GST Bill passed by Rajya Sabha on August 03, 2016

The Constitution (122nd Amendment) Bill, 2014 popularly known as the (GST) Bill has been passed by the Rajya Sabha on August 03, 2016.

The passing of the bill is a landmark achievement for India in its move towards the introduction of GST in the country. There are still certain legal and procedural processes to be completed, before GST is finally introduced in India, but the intention of the ruling and opposition parties to introduce GST is now a certainty.

Overview of GST

Currently, in India various Indirect taxes are levied at both Federal and State level. It is proposed to introduce Goods and Services tax (GST) in India to subsume the various indirect taxes.

At the Central level, the following taxes are being subsumed:

  • Central Excise Duty;
  • Additional Excise Duty;
  • Service Tax;
  • Additional Customs Duty; and
  • Special Additional Duty of Customs

At the State level, the following taxes are being subsumed:

  • State Value Added Tax/Sales Tax,
  • Entertainment Tax (other than the tax levied by the local bodies);
  • Central Sales Tax;
  • Octroi and Entry tax;
  • Purchase Tax;
  • Luxury tax; and
  • Taxes on lottery, betting and gambling.

GST would be a dual GST with the Centre and the States simultaneously levying it on a common base. The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States would be called State GST (SGST).

An Integrated GST (IGST) would be levied on inter-State supply (including stock transfers) and import of goods or services.

Procedure for Introduction of GST

After passing of the GST Bill by the Rajya Sabha on August 03, 2016,the following processes are still to be completed, before GST is finally introduced in India:

  • Going forward the GST Bill will be sent back to the Lok Sabha where the amendments proposed in the Bill will have to be approved;
  • Thereafter the Bill will be sent to the state legislatures for their clearance and it has to be passed by at least fifteen of the thirty-one states;
  • Thereafter the President’ s assent will be required;
  • After the Presidential assent, a GST Council with representatives from the Centre and States will be formed within 60 days of the enactment of the Bill. The Council will be entrusted with the task of recommending the tax rates;
  • Thereafter three more laws will need to be passed namely the CGST, IGST by the Parliament and separate SGST for each State by the respective state assemblies, and the Rules there under.

The above processes will take some time, and it is highly likely that GST would be finally introduced by April 2017, as also contemplated by the Government. It is thus time for industry to gear up and prepare for GST.

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