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Parliamentary panel approves Goods and Services Tax bill with amendments

08 Aug 2013 Evaluate

In order to expedite the implementation of Goods and Services Tax (GST), a parliamentary panel has given approval to GST bill while suggesting amendments to provisions relating to tax structure and dispute resolution mechanism among others. The Standing Committee on Finance, headed by senior BJP leader Yashwant Sinha, said that the present bill relating to GST has not been well drafted in specific aspects relating to tax rates, exemptions, exclusions, thresholds, administrative arrangements etc. and therefore required amendments.

The panel has suggested a voting mechanism instead of consensus for decisions of the GST Council and recommended that the proposed dispute settlement authority be dropped. Further, it has suggested that India could adopt the European model of a floor rate and a ceiling rate to allow states the freedom to have a high or low rate, but has favoured higher rates on demerit goods. The panel has also sought to address the concerns that the new GST law would lead to the loss of fiscal autonomy for the states and has recommended that one-third weightage for state representatives may be provided in the GST Council.

The implementation of GST will replace the plethora of indirect taxes levied by states and the centre with just one tax. Under the GST regime, both the centre and states will have powers to tax supply of goods and services from primary stage to final consumption. The new GST system is expected to help all stakeholder including governments, consumers and business by preventing leakage, cascading of taxes and lowering the incidence of tax.

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