Govt brings out revised GST Bill, accommodates key demands of states

The gov­ern­ment has pre­pared a revised Con­sti­tu­tion Amend­ment Bill for the Goods and Ser­vices Tax that large­ly accom­mo­dates the demands made by states. The gov­ern­ment has set a tar­get of 2016 for the launch of the pan-India indi­rect tax regime.

Accord­ing to the revised Con­sti­tu­tion (115th Amend­ment) Bill, the “pro­pos­al of dis­pute set­tle­ment author­i­ty has been dropped as demand­ed by the states and it has also been agreed to include a floor rate with bands to allow them the free­dom to have a high or low rate”, a gov­ern­ment offi­cial told The Indi­an Express.

The Cab­i­net note is being pre­pared for the Amend­ment Bill and it should be intro­duced in the Win­ter Ses­sion of Par­lia­ment, the offi­cial added.

A key demand of states to keep petrol and alco­hol out­side the purview of the GST has been met par­tial­ly. The revised Bill brings in petro­le­um prod­ucts with­in the regime to make the tax struc­ture more busi­ness-friend­ly, but has left alco­hol out. Ear­li­er both petro­le­um and alco­hol were kept out of the GST struc­ture. “The states have been demand­ing that petro­le­um and alco­hol should be kept out. How­ev­er, in the revised Bill, we have decid­ed to keep petrol under GST while alco­hol will con­tin­ue to be out­side its purview. This arrange­ment will be more GST-friend­ly,” the offi­cial said. The prod­uct will be taxed at zero rate and both the states and Cen­tre would con­tin­ue to levy sales tax, VAT and excise duty respec­tive­ly, the offi­cial added. The offi­cial also said that the revised Bill also includes entry tax in lieu of octroi, which was ear­li­er kept out. “This is impor­tant to reduce dis­tor­tions as much as pos­si­ble,” the offi­cial added. The gov­ern­ment is also look­ing at the GST as a route to improv­ing the ease of doing busi­ness by bring­ing down the inci­dence of mul­ti­ple tax­es. The GST aims at sub­sum­ing most of the indi­rect tax­es at the Cen­tral as well as state lev­el. The UPA gov­ern­ment had intro­duced the Amend­ment Bill, a nec­es­sary con­di­tion for intro­duc­ing the new regime, in 2011. The idea, moot­ed in 2006, is pend­ing since due to lack of con­sen­sus among states on issues regard­ing the exemp­tion list, rev­enue neu­tral rate, thresh­old and compensation.