India’s goods and services tax (GST) regime is set to begin on 1 July after the lower house of parliament passed four GST-related laws and the upper house prepares to do the same.
Marking another major milestone in the long-awaitedGST regime, the Lok Sabha (lower house of parliament) on 29 March passed the Central GST Bill, the Integrated GST Bill, the GST (Compensation to States) Bill and the Union Territory GST Bill.
The passage was not easy, however. Parliament was locked in a seven-hour long debate as government ministers tried to negotiate a host of amendments demanded by opposition parties and answered numerous questions on the government’s chosen GST structure.
Businesses now have less than two months to complete their preparation for the new tax regime, which will apply from 1 July.
The laws were approved only two weeks after the GST Council approved the bills and later gained the Cabinet’s approval.
Earlier this year, the GST Council agreed on a four-tier structure for GST of 5%, 12%, 18%, and 28%, as well as some items at 0%. It has also approved the ceiling rates for the cess (tax) to be levied on top of the maximum GST rate of 28% on 'demerit goods’ such as some luxury goods, tobacco and sugar-sweetened beverages.
The government has also confirmed that it plans to migrate 8.5 million central and state taxpayers to the GST system by 31 March. So far, more than 5.1 million taxpayers have migrated to the new system.
Although the main laws have now been passed, the GST Council still needs to approve some regulations.
Nine sets of rules and regulations require approval, of which five have already been agreed, namely laws relating to registration, payments, refunds, invoices, and returns. Four laws, relating to composition, valuation, ITC and transitions, now require formal approval.
Finance Minister Arun Jaitley said these final rules would be approved at the GST Council’s meeting on 31 March.
However, after these are approved, one major action will be required to categorise certain commodities into the GST rates structure. After 31 March, officers will begin the process of fitting various commodities into the defined tax slabs and once this is completed, these would be approved by the GST Council ministers in their next meeting, the finance minister said.
"Once that is done, we will be ready for GST implementation," Jaitley said after the last GST Council meeting.
The above article was first published on www.internationaltaxreview.com on 31 March 2017 and has been republished with the approval of the Publisher.