Moving one more step ahead towards the roll out of the country’s biggest tax regime from July 2017, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved four supporting GST legislations—the Compensation Law, the central GST (CGST), integrated GST (IGST) and Union Territory GST (UTGST). These bills will be introduced as Money Bills in Parliament this week. Once approved by Parliament, the states would start taking their SGST bill for discussion and passage in the respective state assemblies.
The GST Council, in its previous two meetings, had given approval to the four legislations as also the State-GST (S-GST) bill. While the S-GST has to be passed by each of the state legislative assemblies, the other four other laws have to be approved by Parliament. Once approved, levy of GST will get legal backing. The government is hoping the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current session of Parliament and state legislatures will soon clear the S-GST bills so that the GST regime can be implemented from July 1.
After the implementation of GST regime, a composite GST will be levied on sale of goods or rendering of services and the revenue would be split between Centre and states in almost equal proportion. This is because central taxes like excise and service tax and state levies like VAT will be subsumed in the GST. On the other hand, the CGST will give powers to the Centre to levy GST on goods and services after Union levies like excise and service tax are subsumed, while the IGST is to be levied on inter-state supplies. Moreover, the SGST will allow states to levy the tax after VAT and other state levies are subsumed in the GST and the UTGST will also go to Parliament for approval.