Dear Professional Colleague,
The Union Cabinet, on Wednesday, December 17, 2014 has approved the Constitutional Amendment Bill on Goods and Services Tax (“GST”), taking a step towards the rollout of an ambitious Indirect Tax reform to rationalise Central and State Indirect Taxes into a harmonised GST expecting to raise revenues and boost growth.
The Government aims to implement GST by April 1, 2016. The Government hopes to introduce the Bill in the current winter session of the Parliament. The Bill needs to be approved by a 2/3rd majority of the House. After this, it needs to be endorsed by at least half of the State Assemblies (15).
Major points of agreements are as under:
a. The Petroleum products have been included in GST but will be taxed at zero rate for three years, implying that States will be able to tax these for that period.
b. Alcohol and Tobacco would be kept out of GST.
c. Entry tax to be included in GST, thereby making it a comprehensive tax.
d. The Centre has agreed to compensate the States for revenue loss for five years. Further, the Centre will provide full compensation for the first three years and then progressively reduce it.
e. The States will be having substantial representation in the proposed GST council, where they will be having 2/3rd of the voting power.
The stalemate between the Centre and the States was broken after Finance Minister Mr. Arun Jaitley held a series of meetings over the past few days with State Finance Ministers to address their concerns including compensation. He had also announced compensation of Rs. 11,000 crore to make up for the cut in the Central Sales Tax (CST) rate to 2% from 4% and assured an additional sum in the coming budget. The issue of CST compensation had been a key irritant.
The Finance Minister has further said that it would be important for all stake holders to ensure GST covers all transactions including petroleum, real estate and electricity in due course, if not immediately. Thus even if some of the products / services are kept out of GST initially, we may expect them to be included within the purview of GST in the course of time.
With the expectation that the Bill will now be tabled in the Parliament in the current winter session, we can hope that GST regime may get implemented from April 2016.
Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.
Thanks & Best Regards
Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
A2Z TAXCORP LLP
Tax and Law Practitioners
Delhi:
Flat No. 34B, Ground Floor,
Pocket – 1, Mayur Vihar Phase-1
Delhi – 110091 (India)
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H. No. 908, Sector 12-A,
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Kolkata:
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Email: bimaljain@hotmail.com
Web: www.a2ztaxcorp.com
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