GST Constitutional Amendment Bill passed in RajyaSabha with Key amendments
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 19-8-2016
Dear Professional Colleague,
The long-delayed Constitution (122nd Amendment) Bill, 2014 on GST (“122nd CAB” or “GST Bill”) has finally got the nod of the Rajya Sabha on August 3,2016, with the Government successfully stitching together a political consensus on the GST Bill, to pave the way for much-awaited roll out of the landmark tax reform that will create a common market of 1.25 billion people.GST, is the biggest indirect tax reform since independence, is aimed at dismantling Inter-State barriers to trade in goods and services by subsuming a slew of around 17 indirect taxes viz. Excise Duty, Service Tax, VAT, CST, Luxury tax, Entertainment Tax, Entry Tax, Octroi, etc.
The Rajya Sabha has unanimously passed the ambitious GST Bill as amended with over 2/3 majority. The motion for the constitutional amendment for the GST Bill has b
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gust 2, 2016, has circulated to MPs, the amendments it has proposed in the GST Bill to enable implementation of GST. These proposed amendments importantly includes dropping of 1% additional tax on Inter-State Sale of goods and a definite provision in the statute for 100% compensating the States for any revenue loss for 5 years, amongst others.
With these official amendments, the Government partially met the demands of the Congress party which has been blocking the bill in the Rajya Sabha and this enabled the 122nd CAB to finally see the light of the day.
We are summarising herewith key amendments to the GST Bill, which was circulated to Rajya Sabha members on August 2, 2016, for easy digest:
Dropping 1% Additional taxon Inter-State supply of goods:
It is proposed to delete the provision under Clause 18 of the GST Bill.
Clause 18 of the GST Bill:The 122nd CAB proposes for levy of an Additional tax, not exceeding 1%, on Inter-State supply of goods in the course of Inter-State trade
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compensation to States for any loss of revenues arising on account of GST, for a period which may extend to five years, based on the recommendations of the GST Council. This implies that Parliament may decide to provide compensation to States and may also decide the time period for which it can provide such compensation, which may extend to five years.
Proposed amendment:The Parliament shall, by law, provide for compensation to States for any loss of revenues arising on account of GST, for a period which may extend to five years, based on the recommendations of the GST Council. This implies that the Parliament must provide compensation and compensation shall be provided for a maximum time period of five years.
Recommendation of the Select Committee, 2015:The Committee felt that there is no justification for substitution of the word 'may' with 'shall'. It, however, recommended that compensation should be provided for whole period of 5 years and accordingly proposed amended Clause 19 a
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le 279B i.e. provision for GST Dispute Settlement Authority, as was proposed in Constitution(115thAmendment) Bill, 2011.
Other changes:
Integrated Goods and Services Tax (“IGST”)
Clause 9: Apportionment of IGST i.e. Article 269A: It has been clarified that the States' share of the IGST shall not form a part of the Consolidated fund of India.
Clause 12: IGST term to be replaced with GST on suppliesin the course of inter-state trade or commerce: Under Clause 12 of the GST Bill, it was mentioned that the GST Council would make recommendations on the apportionment of the IGST. Since, the term IGST was not defined,it has been proposed to replace this term with “Goods and Services Tax levied on supplies in the course of inter-state trade or commerce under article 269A”.
Inclusion of CGST and IGST in tax devolution to States
It has been proposed that under Clause 10 of the GST Bill, CGST and the Centre's share of IGST will be distributed between the Centre and States.
Clause 10 of the
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es, Exempted goods and services, dual control& adjudication, etc.
Thereafter, two legislations-Central GST (CGST) and Integrated GST (IGST) will have to be passed by Parliament and a State GST (SGST) legislation by each of the State Legislatures.
Passage of the 122nd CAB in the Parliament is being seen as a big victory for the Narendra Modi government. The next big challenge for the Narendra Modi government is to get the States on board and get rest of the process going as quickly as possible to meet the deadline of implementation of GST by April 2017.
Video presentations on Model GST Law:
Watch the following videos to enrich knowledge regarding the key takeaways of the Model GST Law and the areas to be worked upon under the Model GST Laws – CGST, SGST and IGST:
• Presentation on Draft GST Law – Levy, Taxable Event: Supply, Taxable Person, Composition Scheme:https://www.youtube.com/watch?v=XrWHZMZf8GQ
• Highlights of Draft GST Law, 2016: https://www.youtube.com/watch?v=
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