Goods and Services Tax Bill

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The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2020
Emblem of India.svg
Parliament of India
A Bill further to amend the Constitution of India
Territorial extent India
Enacted by Lok Sabha
Date passed 6 May 2015
Enacted by Rajya Sabha
Date passed pending
Legislative history
Bill introduced in the Lok Sabha The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014
Bill citation Bill No. 192 of 2014
Bill published on 19 December 2014
Introduced by Arun Jaitley
Status: Pending

The Goods and Services Tax Bill or GST Bill (Hindi: वस्तु एवं सेवा कर विधेयक), officially known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India[1] from June 2016.[2] [3]

"Goods and Services Tax" would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the Central and State governments. Goods and services tax would be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method. This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity. Taxable goods and services are not distinguished from one another and are taxed at a single rate in a supply chain till the goods or services reach the consumer. Administrative responsibility would generally rest with a single authority to levy tax on goods and services.[4] Exports would be zero-rated and imports would be levied the same taxes as domestic goods and services adhering to the destination principle.

The introduction of Goods and Services Tax (GST) would be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25%-30%[5]

What changes there would be if India launches GST-“The tax rate under GST may be nominal or zero rated for the time being. It has been proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products,”. According to current minister for state for Finance Mr. Jayant Sinha, the government has assured states of compensation for any revenue losses incurred by them from the date of introduction of GST for a period of three years. [6]

As India is a federal republic GST would be implemented concurrently by the central government and by state governments.[7]

History in Parliament and Empowered Committee[edit]

In 2000, the Vajpayee Government set up a committee headed by Asim Dasgupta, the (Finance Minister of the Government of West Bengal) to design a model for GST and oversee IT preparations.[8][9]

An announcement[citation needed]was made by Palaniappan Chidambaram, the Union Finance Minister, during the central budget of 2006-07 dated 28th February 2006, that GST would be introduced from April 1, 2010 and that the Empowered Committee of State Finance Ministers, on his request, would work with the Central Government to prepare a road map for introduction of GST in India.

After this announcement, the Empowered Committee of State Finance Ministers decided to set up a Joint Working Group on May 10, 2007, with the Adviser to the Union Finance Minister and the Member-Secretary of Empowered Committee as co-convenors and the concerned Joint Secretaries of the Department of Revenue of Union Finance Ministry and all Finance Secretaries of the states as its members[citation needed]. The Joint Working Group, after intensive internal discussions as well as interaction with experts and representatives of Chambers of Commerce and Industry, submitted its report to the Empowered Committee on November 19, 2007.

This report was then discussed in detail in the meeting of Empowered Committee on November 28, 2007[citation needed]. On the basis of this discussion and the written observations of the states, certain modifications were made, and a final version of the views of Empowered Committee at that stage was prepared and was sent to the Government of India (April 30, 2008). The comments[citation needed] of the Government of India were received on December 12, 2008 and were duly considered by the Empowered Committee (December16, 2008).

Legislative history[edit]

Empowered Committee[edit]

In 2000, the Vajpayee government set up the Empowered Committee of State Finance Ministers with the aim of facilitating a switch from the existing national-level central excise duty and state-level sales tax model to a value added tax (VAT) model.[10] It was given the task of designing the GST model and overseeing the IT back-end preparedness for its rollout. The committee was headed by Asim Dasgupta, Minister for Finance and Excise of West Bengal.

Dr. APJ Abdul Kalam pointed out that although the indirect tax policy in India has been steadily progressing in the direction of the value added tax (VAT) principle since 1986, the existing system of taxation of goods and services still suffered from many problems and had suggested a comprehensive goods and services tax (GST) based on the VAT principle. GST system is targeted to be a simple, transparent and efficient system of indirect taxation as has been adopted by over 130 countries around the world. This involves taxation of goods and services in an integrated manner as the blurring of line of demarcation between goods and services has made separate taxation of goods and services untenable.[citation needed]

Frp, 1 April 2005 onwards, a number of states abandoned the sales tax and adopted a state-level VAT.[10]

Salient features of Goods and Service Tax, bill [11][edit]

The salient features about this legislation were first time discussed in its first discussion paper in year 2009. We will reproduce the features discussed here again to understand this act very well.

(i) The GST shall have two components: one levied by the Centre (hereinafter referred to as Central GST), and the other levied by the States (hereinafter referred to as State GST). Rates for Central GST and State GST would be prescribed appropriately, reflecting revenue considerations and acceptability. This dual GST model would be implemented through multiple statutes (one for CGST and SGST statute for every State).

