LOK SABHA APPROVES GST BILL- ALLYOU NEED TO KNOW
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On 29th March, 2017 the introduced Goods and Services Tax (GST) moved a step closer to reality with the Lok Sabha endorse four bills that will include a profusion of central, state indirect taxes and help create a single, unified market.
The Lower House passed the bills by voice vote, after Speaker Sumira Mahajan initiated clause by clause voting at the end of a long Parliament debate on GST, billed as the country’s biggest tax reforms since Independence.
Once the bills are passed in Parliament, the government will issue an advertisement after the President’s consent. The states will pass a several law- the state GST (SGST) bill- to roll out the reform.
The four proposed legislation are the Union Territory Goods and Services Tax (UTGST) Bill, Central Goods and Services Tax (CGST) Bill, the Integrated Goods and Services Tax (IGST) Bill and the Goods and Services Tax (compensation to states) Bill.
The passage of the bad luck removed years of political differences over the GST that will sort out tax barriers, and subsume a host of indirect taxes levied by the Centre and states, service tax, including excise, entry, luxury, entertainment and value added taxes.
The GST will give powers to the Centre to toll tax after excise and service taxes and excessive customs duty are subsumed. The IGST will be a tax on inter-state movement of goods and services. The UTGST is for Union Territories such as Chandigarh and Daman and Diu.
The rates in the four slab structure of the GST will be 5%, 12%, 18% and 28%. The CGST, IGST and SGST bill provide for a maximum tax of 20% each. The bills allow creation of a fund through cress to ensure states are compensated for any revenue loss in the first five years of the new tax regime.
The Goods and service Services Tax Council on 4th March, 2017 decided on a rate of 2% for small manufacturers, 1% for petty traders and 5% for tiny restaurants with the proceeds from the levies being shares equally by the Centre and States.
A compensation law- that provides for the payment of recompense to states for loss of revenue while making and switch to the GST law which will subsume existing central and state levies- is also on the anvil. The Centre has already agreed to create a Rs. 50,000crore corpus to compensate states over five-year period from the year of implementation of the law.
- Farmer and small traders are exempt;
- 0% tax on essential items;
- 28% in luxury cars, pan masala, tobacco and aerated drinks;
- 5% in items of muss consumption such as spices, tea and mustard oil;
- 12% and 18% standard rates cover most manufactured items and services;
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