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“GST BILL” -THE CONSTITUTION (122ND Amendment Bill),2014

BY CA SRINIVASAN ANAND G

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GST BILL

“GST Bill” is a misnomer for this Bill.This Bill does not propose to introduce a law to levy GST.This Bill proposes to amend the Constitution to:

confer concurrent taxing powers on Centre & the States to make laws to levy GST

GST will come into force only when this Bill is passed to and under amended Constitution the Centre & states make laws imposing GST

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Definition of “Services”

“Services” defined by proposed new clause (26A) to be inserted into Article 366

“Services” means anything other than goods

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Features of GST

One indirect tax (GST) to replace a number of Central and state indirect taxes levied at presentIntention is to remove cascading effect of multiple indirect taxesProposed GST aims at creating a common national market for goods and servicesConcurrent taxing powers to Centre & States to make laws for levying GSTGST to cover all goods/services except alcoholic liquor for human consumption

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Central Indirect Taxes that GST will replace

Central Excise Duty

Additional Excise Duties

Excise Duty levied under Medicinal and Toilet Preparations (Excise Duties) Act,1955

Service Tax

Additional Customs Duty (Countervailing Duty)

Special Additional Duty of Customs

Central surcharges and cesses relating to supply of goods and services

CST

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State taxes that proposed GST will replace

State VAT/sales tax

Entertainment Tax (other than the taxes levied by local bodies)

CST (levied by the Centre & collected by States)

Octroi

Entry Tax

Purchase Tax

Luxury Tax

Taxes on lottery, betting and gambling

State surcharges & cesses relating to supply of goods & services

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Will Central Excise Duty/State VAT go on introduction of GST?

Yes. CED to go on all goods except petroleum & petroleum products and tobacco and tobacco products .Power of Centre under Entry 84 to impose CED to be limited to these products.

State VAT to go all goods except petroleum & petroleum products & alcoholic liquor for human consumption. Power of States under Entry 54 to impose VAT to be limited to these products.

Petroleum & petroleum products will not come under GST net till a date notified on the recommendation of the GST Council. Presumably, CED/State VAT to apply on these till then.

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Will Service tax go on introduction of GST ?

Service Tax (presently imposed by Centre) will go

Entry 92C “Tax on Services” in Union List ie List I of Seventh Schedule proposed to be omitted

All services will be under the GST net

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Objects of the Constitution (122nd Amdt) Bill

subsuming of various Central indirect taxes and levies into GST;

subsuming of State indirect taxes into GST; dispensing with the concept of “declared goods’ levy of Integrated GST on inter-State transactions of

goods & services; levy of an additional tax on supply of goods, not

exceeding 1%,in the course of inter-State trade or commerce to be collected by the Govt of India for a period of two years, and assigned to the States from where the supply originates;

compensation to the States for loss of revenue on account of GST for a period upto 5 years;

creation of GST Council to examine issues relating to GST and make recommendations to the Union &the States on parameters like rates, model GST laws, exemption list & threshold limits

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Objects of the Constitution (122nd Amdt) Bill

subsuming of various Central indirect taxes and levies into GST;

subsuming of State indirect taxes into GST; dispensing with the concept of “declared goods’ levy of Integrated GST on inter-State transactions of

goods & services; levy of an additional tax on supply of goods, not

exceeding 1%,in the course of inter-State trade or commerce to be collected by the Govt of India for a period of two years, and assigned to the States from where the supply originates;

compensation to the States for loss of revenue on account of GST for a period upto 5 years;

creation of GST Council to examine issues relating to GST and make recommendations to the Union &the States on parameters like rates, model GST laws, exemption list & threshold limits