Bracing to roll out the new Indirect tax regime — Goods and Services Tax (“GST”) from April 1, 2016, the Central Government on Wednesday, June 17, 2015 announced the setting up of two Committees to suggest tax rates and to look into IT preparedness.
The Government has entrusted Chief Economic Advisor, Shri. Arvind Subramanian—head of one of the two panels—with the task of proposing a Revenue Neutral Rate (“RNR”), or a rate at which there will be no revenue loss to States under the proposed GST regime. Previous rate of 27% recommended by a sub-committee of the State and Central Government officials, based on a report of the National Institute of Public Finance and Policy (“NIPFP”), was considered unacceptable and too high by the Government.
This Committee will recommend possible tax rates under GST that will be consistent with the present level of revenue collection of the Centre and the States, taking into account expected levels of growth in the economy, different levels of compliance and broadening of the tax base under GST. It will also analyse Sector-wise and State-wise impact of GST on the economy.
The other panel is a Steering Committee with representation from the Central Board of Excise and Customs (“CBEC”), States and the Goods and Services Tax Network (“GSTN”)—the Company tasked with setting up the information technology (“IT”) network for GST. It will be headed by Ms. Rashmi Verma, Additional Secretary, Department of Revenue in the Ministry of Finance, and Mr. Satish Chandra, Member Secretary, empowered committee of State Finance Ministers.
This Committee shall monitor the progress of IT preparedness of GSTN/CBEC/tax authorities, finalization of reports of all the sub-committees constituted on different aspects relating to the mechanics of GST and drafting of CGST (Central GST), IGST (integrated GST) and SGST (State GST) laws/ rules. The Committee shall also monitor the progress on consultations with various stakeholders like trade and industry and training of officers.
The Lok Sabha on May 6, 2015 had passed the much awaited Constitution (122nd Amendment) Bill, 2014 on GST with 2/3rd majority. However, with no consenus in sight and the Modi Government facing a number crunch in the Rajya Sabha, GST Constitutional Amendment Bill was referred to a Select Panel on May 12, 2015 after the opposition insisted on its legislative scrutiny.
The GST Constitutional Amendment Bill which will subsume all Indirect taxes into one uniform levy across the Country, has to be first passed in the Rajya Sabha with 2/3rd majority followed by its ratification by at least 50% of the States before it becomes law of the land.
Following this, the Government will set up the GST Council within 60 days from the date of commencement of 122nd Constitutional Amendment Bill, 2014, with the Union Finance Minister as the Chairman and Minister of State, Finance & the State’s Finance Ministers as members to decide on the crucial issue of the final design of GST, including RNR and the threshold level or the revenue level beyond which GST will be levied on traders, etc.
This may not leave too much time for the Trade and Industry to prepare for GST. However, setting up of Committee to relook RNR calculations done by NIPFP is a welcome move considering 27% which is too high rate.
As an endeavour to give clarity on GST, its constitution and implementation, CA. Bimal Jain has recorded three videos on GST. The videos touch the issues pertaining to present Indirect Tax systems and suggests how the GST can be a Good and Simplified Tax System.
The videos consist of following three parts:-
Videos can be accessed at the following link :-
Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Email: firstname.lastname@example.org)