However, the basic features of law such as chargeability, definition of taxable event and taxable person, measure of levy including valuation provisions, basis of classification etc. would be uniform across these statutes as far as practicable.

(ii) The Central GST and the State GST would be applicable to all transactions of goods and services made for a consideration except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits.

(iii) The Central GST and State GST are to be paid to the accounts of the Centre and the States separately. It would have to be ensured that account-heads for all services and goods would have indication whether it relates to Central GST or State GST (with identification of the State to whom the tax is to be credited).

(iv) Since the Central GST and State GST are to be treated separately, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST.

(v) Cross utilization of ITC between the Central GST and the State GST would not be allowed except in the case of inter-State supply of goods and services under the IGST model which is explained later.

(vi) Ideally, the problem related to credit accumulation on account of refund of GST should be avoided by both the Centre and the States except in the cases such as exports, purchase of capital goods, input tax at higher rate than output tax etc. where, again refund/adjustment should be completed in a time bound manner.

(vii) To the extent feasible, uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST.

(viii) The administration of the Central GST to the Centre and for State GST to the States would be given. This would imply that the Centre and the States would have concurrent jurisdiction for the entire value chain and for all taxpayers on the basis of thresholds for goods and services prescribed for the States and the Centre.

(ix) The present threshold prescribed in different State VAT Acts below which VAT is not applicable varies from State to State. A uniform State GST threshold across States is desirable and, therefore, it is considered that a threshold of gross annual turnover of Rs.10 lakh both for goods and services for all the States and Union Territories may be adopted with adequate compensation for the States (particularly, the States in North-Eastern Region and Special Category States) where lower threshold had prevailed in the VAT regime. Keeping in view the interest of small traders and small scale industries and to avoid dual control, the States also considered that the threshold for Central GST for goods may be kept at Rs.1.5 crore and the threshold for Central GST for services may also be appropriately high. It may be mentioned that even now there is a separate threshold of services (Rs. 10 lakh) and goods (Rs. 1.5 crore) in the Service Tax and CENVAT.

(x) The States are also of the view that Composition/Compounding Scheme for the purpose of GST should have an upper ceiling on gross annual turnover and a floor tax rate with respect to gross annual turnover. In particular, there would be a compounding cut-off at Rs. 50 lakh of gross annual turn over and a floor rate of 0.5% across the States. The scheme would also allow option for GST registration for dealers with turnover below the compounding cut-off.

(xi) The taxpayer would need to submit periodical returns, in common format as far as possible, to both the Central GST authority and to the concerned State GST authorities.

(xii) Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax, facilitating data exchange and taxpayer compliance.

(xiii) Keeping in mind the need of tax payer’s convenience, functions such as assessment, enforcement, scrutiny and audit would be undertaken by the authority which is collecting the tax, with information sharing between the Centre and the States.

National proposals[edit]

A proposal to introduce a national-level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07. Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC). In April, 2008, the EC submitted a report, titled "A Model and Roadmap for Goods and Services Tax (GST) in India" containing broad recommendations about the structure and design of GST. In response to the report, the Department of Revenue made some suggestions to be incorporated in the design and structure of proposed GST. Based on inputs from GoI and States, The EC released its First Discussion Paper on Goods and Services Tax in India on the 10th of November, 2009 with the objective of generating a debate and obtaining inputs from all stakeholders.

A dual GST module for the country has been proposed by the EC. This dual GST model has been accepted by centre. Under this model GST have two components viz. the Central GST to be levied and collected by the Centre and the State GST to be levied and collected by the respective States. Central Excise duty, additional excise duty, Service Tax, and additional duty of customs (equivalent to excise), State VAT, entertainment tax, taxes on lotteries, betting and gambling and entry tax (not levied by local bodies) would be subsumed within GST.

In order to take the GST related work further, a Joint Working Group consisting of officers from Central as well as State Government was constituted. This was further trifurcated into three Sub-Working Groups to work separately on draft legislations required for GST, process/forms to be followed in GST regime and IT infrastructure development needed for smooth functioning of proposed GST. In addition, an Empowered Group for development of IT Systems required for Goods and Services Tax regime has been set up under the chairmanship of Dr. Nandan Nilekani.

Parliamentary motions[edit]

A draft of the Constitutional Amendment Bill has been prepared and has been sent to the EC for obtaining views of the States.Gst Has its salient features for taxex made on goods.

