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Crucial GST Bills, compensation law on GST Council's agenda tomorrow

17 February, 2017 1:33 PM
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Crucial GST Bills, compensation law on GST Council's agenda tomorrow

It could also discuss an anti-profiteering clause to ensure sharing of benefits by consumers

After thrashing out the contentious issue of administrative turf, Union Finance Minister Arun Jaitley will meet state finance ministers on Saturday for what could be the second last meeting of the Goods and Service Tax (GST) Council before the expected roll out of the new indirect tax system by July 1. Ratification of supporting pieces of GST legislation and the proposed compensation law are on the council's agenda.

Most of the contentious issues which the council has been dealing with, including cross-empowerment or dual control and rate slabs, have been dealt with by the council in its previous meetings. To be held in Udaipur, this — the tenth meeting of GST Council — will be crucial as only after the council gives its consent to the draft integrated GST, central GST, and state GST Bills, will the first two be taken up in the Budget session of Parliament after it reconvenes on March 9. Each state's legislature will also have to pass their own state GST laws.

"The GST council meeting on Saturday could be the second last meeting before the rollout of the nationwide law. We could have one more meeting in mid-March. After that, the council may only meet next once the tax comes into existence," a senior government official told Business Standard.

The official said that since the draft laws have already been examined by the Law Ministry, the GST council's nod should not be much of a problem on Saturday.

Also read: Council approves all five draft bills for GST

The council could also discuss an 'anti-profiteering' clause in the draft laws that will ensure sharing of benefits of lower taxes by consumers. The clause provides for an authority to examine whether input tax credits availed by any registered taxable person or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods or services supplied.

The draft laws will also make it clear if e-commerce companies will collect from their customers 2 per cent service tax and pay it to the government.

The council could also finalise the definition of 'agriculture' and 'agriculturist' as well as the constitution of a 'National Goods and Services Tax Appellate Tribunal' (NGSTAT) to adjudicate on disputes.

The Centre and states have already agreed to provide full compensation to states in case of revenue losses due to GST for the first five years. The base year for calculating the revenue of a state would be 2015-16 and secular growth rate of 14 per cent would be taken for calculating the revenues of each state.

In the previous GST council meeting, the deadlock was finally broken on the issue of administrative control over assessees, when the Centre decided to allow states to have control over 90 per cent assessees up to Rs 1.5 crore of annual turnover. Currently, more than 9 per cent of service tax assessees and 85 per cent of the VAT (value added tax) taxpayers have a turnover below Rs 1.5 crore.

Those having an annual turnover over Rs 1.5 crore would be assessed by the Centre and states in the ratio of 50:50. Under the proposed GST, taxpayers having a turnover of over Rs 1.5 crore are estimated to contribute almost 90 per cent of the revenue.

The Council has already approved GST rates at 5 per cent, 12 per cent, 18 per cent and 28 per cent and a cess above the peak rate for demerit and luxury items such as tobacco, big cars etc.

Meanwhile, the Federation of Biscuit Manufacturers of India (FBMI) has urged the GST Council to keep biscuits in the lowest slab since biscuits are an item of mass consumption and higher taxation on it would adversely hit its production and consumption, hitting employment in the industry.

Also read: United Naga Council To End Economic Blockade In Manipur

Source: business-standard.com

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