Govt releases draft GST law as states get on board
Hours after a meeting of empowered committee of Finance Ministers on Goods and Service Tax in Kolkata, the central government, on Tuesday, released the draft centralGST and integrated GST laws in public domain.
The draft laws state that a uniform tax shall apply to all intra-State supplies of goods and services at the rates to be specified later. While it will be applicable to the provider of goods and services, in certain cases to be specified later, the tax shall also be liable to the person or entity receiving the goods and service.
“The government releasing the draft GST laws in public domain is a positive step. It shows the intent of the centre to implement SGT by April 1, 2017,” said Rakesh Nangia of Nangia and Co.
Experts said that the draft GST laws are a huge positive as they clearly define what shall constitute goods or services.
“It is one step closer to GST and it puts to rest all the confusion around what the definition of goods or service under the law should comprise of,” said Sachin Menon of KPMG in India.
The schedule II of the draft laws state that transfer and transportation of goods in lieu of current of future payment, business assets and selling of assets to pay debt shall be treated as ‘goods’. ‘Services’ shall include leasing or renting of land or property, goods being sold for purposes apart from business, rent, real estate construction with the intention of sale or lease and transfer of intellectual property rights.
Earlier in the day, Finance Minister Arun Jaitley met finance ministers of various states in Kolkata in what participants described as one of the most positive meetings of the Empowered Committee.
The meeting was attended by 22 state finance ministers, along with several state and central officials.
“The fact that the draft law was released shows that the states were on board for almost all the issues,” said Menon of KPMG. The draft laws was shared with the state finance ministers as well.
While every state is in support of GST, Tamil Nadu has expressed reservation on its present form ,Jaitley told reporters after the meeting. “Virtually every state has supported the idea of GST. One state, Tamil Nadu, has said they have reservations, but they have suggested how it is implementable,” said Jaitley.
He also said that there was complete consensus among states that there would be no constitutional cap on rates of taxation. A cap on rate to be included in the Constitution Amendment Bill, which is stuck in Rajya Sabha, has been one of the main demands of the Congress.
Two issues that were widely discussed in the meeting were the calculation of the revenue neutral rate and the management of taxation structure in the perspective of the dual control of the Centre and state.
Amit Mitra, chairman of the Empowered Committee, is now expected to convene another meeting in July to discuss the two issues. Chief economic advisor Arvind Subramanian will also make a presentation on the revenue neutral rate calculation in July.
On dual control, Mitra elaborated that there was an agreement that for upto Rs 1.5 crore, the state would administer the GST mechanism. A consensus is yet to be reached on the dual management of the GST above Rs1.5 crore, though there was broad understanding, he added.
Jaitley, meanwhile, said that for five years, if there is any loss of revenue to the state, it would be the liability of the Centre to compensate for the revenue loss and said that the central is flexible flexible on the issue of additional one percent tax for two years as a compensation to the producing states.
Source:- http://www.business-standard. com/article/economy-policy/govt-releases-draft-gst-law-as-states-get-on-board-116061400843_1.html