Rohit Arora

“In the last one year, our country has witnessed historic and impactful economic reforms and policy making. In fact, India was one of the very few economies undertaking transformational reforms. There were two tectonic policy initiatives, namely, passage of the Constitution Amendment Bill for GST and the progress for its implementation; and demonetisation of high denomination bank notes.”- Union Budget 2017: speech of Finance Minister Arun Jaitley

Goods services tax which is believed to be one of the major reform in Indian tax regime as well big step in business arena of Indian economy was introduced by 122nd Constitution Amendment (GST) Bill, 2014” by Central Government in December 2014 [as the earlier 115th Constitution Amendment (GST) Bill, 2011 bill lapsed)] and was passed in Rajya Sabha on 3rd August 2016 and in Lok Sabha on 8 August 2016.

GST is termed as a destination based consumption tax and covers all the current forms of indirect tax laws such as VAT, Service tax, Excise Duty which will be subsumed under a single term GST. Clause 366(12A) of the Constitution Bill defines GST as “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption. Further the clause 366(26A) of the Bill defines “Services” means anything other than Goods. Thus it can be said that GST is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. The proposed tax will be levied on all transactions involving supply of goods and services, except those which are kept out of its purview.

Till now the GST council has conducted 10 meetings in which the issues raised on GST Model law have been discussed. The 10th meeting of GST council held on 18th February 2017 ratified the draft law for compensation to states while it could not ratify the three enabling laws — Integrated GST (IGST), State GST (SGST) and Central GST (CGST) draft laws because of some contentious issues that cropped up and are now expected to be ratified by the GST Council in its next meeting, on March 4 and 5 in New Delhi. It is expected that a fourth law, for Union Territories, would also be drafted on the lines the SGST draft law, and would be cleared by Parliament.

Draft GST model law which was presented on 14 June 2016 was replaced by Revised draft GST law on 26 November 2016. The expert committee under Arvind Subramanian had recommended a standard rate of 17-18% for most commodities, a lower rate of 12% for commodities more commonly consumed, and a higher rate of 40% for luxury products like cars, and demerit goods like tobacco and paan masala. The Union finance ministry proposal to the GST council increased the number of rates to four i.e. 6%, 12%, 18% and 26%, plus cesses on some of the commodities in the 26% slab. The GST council, in its wisdom, worsened the situation by widening the spread, lowering the lowest rate to 5% and increasing the highest to 28%.

Hon’ble Finance minister stated GST as one of major consideration in the budget 2017. That is the reason no major changes is made in Indirect taxes the budget 2017.  Mr Adhia, Revenue Secretary stated that talks are being done with states and authorities over fast implementation of GST. The government wants to roll out GST from 1st July 2017.

The government despite the pressure to delay it is endeavoring to achieve the consent of states in order to implement GST as soon as possible. Recently, the central board of excise and customs (CBEC) launched a GST app to facilitate a smooth transition to the new indirect tax regime for taxpayers. Various economists believe that GST will bring fatal result to Indian economy while some believe that it will boost Indian economy by a great hike. International monetary fund on 22 February 2017 stated that continued progress on reforms and adoption of the GST could raise India’s medium-term economic growth to above 8%. While for a layman to whom Indirect taxes and its calculations seems to be mindboggling issues can only HOPE for ACCHE DIN as promised by our Hon’ble Prime Minister.

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June 2021