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Published: Fri, March 17, 2017
Economy | By Melissa Porter

Council approves State GST and Union Territory GST law, says Arun Jaitley

Council approves State GST and Union Territory GST law, says Arun Jaitley

Clearing the decks for introduction of a major indirect tax reform in Parliament, the Centre and States on Thursday approved draft Bills for implementing the goods and services tax (GST) in States and Union Territories (UTs).

Government sources said the GST legislation is likely to be taken up as money bills during the budget session, which restarted on 9 March after a month-long recess.

The Council also capped 15 per cent cess as upper limit on top of the peak GST rate of 28 per cent which will be levied on luxury goods and aerated drinks. "Supporting GST laws will now be taken to the Cabinet and then to Parliament for approval", said the Finance Minister, adding that the GST Council will further meet on March 31 for framing of rules for GST regime".

GST 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. For the legislative rollout of the GST, approval from the Lok Sabha and Rajya Sabha will be required.

The GST Council has approved rules and regulations on registration, payments, refund, invoice and returns, but these may require minor corrections, Jaitley said.

Also, the council agreed on capping cess on demerit goods - so-called sin and luxury products - such as cigarettes, alcohol, colas and cars at 15%.

The panel today also cleared the State-GST (S-GST) and Union Territory GST (UT-GST) legislations, Jaitley said while briefing reporters on the deliberations at the 12th meeting of the all-powerful GST Council. "We will maintain roughly the same leek of tax incidence as it applies today", a finance ministry official said. The GST Council had a year ago decided on four tax slab rates, 5 per cent, 12 per cent, 18 per cent and 28 per cent, with another "zero tax rate" on several items that approximately constitute half of the consumer price index basket including food grains. While state legislatures will ratify the SGST provisions.

Apart from tobacco, aerated drinks, luxury cars and environment cess, the GST Council has kept the option open for levy of 15 per cent cess on "all other supplies".

The GST Council will consider and approve those regulations in the next meeting on March 31.

The council also decided to make the tax treatment of items produced in special economic zones (SEZs) similar to that on exports.

Any supply made to SEZ will be zero rated. "They can do it either under bond and not pay tax or they can pay IGST and take refund", the official said.

"The cess is to be levied on four or five commodities and the caps have been approved by the Council".

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