Council meeting to pave way for GST Bill in Parliament, Assemblies

For now the four tax slabs will remain the same at 5%, 12%, 18% and 28%

The GST Council meeting on Thursday is crucial for the Bills on the new indirect tax regime coming up in the ongoing Budget session of Parliament. If state assemblies also pass their respective GST Bills in time, the new indirect taxation regime could be introduced from July with April deadline almost missed. 

The meeting will take up the state GST (SGST) Bill and union territory GST (UTGST) Bill, having approved all the other Bills in the previous meetings. 

The draft SGST and UTGST Bills will be more or less replica of the draft Central GST (CGST) Bills that was passed by the Council earlier this month. However, according to some state finance ministers, the council meeting may once again take a final look at CGST Bill, besides Integrated GST legislation.  

In the previous meeting, the Council had approved an enabling provision for higher tax ceiling of 20 per cent under the CGST Bill against 14 per cent prescribed earlier. A similar provision will also be made in the SGST Bill that will enable the Council to hike the peak rate to 40 per cent in aggregate for GST in the future against 28 per cent prescribed as of now. 

For now, the four tax slabs will remain the same at 5 per cent, 12 per cent, 18 per cent and 28 per cent.

The fitment relating to item-wise GST rates will be worked out later by a committee of officers. It will also decide a cess on luxury and demerit items — luxury cars, aerated drinks, tobacco — to compensate states for any loss of revenue from implementation of GST in the first five years.

The council had given a relief to e-commerce companies by capping the tax collected at source at one per cent instead of two per cent which was proposed in the initial draft. However, the issue of multiple registrations for e-commerce companies still remains, which would come up only in the rules. 

The Council had also decided that there will be a 5 per cent composite rate for restaurants with a turnover of Rs 50 lakh, which is 2.5 per cent each for CGST and SGST. For traders, the composite rate will be 0.5 per cent each under CGST and SGST. 

Tax demand raised by authorities will be allowed to be paid in monthly instalments of up to two years in the case of ‘financial hardships’ on a case by case basis. 

The revised draft CGST  Bill gives powers to tax officers to allow the taxpayer to pay dues in a staggered manner if he is facing a financial crunch. The move is aimed at improving the scope of revenue recovery without causing hardships to the assessee.

Payments made under the instalment provision will escape penalty but interest will have to be paid. The instalment tenure allowed in the draft law runs up to a maximum of 24 months.