Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 9-4-2016 – GST Structure We are going to have a dual GST model. The Center and the States both, will levy GST on supply of goods and services. On Supply of goods and services in the course of Inter-state only Center will levy and collect taxes (IGST) which will be apportioned between Centre and States based on the recommendation of GST Council. The Center will have power to make place of supply rules in this regard. On supply of goods and services in the course of or International trade or commerce, states will not have any power to levy and collect taxes. For the first two years under GST (or as GST Council would recommend), 1% additional tax apart from GST will be levied on inter-state sale of goods which will be assigned to the state of origin of supply of goods. The rules regarding the place of origin will be formed by the Parliament. The Central Government would also have power to grant exemption to any goods from
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ay of notification, after enactment. For enactment, it has to be passed by two-third majority by both houses of the Parliament of those present and simple majority of total membership of both houses. It has to be then approved by one-half of the state Governments, i.e. atleast 15 states. The said Bill has been passed by Lok Sabha on 6-5-2015 but could not be passed by Rajya Sabha. The same has now been referred to the select committee of the Rajya Sabha. Fate of Bill in Parliament It may be noted that 122nd Amendment Bill has since been passed by the Lok Sabha in May 2015 and was referred to the Select Committee by Rajya Sabha on 12.05.2015 . Select Committee Report tabled in Rajya Sabha The Select Committee of Rajya Sabha has since tabled its report on GST Bill [i.e., Constitution (122nd) Amendment Bill, 2014] on 22.07.2015. While it endorsed majority of provisions, Congress, AIADMK and Left parties have opposed the GST Bill in its existing form. The Select Committee has suggested tha
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upon the GST Council, it would be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services. While construing above definition of Band one has to ensure that harmonized structure of GST rates must not be altered. The GST Council is also tasked with making recommendations on taxes that would be subsumed by the Central and State GST laws. It has been recommended that in the drafting of state GST laws, revenue sources of Panchayats, Municipalities etc. must be protected. State governments must also take measures to ensure adequate revenue flow to local bodies. Voting pattern The Committee found no merit in altering the voting pattern proposed in the Bill. Dispute Settlement Authority The Bill states that the GST Council would decide upon the modalities to resolve disputes. The Committee has stated that the creation of a separate dispute settlement authority would hamper the functioning of the GST
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f 1% additional tax in its present form may lead to cascading effect of taxes. Therefore, it has strongly recommended that following Explanation should be added for word supply : Supply: All forms of supply made for a consideration. Compensation to States The Bill proposed that the Parliament may compensate States for loss of revenue for a period which may be extended to five years. The Committee felt that there was no justification for substitution of the word may with shall . It, has however, recommended that compensation should be provided for whole period of five years. GST rates of banking services The Committee recommended that the GST rate for the banking industry should be minimum, to ensure international competitiveness. If possible, banking services could be outside the purview of GST. GSTN The GSTN is the comprehensive back end infrastructure network for the management of tax data and reporting of the GST. The Committee noted that the Non Government shareholding in GSTN is d
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rn in the GST Council, by giving states three- fourth of the weighted votes, and the centre one- fourth. Cabinet clears GST Amendments The Union Cabinet on 29.07.2015 approved changes suggested by a Rajya Sabha Select Committee to the Goods & Services Tax Amendment Bill , including compensating the States for five years for loss of revenue. Sharing of GST Revenue with States The State Governments have not objected to the proposed formula of the Union Government for sharing of revenue with States that would be earned as Goods and Service Tax (GST). Under the proposed GST regime, both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services for consideration. Centre would levy and collect Central Goods and Services Tax (CGST) and States would levy and collect the State Goods and Service Tax (SGST) on all transactions within a State. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on
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