In the biggest tax reform in Indian history since Independence, the Goods and Services Tax (GST) Constitutional (One Hundred and Twenty second Amendment) Bill 2014, was approved by the Rajya Sabha on Wednesday which the Lok Sabha had already approved last year on 6th May 2015.
The 66-year-old Constitution, which gives power to Centre to levy taxes like excise, and empowers states to collect retail sales taxes, was amended though the 122nd Constitution Amendment Bill.
The legislation was approved by the Rajya Sabha with 203 votes in favour and none against, in the 243-member House. It is an enabling amendment to the Constitution to permit the introduction of a single goods and service tax for the entire country.
The core objective of the GST is to eliminate excessive taxation. GST is a uniform indirect tax levied on goods and services across a country. Many developed nations tax the manufacture, sale and consumption of goods using a single, comprehensive tax.
www.carajput.com; Ready for GST
There is a road ahead to traverse before GST becomes reality.
So, what is the next step?
Here is a simplified Steps to convert GST a reality.
Since the Bill was passed in the Lok Sabha last year, there have been major amendments to it. So it will go back to the Lower House for approval.
Once approved by both the houses, the final draft will go to the state assemblies where the government needs atleast 50% of the 29 state assemblies to ratify the Bill before it is accepted.
Once the Bill is ratified by the states, it will pave the way for the establishment of a GST council to finalise key things like the GST rate — which is still not finalised and a key debating point — the extent of the indirect taxes that will be subsumed under GST, and so on.
The legislation will then go to the President, whose signature will turn it into a law ahead of its rollout by the intended deadline of April 1, 2017. The government is aiming at an April 1, 2017 deadline for the rollout of the new taxation system.
The next step will be the formation of the GST Council. This council will have representatives from both the Centre and states. All this will be made within 60 days of the enactment of the bill. It will decide the revenue neutral rate (RNR), the rate at which there will be no loss in aggregate central and state tax revenue.
The RNR will then get converted into a three-slab GST rate structure, depending on exemptions. Essential commodities will be charged at low rates offset by higher ‘sin’ taxes on goods considered to be luxuries. A so-called standard or GST rate will be the middle slab and will apply to most goods and services. The single GST rate will be split between and central GST and state GST. The split shares will be decided by the GST Council.
GSTC to recommend GST Law and procedure. Three more laws will need to be passed: laws on the Central GST (CGST), integrated GST (IGST) and 29 separate state GST legislations (SGST).
CGST and IGST Laws to be introduced in Parliament and will require be passed by simple majority.
We look forward for your valuable comments. Thank You for reading this blog.
Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders.
Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields.
We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.
