Dated:- 19-12-2014 – Finance Minister tabled the Constitution Amendment Bill in the Lok Sabha today with respect to Goods and Services Tax The Union Cabinet approved on 17th December,2014 the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country. The Union Finance Minister Shri Arun Jaitley introduced the said Bill in the Lok Sabha today. The proposed amendments in the Constitution will confer powers both to the Parliament and State legislatures to make laws for levying GST on the supply of goods and services in the same transaction. GST will simplify and harmonise the indirect tax regime in the country. GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one state to another in the chain of value addition, there is an in-built mechanism in the design of GST that woul
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nder the Constitution. • Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years. A provision in this regard has been made in the Amendment Bill (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year). The proposed GST has been designed keeping in mind the federal structure enshrined in the Constitution and will have the following important features: • Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. • At the State level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST. • All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. Petroleum
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on-based tax. All SGST on the final product will ordinarily accrue to the consuming State. • GST rates will be uniform across the country. However, to give some fiscal autonomy to the States and Centre, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST. • It is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. This tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate. AS INTRODUCED IN LOK SABHA Bill No. 192 of 2014* THE CONSTITUTION (ONE HUNDRED AND TWENTY-SECOND AMENDMENT) BILL, 2014 A BILL further to amend the Constitution of India. BE it enacted by Parliament in the Sixty-fifth Year of the Republic of India as follows:- Short title and commencement. 1. (1) This Act may be called the Constitutio
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trade or commerce. Explanation.-The provisions of this article, shall, in respect of goods and services tax referred to in clause (5), of article 279A, take effect from the date recommended by the Goods and Services Tax Council. . Amendment of article 248. 3. In article 248 of the Constitution, in clause (1), for the word Parliament , the words, figures and letter Subject to article 246A, Parliament shall be substituted. Amendment of article 249. 4. In article 249 of the Constitution, in clause (1), after the words with respect to , the words, figures and letter goods and services tax provided under article 246A or shall be inserted. Amendment of article 250. 5. In article 250 of the Constitution, in clause (1), after the words with respect to , the words, figures and letter goods and services tax provided under article 246A or shall be inserted. Amendment of article 268. 6. In article 268 of the Constitution, in clause (1), the words and such duties of excise on medicinal and toilet
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ds, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. (2) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. . Amendment of article 270. 10. In article 270 of the Contitution,- (i) in clause (1), for the words, figures and letter articles 268, 268A and article 269 , the words, figures and letter articles 268, 269 and article 269A shall be substituted; (ii) after clause (1), the following clause shall be inserted, namely:- (1A) The goods and services tax levied and collected by the Government of India, except the tax apportioned with the States under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2). . Amendment of article 271. 11. In
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d to in sub-clause (c) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide. (4) The Goods and Services Tax Council shall make recommendations to the Union and the States on- (a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to, or exempted from the goods and services tax; (c) model Goods and Services Tax Laws, principles of levy, apportionment of Integrated Goods and Services Tax and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (g) special provi
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n of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:- (a) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting. (10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of- (a) any vacancy in, or any defect in, the constitution of the Council; or (b)any defect in the appointment of a person as a member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case. (11) The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its recommendation. . Amendment of article 286. 13. In article 286 of the Constitution,-
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8, 269, 269A and article 279A includes a Union territory with Legislature; . Amendment of article 368. 15. In article 368 of the Constitution, in clause (2), in the proviso, in clause (a), for the words and figures article 162 or article 241 , the words, figures and letter article 162, article 241 or article 279A shall be substituted. Amendment of Sixth Schedule 16. In the Sixth Schedule to the Constitution, in paragraph 8, in sub-paragraph (3),- (i) in clause (c), the word and occurring at the end shall be omitted; (ii) in clause (d), the word and shall be inserted at the end; (iii) after clause (d), the following clause shall be inserted, namely:- (e) taxes on entertainment and amusements. . Amendment of Seventh Schedule. 17. In the Seventh Schedule to the Constitution,- (a) in List I – Union List,- (i) for entry 84, the following entry shall be substituted, namely:- 84. Duties of excise on the following goods manufactured or produced in India, namely:- (a) petroleum crude; (b) high
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her period recommended by the Council. 18. (1) An additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2). (2) The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. (3) The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (1). (4) Parliament may, by law, formulate the principles for determining the place of origin from where supply of go
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to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty: Provided that no such order shall be made after the expiry of three years from the date of such assent. (2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament. STATEMENT OF OBJECTS AND REASONS The Constitution is proposed to be amended to introduce the goods and services tax for conferring concurrent taxing powers on the Union as well as the States including Union
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al Surcharges and Cesses so far as they relate to the supply of goods and services; (b) subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling; and State cesses and surcharges in so far as they relate to supply of goods and services; (c) dispensing with the concept of declared goods of special importance under the Constitution; (d) levy of Integrated Goods and Services Tax on inter-State transactions of goods and services; (e) levy of an additional tax on supply of goods, not exceeding one per cent. In the course of inter-State trade or commerce to be collected by the Government of India for a period of two years, and assigned to the States from where the supply originates; (f) conferring concurrent power upon Parliament and the State Legislatures to make laws governing good
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ted by each State Government. It is further provided that every decision of the Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting in accordance with the following principles:- (A) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and (B) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast in that meeting. Illustration: In terms of clause (9) of the proposed article 279A, the weighted votes of the members present and voting in favour of a proposal in the Goods and Services Tax Council shall be determined as under:- WT = WC+WS Where, WT = WC+WS × SF Wherein- WT = Total weighted votes of all members in favour of a proposal. WC = Weighted vote of the Union = i.e., 33.33% if the Union is in favour of the proposal and be taken as 0 if, Union is not in favour of a proposal. WS = Weighted votes of the States
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cle 274, of the Constitution of India, the introduction of the Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 in Lok Sabha and also the consideration of the Bill. FINANCIAL MEMORANDUM Clause 12 of the Bill seeks to insert a new article 279A in the Constitution relating to Constitution of Goods and Services Tax Council. The Council shall function under the Chairmanship of the Union Finance Minister and will have the Union Minister of State incharge of Revenue or Finance as member, along with the Minister in-charge of Finance or Taxation or any other Minister nominated by each State Government. 2. The creation of Goods and Services Tax Council will involve expenditure on office expenses, salaries and allowances of the officers and staff. The objective that the introduction of goods and services tax will make the Indian trade and industry more competitive, domestically as well as internationally and contribute significantly to the growth of the economy, such additional
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