meetings and formulated the law and procedure to implement this historic tax reform. It was a mammoth task involving 27000+ man hours of intensive work. More than 200 meetings of the officers of the Centre and States took place in different parts of the country to expedite implementation of GST.
In a short span of time, the GST council has cleared GST laws, GST Rules, Tax rate structure including Compensation Cess, Classification of goods and services into different rate slabs, exemptions, thresholds, structure for tax administration, etc. All the decisions of Council were taken with consensus.
On March 29, Union Finance Minister tabled four Goods and Services Tax (GST) Bills for consideration and passage in the Lok Sabha namely The Central Goods and Services Tax (CGST) Bill, 2017, The Integrated Goods and Services Tax (IGST) Bill, 2017, The Union Territories Goods and Services Tax (UTGST) Bill, 2017 and the GST (Compensation to States) Bill, 2017. They were passed by the Lok Sabha on March 29 and the Rajya Sabha on April 6.
The GST Council has decided the final structure of GST as follows:
• The threshold limit for exemption from levy of GST is Rs. 20 lakh for the States except for the Special Category, where it is Rs 10 Lakh.
• A four slab tax rate structure of 5%, 12%, 18% and 28% has been adopted for GST.
• A cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28% for payment of compensation to the states.
• The threshold for availing the Composition scheme is Rs. 75 lakh except for special category States where it is Rs. 50 lakh and they are required to file quarterly returns only. Certain categories of manufacturers, service providers (except restaurants) are out of the Composition Scheme.
Other Important Features of GST
• GST envisages all transactions and processes to be done only through electronic mode, to achieve non-intrusive administration. This will minimise tax payers physical interaction with the tax officials.
• GST provides for the facility of auto-populated monthly returns and annual return.
• It also facilitates the taxpayers by prescribing grant of refund within 60 days, and provisional release of 90% refund to exporters within 7 days. Further facilitation measures include interest payment if refund is not sanctioned in time, and refund to be directly credited to bank accounts.
• Comprehensive transitional provisions for ensuring smooth transition of existing taxpayers to GST regime, credit for available stocks, etc.
• Other provisions include system of GST Compliance Rating, etc.
• Anti-profiteering provisions for protection of consumer rights.
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