Tuesday, 25 April, 2017

Council approves state and Union Territory GST laws

Representational Image Representational Image
Juana Turner | 17 March, 2017, 00:57

The Goods and Services Tax (GST) Council has approved a 15 per cent ceiling on the cess to be levied on aerated drinks and luxury cars over and above the maximum proposed GST rate of 28 per cent, and the enabling laws for state and union territories to adopt the new indirect tax regime at its meeting on Thursday.

But, while the Centre hopes for July rollout, the deadline could still be elusive as J&K finance minister told India Today that GST framework will require more time.

The Council has made a decision to cap the cess on luxury goods and aerated drinks at 15 per cent.

The progress made towards rolling out the Goods and Services Tax (GST) is encouraging but implementing the new tax regime on July 1 will be hard as the industry may not have sufficient time to prepare itself, said Sachin Menon Head-Indirect Tax, KPMG. He said that for the goal of empowerment, cap of cess on demirit goods on top of peak rate of the taxation law has been kept at 15 per cent.

He said the four laws - CGST, IGST, UTGST and Compensation law - as approved by the Council will be taken to the Cabinet and after its approval these would be introduced in the Lok Sabha.

Addressing the conference after the 12th GST Council meeting, Jaitley said: "Today the GST Council gave its approval to the State GST and the Union Territories GST laws and cleared the revised drafts of three other crucial bills".

Jaitley said the cess has been capped at 15 per cent as upper limit for the four to five commodities, including luxury cars and aerated drinks that fall in this category.

Speaking in New Delhi at the GST Council meet headed by Finance Minister Arun Jaitley said that July 1 is the tentative date fixed for GST implementation.

At present, the Council has chose to imposed this cess on 4 items namely tobacco, pan masala, aerated drinks, luxury cars.

"With this, all nine rules will be cleared by the Council", Jaitley said, noting that five sets of rules relating to refunds, registration, invoices, payments and processes have already been approved. The draft is being circulated to state assemblies. For this, the next meeting has been called on March 31.

The council also decided to make the tax treatment of items produced in special economic zones (SEZs) similar to that on exports. Now, it has been agreed that in case of physical export or anybody supplying goods to SEZ, the same methodology will apply.

KPMG (India) National Head, Indirect Tax, Sachin Menon said clearance of the model GST law is warning bell for those who have not yet commenced their preparations for introduction of GST.

However, on pan masala and tobacco, the cess caps were a high 135% and 290%, respectively.

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