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Highlights of GST Bill passed by Lok Sabha

Amid stiff resistance followed by walk out by the Congress Members, the Lok Sabha today, on May 6, 2015 has passed the much awaited Constitutional (122nd Amendment) Bill, 2014 on Goods and Services Tax (GST) with 2/3rd majority.

CA Bimal Jain

Lok Sabha passes GST Constitutional Amendment Bill with 2/3 majority

Amid stiff resistance followed by walk out by the Congress Members, the Lok Sabha today, on May 6, 2015 has passed the much awaited Constitutional (122nd Amendment) Bill, 2014 on Goods and Services Tax (GST) with 2/3rd majority.

The Hon’ble Finance Minister, Mr Arun Jaitley, has indeed been working hard for the smooth passage of the GST Constitutional Amendment Bill tabled in the last session of the Parliament in December, 2014 [calling it the “Single biggest tax reform since Independence”], but he was taken aback by the sudden vociferous stand coupled with aggressive and brisk walk-out from the House by the main Opposition Party.

As the Lok Sabha took up discussion on the GST Constitutional Amendment Bill on Tuesday, Finance Minister Mr. Arun Jaitley ‘requested’ the Opposition to help clear the Bill and not to insist on sending it to the Standing Committee, otherwise the planned roll out of GST from April 1, 2016 will be delayed by another fiscal.

Meanwhile, Mr. Arun Jaitley said that GST will reduce prices in the long run and will boost economic growth. He further added that the Central and State Governments are not interested in imposing higher GST rates that could hurt people.

I don’t forsee any state losing revenue after roll out of GST,” Mr. Arun Jaitley added.

The GST Constitutional Amendment Bill paves the way for a pan-India Tax regime and a unified market across the Country, ending the multiplicity of Central and State Taxes. Because it seeks to amend the Constitutional, it needs two-thirds of both houses to vote in its favour.

Now, after being passed in the Lok Sabha, the GST Constitutional Amendment Bill requires to be passed with 2/3rd majority in the Rajya Sabha as well followed by its ratification by at least 50% of the States before it becomes law of the land.

In the Rajya Sabha, where the ruling BJP is in a minority, the Congress has said it will insist on sending the Bill to a Parliamentary committee for review. Thus, the GST Constitutional Amendment Bill is likely to face stiff opposition at the Rajya Sabha and may be routed to the Standing Committee.

Following are the salient features of the GST Constitutional Amendment Bill:

  • Insertion of new Article 246A conferring simultaneous power to the Union and the State legislatures to legislate on GST.
  • Insertion of new Article 279A for the creation of a Goods & Services Tax Council, which will be a joint forum of the Centre and the States. This Council would function under the Chairmanship of the Union Finance Minister.
  • To do away with the concept of ‘declared goods of special importance’ under the Constitutional.
  • Central Taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST.
  • At the State level, Taxes like VAT/ Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
  • The Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year).
  • All Goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. However, it has also been provided that petroleum and petroleum products shall not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council. The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period.
  • Both Centre and States will simultaneously levy GST across the value chain. The Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State.
  • The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of Goods and Services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States.
  • GST is a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State.
  • GST rates will be uniform across the Country. However, to give some fiscal autonomy to the Centre and States, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST.
  • It is proposed to levy a non-vatable Additional Tax of not more than 1% on supply of goods in the course of inter-State trade or commerce for a period not exceeding 2 years, or further such period as recommended by the GST Council. This Additional Tax on supply of goods shall be assigned to the States from where such supplies originate.
  • The term “Services” is proposed to be exhaustively defined as “anything other than goods”.

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:-

  1. Goods and Services Tax – Need and Necessity;

  2. Overview of Dual GST Model in India;

  3. Highlights of 122 Constitutional Amendment Bill.

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), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)

Click Read Other Articles from CA Bimal Jain

View Comments (7)

  • Dear Mr. Bimal Jain,

    I really enjoyed your presentation of GST.

    I am worried about the following.
    RNR of 27% seems to be very very high.
    IGST - seems to be an irritant.
    Excluding petroleum products for the present seems to be an irritant
    exclusion of alchohol also is an irritant.

    It will be interesting to watch how Stock transfer will be treated.

    Hope government comes out with less paper work...

    Kind Regards,
    Vardharajan

  • Dear Sir,
    The items IGST, Petroleum & Liquor as proposed seems to be immature stage of indian politics. Actually petroleum products & Liquor fetch easy revenue to states without much efforts. So states want these to be under their control. In any way these should have also brought under GST.

    M C PANDEY FCA
    Chartered Accountant
    Pithoragarh

  • Like individuals e-filing ITRs, a simplified pan-india tax (gst) should be imposed and e-payment and e-receipt from govt transactions,should be developed with a view to create fair tax compliance system.

  • Dear Sir,

    The State and Center both government are hungry of heavy tax collection from public to expense most part of so collected taxes on their own machinery as force of IAS, IPS,ministers, to maintain their luxurious as king standards, on other governments servants, on police force and other forces to maintain law and order for protection of aforesaid machinery from public anger only.

    Now GST is rough try to copy of GST of other develop countries as like our constitution which is wrong copy of Grate Britain and united states of America.
    The whole learned force of the government has applied their IAS mind in SGST and CGST and IGST to make the public foolish but collect more and more revenue for the Govt. That's it.

    In this way, honesty towards public which is existed in GST of other countries has been completely lost.

    When you are not able to unite our country as one then why you are trying for so called GST. What is the need of concept of State and Center in GST. Are you not honest to division of the loot sorry so tax collected GST between both type of governments.

    AK.

  • Sir,
    The points are very relevant to the issue. I thoroughly appreciate your effort. I am a CA student.

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