Four Bills aimed at rolling out the much-awaited Goods and Services Tax (GST) and usher in landmark tax reforms in the country were tabled in the lok Sabha on Monday. Finance Minister Arun Jaitley introduced the four Bills on GST, providing for a maximum GST rate of 40 per cent, an anti- profiteering authority and arrests for evading taxes. The Bills are Central GST, Integrated GST, Union Territory GST and the Compensation law to implement the one-nation one-tax regime.
Central Goods and Service Tax or CGST Bill will amalgamate all the indirect Central Government levies like sales tax, service tax, excise duty, additional customs duty (countervailing duty), special additional duty of customs, surcharges and cesses. CGST provides for a maximum tax of 20 per cent.
Actual rates would however be a four-tier tax structure of 5, 12, 18 and 28 per cent as approved by the GST Council. The peak rate of 40 per cent is only an enabling provision for financial emergencies. A Union Territory GST Bill will take care of taxation in UTs of Chandigarh, Andaman and Nicobar Islands, lakshadweep, Dadra and Nagar Haveli and Daman and Diu.
A Bill on Integrated-GST -- to be levied and collected by the Centre on inter-State supply of goods and services, was also introduced in the lok Sabha. The IGST law provides for a maximum tax of 40 per cent.
The fourth legislation called GST (Compensation to States) Bill, 2017 that provides for mechanism for making good any loss of revenue of States from introduction of GST in first five years of rollout. These four bills will be taken up for discussion together.
Another mirror legislation of CGST, called State-GST, will amalgamate all State taxes like VAT, will be levied by States and has to be approved by all State legislatures. Together, CGST and SGST will enable the GST incidence of 40 per cent. GST will not apply to Jammu and Kashmir.
The CGST Bill also provides for e-commerce companies to collect tax at source at a rate not exceeding 1 per cent of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portals.
To protect small businesses, the CGST provides for a tax of no more than 1 per cent of turnover for manufacturers with annual turnover of up to Rs50 lakh. A 2.5 per cent tax is prescribed for suppliers. To ensure that benefit of lower taxes is passed on to consumers, an anti-profiteering measure has been incorporated in the law.
It provides for constituting an Authority to examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.
The law provides for arrest, ordered by not less than a Tax Commissioner, in case of suppression of any transaction or evading taxes. A person convicted is punishable upto 5 years of imprisonment or fine.
The Compensation law provides for levy of cess on top of the peak rate of approved tax (28 per cent presently) on paan masala, tobacco, aerated waters, luxury cars and coal to create a non-lapsable fund for compensating States.
As Jaitley introduced the Bills in the lok Sabha, Opposition, Congress and TMC, protested saying it was not listed in Monady’s agenda for the House. Minister of State for Parliamentary Affairs S S Ahluwalia said the Bills were uploaded on the government website on the midnight of Friday.
The Opposition MPs, however, took strong objection saying how could the Government expect the members to check the website at midnight and why the issue was not discussed at the meeting of Business Advisory Committee last week. Dism-
issing the Opposition objec-tions, Spaker Sumitra Mahajan said the Bills were sent to the MPs on Saturday morning and there was nothing wrong in these being tabled.