President Pranab Mukherjee approves GST Constitution Amendment Bill

President Pranab Mukherjee has given final approval to the GST Constitution Amendment Bill which has been already been approved by the Parliament as well as 16 states, making the GST bill a law. This is a significant milestone achieved in the implementation of GST that sets the stage for GST Council, which will work out the details of the tax, including the rate at which it will be levied.  With this, the road is now clear for the Centre and states to constitute the GST Council, headed by Union finance minister Arun Jaitley and comprising state finance ministers. Jaitley has recently said that the government will attempt to press ahead with the implementation of the GST from April 1, 2017. Once the date of the new tax is notified all state and central taxes that it subsumes will cease to exist.

The GST rate has to be decided by the proposed GST Council, which will be chaired by the Union Finance Minister. The states will have two-thirds of the voting rights in the GST council, while the Centre will have a one-third right. Decisions will have to passed by three-fourth vote, implying the need for consensus. The council will take crucial decisions including the rate, laws, rules and procedures and administrative framework that will form the core of the CGST law and the IGST law, which will have to be passed apart from the state GST laws before the tax can be rolled out.

A committee headed by chief economic adviser Arvind Subramanian has suggested a revenue neutral rate of 15-15.5 per cent and standard rate of around 18 per cent. The Goods and Services Tax is a single indirect tax that proposes to subsume most central and state taxes like Value Added Tax, service tax, central sales tax, excise duty, additional customs duty and special additional customs duty and creating one national market that is expected to bump up GDP by as high as 2 per cent.