NEW DELHI: Prime Minister Narendra Modi has called a meeting of his council of ministers today to brief them ahead of a seven-hour debate on Wednesday in the Lok Sabha on the government’s mega reform, the Goods and Services Tax. Four bills crucial to the implementation of GST will be passed at the end the debate;
they were introduced in the lower house yesterday by union finance minister Arun Jaitley. The government needs to ensure that these bills are approved by Parliament in the current Budget session to be able to meet a July 1 deadline for the launch of GST, a unified tax regime that subsumed a slew of indirect taxes at the centre and in states.
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1 – 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.
2 – 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.
3 – The Cabinet approval came after the powerful GST Council, headed by Mr Jaitley and with state finance ministers as members, 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.
4 – The BJP-led government wants to quickly push the bills through in the Lok Sabha, where it has a commanding majority, as it wants enough time to move them in the Rajya Sabha and bring back to the Lok Sabha any amendment suggested by the Upper House.
5 – The bills are all money bills, which means that the Rajya Sabha’s suggestions are not binding on the Lok Sabha, which can choose to accept or reject them. The government however 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.
6 – 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.
7 – The opposition said it was studying the fine print of the bill, focusing on the division of right to tax between the Centre and the states. Since GST will subsume indirect taxes levied by both the Centre and the states, the Central GST or CGST and State GST or SGST Bills lay out how the new tax will be shared between the two. The SGST will include state-specific exemptions.
8 – There will be four tax slabs of five, 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.
9 – The compensation law has been prepared to give legislative backing to the Centre’s promise to compensate the states for five years for revenue losses from the implementation of GST.
10 – The integrated GST (I-GST) deals with taxation on inter-state movement of goods and services. The Union Territory GST (UT-GST) Bill covers taxation in Union Territories. GST is expected to boost the rate of economic growth by about 0.5 percentage points, broaden the revenue base and cut compliance cost for firms.