GST Council clears Central, Integrated GST Laws

The GST Council has fixed a four-tier tax system under GST. The Centre wants to bring these bills in the second half of the Budget session that starts next week as it wants to stick to the July 1 deadline to rollout GST. For instance, if 18 percent is the GST rate on an item, the states and the Centre will get 9 percent each called the CGST and SGST rates. On the hand, J&K Finance Minister Haseeb Drabu said that "some minor editorial changes" are required in the legislations and they have to be sent to the legal department afresh.

The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon past year for the moment, but is only a provision being built into the model law to take care of contingencies in future, two officials in the know told PTI. "The GST Council has chose to keep the upper cap higher at 20 percent so that in future in case of need to hike tax rate, there is no need to approach Parliament for a nod and the GST Council can raise it", the officials said.

The GST Council, headed by finance minister Arun Jaitley and comprising representatives of all states, is to take up the model laws at its next meeting.

Officials said this will now be changed to say the rate will not exceed "20 percent". Under the present service tax law, service providers have the option to obtain a single centralised registration for paying service tax (which is levied and collected by the Central government only).

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Successive governments have pushed to implement the GST, which will create a common market and help lower the tax burden, shore up government revenues, temper inflation and boost economic growth by 1-2 percentage points, analysts say.

This would make things easier as the Council will not have to approach parliament again in case it wanted to increase peak rate in future.

The S-GST law will need to be approved by state assemblies, and its draft will soon be circulated among the states, the finance minister continued.

The Council had previously cleared the compensation draft bill and today's approval means that only two more laws - the State GST (S-GST) and Union Territory (UT-GST) - remain to be considered. The UT-GST will also go to Parliament for approval.

  • Desiree Holland