Rajya Sabha on 3 August 2016 passed The Constitution (122nd Amendment) (GST) Bill, 2014 to introduce the goods and services tax (GST). The passage of this historic GST Bill has now paved the way for the concept of one nation, one tax.
It will enable both the Centre and the States to simultaneously levy the GST, which will subsume all indirect taxes currently levied, including excise duties and service tax. It will be levied on consumption rather than production.
The Bill was introduced and passed in Lok Sabha in May 2015. However, the bill will now go back to the Lok Sabha to incorporate the amendments approved by the Rajya Sabha.
Provisions of the Bill
• The GST will have two components keeping in mind the federal structure of India: the Central GST (CGST) and the State GST (SGST).
• For goods and services that pass through several states, or imports, the Centre will levy another tax, the Integrated GST (IGST).
• Alcohol for human consumption has been kept out of the purview of GST.
• It empowers the centre to impose an additional tax of up to 1% on the inter-state supply of goods for two years or more. This tax will accrue to states from where the supply originates.
• Initially, GST will not apply to (a) petroleum crude, (b) high speed diesel, (c) motor spirit (petrol), (d) natural gas and (e) aviation turbine fuel. The GST Council will decide when GST will be levied on them.
• Tobacco and tobacco products will be subject to GST. The centre may also impose excise duty on tobacco.
• Parliament may provide for compensation to states for revenue losses arising out of the implementation of GST for up to 5 years, based on the recommendations of the GST Council.
Central Taxes replaced by GST Bill
• Central Excise Duty
• Additional Duties of Excise and Customs
• Special Additional Duty of Customs (SAD)
• Service Tax
• Cesses and Surcharges on Supply of goods and services
State Taxes Subsumed in the GST Bill
• Central Sales Tax
• Purchase Tax
• Luxury Tax
• Entry Tax
• Entertainment Tax
• Taxes on advertisements, lotteries, betting, gambling
• State Cesses and Surcharges
The GST Council will consist of (a) the Union Finance Minister (as Chairman), (b) the Union Minister of State in charge of Revenue or Finance and (c) the Minister in charge of Finance or Taxation or any other Minister nominated by each state government.
All decisions of the GST Council will be made by three fourth majority of the votes cast; the centre shall have one-third of the votes cast, and the states together shall have two-third of the votes cast.
It will make recommendations on taxes; goods and services; threshold limit of turnover for application of GST; rates of GST; principles of levy; special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir and Uttarakhand.
The Bill required a special majority for its passage as it is a Constitution Amendment Bill (that is at least 50% majority of the total membership in the House, and 2/3rds majority of all members present and voting).
Thus, the Bill was approved by the Rajya Sabha with 203 votes in favour and none against.
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What: Passed by Rajya Sabha
When: 3 August 2016