The Goods and Service Tax Bill or GST Bill, officially known as "The Constitution (122nd Amendment) Bill, 2014", would be a Value added Tax (VAT) to be implemented in India, from April 2016. GST stands for "Goods and Services Tax", and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments. It is aimed at being comprehensive for most goods and services.[12][13]

Tax-Rate under the proposed GST[edit]

The tax-rate under the proposed GST would fall, but the number of assesses would increase by 5-6 times.[14] Although rates would come down, tax collection would go up due to increased buoyancy.[15] The government is working on a special IT platform for smooth implementation of the proposed Goods and Services Tax (GST). The IT special purpose vehicle (SPV) christened as GST N (Network) will be owned by three stakeholders—the centre, the states and the technology partner NSDL, then Central Board of Excise and Customs (CBEC) Chairman S Dutt Majumdar said while addressing a "National Conference on GST". On the possibility of rolling out GST, he said, "There was no need for alarm if GST was not rolled out in April 1, 2012.[13]


Renewed GST concerns[edit]

With heterogeneous State laws on VAT, the debate on the necessity for a GST has been reignited[16][citation needed]. The best GST systems across the world use a single GST, while India has opted for a dual-GST model. Critics claim that CGST, SGST and IGST are nothing but new names for Central Excise/Service Tax, VAT and CST, and hence GST brings nothing new to the table. The concept of value-added has never been utilised in the levy of service, as the Delhi High Court is attempting to prove in the case of Home Solution Retail, while under Central Excise the focus is on defining and refining the definition of manufacture, instead of focusing on value additions. The Revenue can be very stubborn when it comes to refunds, as the Maharashtra Government proves, and software entities that applied for refunds on excess service tax paid on inputs discovered[citation needed].[13]


The all-new Cenvat Credit Rules, 2014 do little to clarify eligibility for input credits, by using general terms such as "any goods which have no relationship whatsoever with the manufacture of a final product" and "services used primarily for personal use or consumption of any employee"[citation needed].[17]

See also[edit]

References[edit]

  1. ^ http://goodsandservicetax.com/gst/showthread.php?79-Executive-Summary-(Report-of-Task-Force-on-Implementation-of-GST)&goto=nextnewest
  2. ^ "GST Council not to Disturb or Alter Primacy of Legislature in the area of Taxation FM - Shri Mukherjee calls Upon the State Finance Ministers to make all efforts to meet the timelines of Introduction of GST by april 2011 - FM s Address at meeting with Empowered Committee of state Finance Ministers". taxmanagementindia.com. 
  3. ^ Agrawal, Puneet (2016-07-11). "Analysis of 122nd Constitutional Amendment Bill". GST LAW IN INDIA. Athena Law Associates. Retrieved 2016-07-19. 
  4. ^ http://www.idtc.icai.org/download/BGM-on-GST-march-15.pdf
  5. ^ "gstbharat.co.in". google.com. 
  6. ^ "'States on Board, GST Launch from April '16'". newindianexpress.com. 
  7. ^ http://www.123gst.com/introductory-resources/first-discussion-paper-on-goods-and-services-tax-in-india/frequently-asked-questions-faqs/09-dual-gst
  8. ^ "Modi to quit as GST panel head today". The Telegraph (Calcutta, India). 16 June 2013. Retrieved 17 June 2013. 
  9. ^ "Post Sushil Modi, GST Committee will have to find new chief". The Times Of India. 16 June 2013. Retrieved 17 June 2013. 
  10. ^ a b Reporter, B. S. "Race for GST committee chairman hots up". business-standard.com. 
  11. ^ "Goods and Service tax - GST". hubco.in. Retrieved 2016-06-15. 
  12. ^ "GST Journey So Far, Know GST history - GST India- GSTSEVA.COM". gstseva.com. 22 May 2015. 
  13. ^ a b c "Goods and Service Tax - JBGST.in". jbgst.in. 
  14. ^ "GST in India". businesssetup.in. 
  15. ^ "Business Finance, Stock Market, Quotes, News, Sensex, Nifty - NDTV Profit". ndtv.com. 
  16. ^ Nair, Remya. "Rajya Sabha panel to hear GST concerns on 16 June". Retrieved 2015-10-07. 
  17. ^ Lavi, Mohan. "Renewed GST concerns". The Hindu Business Line. Kasturi & Sons Ltd. Retrieved 24 August 2015. 

External links[edit]