GST Council movements on track for successful launch on July 01, 2017: All GST laws cleared
The pace at which the government is moving ahead to ensure implementation of GST by 1st July 2017 is commendable.
With the Goods and Services Tax (GST) council approving the remaining two of the five bills concerning the tax regime on Thursday, India’s most ambitious indirect-tax reform is likely to roll out from July 1. The GST Council capped the proposed cess on aerated drinks and luxury automobiles at 15% and on cigarettes at 290%. It also approved the State GST and Union Territory GST laws.
Finance Minister Arun Jaitley said that the Council has kept a “little” headroom for future exigencies and the actual cess imposed on demerit goods may be lower than the cap. The cess will help create a corpus for compensating states for any loss of revenue from GST implementation in the first five years.
Giving an example, he said that if a luxury car is subjected to a total tax of 40 percent presently, a GST of 28 percent plus 12 percent cess can be levied under the GST regime to keep the tax incidence at the same level.
While the cap on luxury cars and aerated drinks has been set at 15%, the cess on pan masala has been capped at 135 percent ad valorem.
Tobacco cess has been capped at Rs 4,170 per 1,000 sticks or ad valorem of 290 percent, which ever is higher. Cess on coal will be capped at Rs 400 per ton. The decision of levying cess on bidis has been left for future GST council meetings.
The supporting SGST and UTGST legislations together with GST Compensation Law will now go to the Cabinet for a formal approval before being presented in the Parliament. The ongoing Budget session ends on April 12.
Affirmation to these laws along with amendments in the CGST and IGST laws will make way for introduction of these legislations in Parliament and state assemblies as early as next week. Now it seems that we can expect a nationwide GST being rolled out from July 1.