GST Council approved bill to reimburse revenue loss to States
Once fully implemented, the Goods and Services Tax is expected to boost the investment potential of India.
The GST Council on 18 February 2017 approved a bill to compensate States for any loss of revenue due to the implementation of the Goods and Services Tax (GST).
This approval by the GST Council paves the way for the roll out of the GST on 1 July 2017.
What is Goods and Services Tax?
The GST is a single indirect tax. It subsumes most of the Central and State taxes such as the Value Added Tax (VAT), excise duty, service tax and central sales tax.
What are the benefits of GST?
• GST will bring uniformity in the tax structure across the country.
• It helps the government to reach the goal of – ‘One Nation, One Tax.’
• Once it is fully implemented, the proposed tax is expected to contribute to the additional 2 percent of the gross domestic product (GDP).
• It will also help the administrators in curbing tax evasion.
What is GST Council?
• The President Pranab Mukherjee approved the Constitution (One Hundred and First Amendment) Act, 2016 in September 2016.
• The Act, amended various provisions of the Constitution paving way for the introduction of the Goods and Services Tax (GST) across the country.
• As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.
• Consequently, a notification was issued by the Union Ministry of Finance on 10 September 2016 regarding the formation of the GST Council.
• The Council is the apex body that takes decisions on all important decisions related to the GST, including items and rates.
• The Union Finance Minister is the Chairperson of the council.
• The Union Minister of State, in-charge of the Revenue in the Finance Ministry, and the Minister in-charge of finance or taxation or any other Minister nominated by each State Government are the members of the council.