Key features of CGST, IGST, UTGST & Compensation to States bills passed in Lok Sabha

GST Bills–CGST, IGST, UTGST and Compensation to States, introduced in Lok Sabha on 27.03.2017 and passed by Lok Sabha on 29.03.2017. The following are the key features of the Bills :-

• CGST provides for a maximum tax of 20 per cent
• Actual rates would however be a four-tier tax structure of 5, 12, 18 and 28 per cent as approved by the GST Council
• A Union Territory GST Bill will take care of taxation in UTs of Chandigarh, Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu
• A Bill on Integrated-GST — to be levied and collected by the Centre on inter-state supply of goods and services, was also introduced in the Lok Sabha
• The IGST law provides for a maximum tax of 40 per cent
• Jaitley also introduced a fourth legislation called GST (Compensation to States) Bill, 2017 that provides for mechanism for making good any loss of revenue of states from introduction of GST in first five years of rollout
• Another mirror legislation of CGST, called State-GST, will amalgamate all state taxes like VAT, will be levied by states and has to be approved by all state legislatures
• Together, CGST and SGST will enable the GST incidence of 40 per cent
• GST will not apply to Jammu and Kashmir
• The CGST Bill also provides for e-commerce companies to collect tax at source at a rate not exceeding 1 per cent of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portals
• To protect small businesses, the CGST provides for a tax of no more than 1 per cent of turnover for manufacturers with annual turnover of up to Rs 50 lakh
• A 2.5 per cent tax is prescribed for suppliers
• To ensure that benefit of lower taxes is passed on to consumers, an anti-profiteering measure has been incorporated in the law
• It provides for constituting an Authority to examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him
• The law provides for arrest, ordered by no less than a Tax Commissioner, in case of suppression of any transaction or evading taxes. A person convicted is punishable by up to 5 years of imprisonment and/or fine
• The Compensation Law provides for levy of cess on top of the peak rate of approved tax (28 per cent presently) on paan masala, tobacco, aerated waters, luxury cars and coal to create a non-lapsable fund for compensating states
• Compensation will be paid bi-monthly and the amount due would be calculated after considering a 14 per cent growth rate in taxes over the base year of 2015-16
• Touted as the biggest taxation reform since independence, GST is expected to boost GDP growth by up to 2 per cent. The government proposes to roll out GST by July 1, 2017.

Source- ICSI