Finance Minister Arun Jaitley today introduced in Lok Sabha four bills on Goods and Services Tax, providing for a maximum GST rate of 40 per cent, an anti- profiteering authority and arrests for evading taxes.
CGST bill is introduced 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.
What is GST?
Goods and Services Tax is a comprehensive tax levied on supply of goods and services across India. GST (Goods and Services Tax) is a Destination based Consumption tax, and the taxable event is Supply as against the existing taxable events of sale, manufacture or provision of service. Draft model GST law was first made public in June 2016, after which the Revised Draft Law was made public on 26th November 2016.
Understand the Important Highlights of GST Bill:
- CGST provides for a maximum tax of 20 percent.
2. There will be four tax slabs of 5, 12, 18 and 28 per cent, plus a levy on taxes on items like cars, aerated drinks and tobacco products to compensate states for any revenue losses in the first five years. The peak rate of 40 percent is only an enabling provision for financial emergencies.
3. A new clause has been introduced in the IGST to permit refund of taxes to foreign tourists for products bought during stay. The tax refund will be on the lines of VAT refund in UK.
4. The bills – Central GST, Integrated GST, Union Territories GST and the compensation law – were approved by the cabinet earlier this month. Once these get Parliament’s approval, a State GST bill will be presented in state assemblies.
5. A Union Territory GST Bill will take care of taxation in UTs of Chandigarh, Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu.
6. Earlier GST council cleared the five draft laws, ironing out the remaining differences between the states and the Centre on how to implement the national tax that will replace a slew of indirect taxes.
7. The CGST Bill also provides for e-commerce companies to collect tax at source at a rate not exceeding 1 percent of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portals.
8. To protect small businesses, the CGST provides for a tax of no more than 1 percent of turnover for manufacturers with annual turnover of up to Rs 50 lakh. A 2.5 percent tax is prescribed for suppliers.
9. To ensure that benefit of lower taxes is passed on to consumers, an anti-profiteering measure has been incorporated in the law.
10. 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.
11. The law provides for arrest, ordered by no less than a Tax Commissioner, in case of suppression of any transaction or evading taxes. A person convicted is punishable by up to 5 years of imprisonment and/or fine.
12. The Compensation Law provides for levy of cess on top of the peak rate of approved tax (28 per cent presently) on paan masala, tobacco, aerated waters, luxury cars and coal to create a non-lapsable fund for compensating states.
13. Such cess has been capped at 135 percent in case of paan masala, Rs 4,170 per thousand cigarettes sticks or 290 percent ad valorem, Rs 400 per tonne on coal and 15 percent on aerated water and luxury cars.
14. Compensation will be paid bi-monthly and the amount due would be calculated after considering a 14 percent growth rate in taxes over the base year of 2015-16.
15. The Central Government wants a full debate in the Rajya Sabha to stave off criticism by the opposition that it is trying to circumvent the upper house, where it is in a minority.
All this has to be done before April 12, when the Budget session of Parliament ends. GST has already missed an earlier deadline of April 1 for roll-out.
