GST from July 1

​New Delhi: Giving a clear roadmap for its implementation, Union Finance Minister Arun Jaitley on Saturday said the Goods and Services Tax (GST) was on track and July 1 was going to be the likely rollout date of the new indirect tax regime. He said the GST Council has also fixed a 5 per cent tax rate on small hotels and restaurants and approved draft of key supporting legislations to enable the rollout of the new indirect tax regime.

"It (GST) looks on track. Subject to Parliament approval, it looks like the possible date of implementation of GST is July 1," Jaitley said after the 11th GST Council meet concluded here. The Council approved the central cGST and integrated GST (iGST) draft laws on Saturday. "Consensus on cGST, iGST law. Both the final draft laws were discussed today.

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HIGHLIGHTS:

• Centre, states clear CGST, IGST laws
• Tax rate on small hotels fixed at 5%

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Council has approved both the drafts," Jaitley said. With the compensation draft law having already been approved in the Council's previous meeting -- held on February 18 in Udaipur -- there are two more draft laws remaining for approval.

The Union Territory GST (UTGST) and state GST (sGST) draft laws will be taken up for discussion and approval at the Council's next meeting on March 16, Jaitley told reporters at a press briefing. The sGST and UTGST are replicas of cGST and the settlement of their drafts is only a formality, he said.

"Once these are approved, the four laws - compensation, UTGST, cGST and iGST - will be approved by Cabinet and placed in Parliament in the coming session," Jaitley added.

Meanwhile, the sGST draft law will have to be approved by the legislative Assemblies of states and Union Territories (Delhi, Puducherry).

The UTGST draft law is for the Union Territories like Andaman and Nicobar Islands, Lakshadweep, Daman and Diu and Dadra and Nagar Haveli, which do not have legislative Assemblies.

Jaitley said the model GST Law will have a clause to enable levy of up to 40 per cent tax (20 per cent by the Centre and an equal amount by the states) but the effective tax rates will be kept at the previously approved levels of 5, 12, 18 and 28 per cent. "The rates will be what have been decided by the Council.

There won't be a higher rate of taxation. But the cap rate in the legislation is always put at a higher level to leave a headspace; just as in the Customs Act you have a difference between the bound rate and applied rate. So the applied rate is going to be what the council has decided," Jaitley said.

The Council has approved raising the cGST, sGST peak tax rate from 14 per cent to 20 per cent each, amounting to a peak rate of 40 per cent.

Revenue Secretary Hasmukh Adhia, who was also present at the briefing, told reporters, "The slabs are already decided and there is no change in slabs. But to provide the maximum ceiling, the Council felt the need to leave some scope for higher GST for after five years, when compensation to states is not required and cess is likely to be merged with GST rate."

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GST highlights

• A state-wise single registration for a taxpayer for filing returns, paying taxes, and to fulfil other compliance requirements
• A taxpayer has to file one single return state-wise to report all his supplies, whether made within or outside the state or exported out of the country and pay the applicable taxes on them.
• A business entity with an annual turnover of up to Rs 20 lakh would not be required to take registration in the GST regime, unless he voluntarily chooses to do so to be a part of the input tax credit chain. The annual turnover threshold in the special category states (such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and the other states of the north-east) for not taking registration is Rs 10 lakh.
• A business entity with turnover up to Rs 50 lakh can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance requirements.
• In order to prevent cascading of taxes, input tax credit would be admissible on all goods and services used in the course or furtherance of business, except on a few items listed in the Law.
• In order to ensure a single administrative interface for taxpayers, a provision has been made to authorise officers of the tax administrations of the Centre and the states to exercise the powers conferred under all Acts.
• An agriculturist, to the extent of supply of produce out of cultivation of land, would not be liable to take registration in the GST regime.

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