All purchases made online will attract a uniform Goods and Services Tax, likely to take effect from April next year, according to the model GST law approved by state finance ministers today.
The tax, in lieu of local levies, will be imposed at the first point of financial transaction. This clears the air on applicability of GST in e-commerce in cases where goods were being sold in one state but was being bought in another state.
The model GST law, which has 162 clauses and 4 schedules, has also suggested a jail terms of up to 5 years and fine for violation of the provisions of the statute.
It prescribes a threshold of Rs 10 rpt 10 lakh annual turnover for applicability of the new levy and Rs 5 rpt 5 lakh for businesses in North Eastern states including Sikkim.
Revenue Secretary Hasmukh Adhia said the Empowered Committee of State Finance Ministers at their meeting today in Kolkata approved the model GST law.
"We request all stakeholders to give their suggestions/ comments to secretariat of Empowered Committee of FMs and or to finance ministry," Adhia tweeted.
Government is hoping to get the Constitution Amendment Bill passed by Parliament in the upcoming Monsoon Session. It plans to roll out GST from April 1, 2017 that will subsume excise, service tax and all local levies.
Virtually all states have supported the idea of GST except Tamil Nadu which has "some reservations", Finance Minister Arun Jaitley said after the meeting of Empowered Committee on the long awaited indirect tax reform.
The GST Council, which will have representative of all
states and UTs, will make recommendations on the goods and services that may be subjected or exempted from GST, model GST laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters and special provisions for certain States.
While the Centre will have one-third vote in the GST Council, states together will have a two-third say. To adopt a resolution, three-fourth majority would be required.
GST, which was first proposed a decade back, is seen as potentially transformative for India's economy, adding as much as 2 percentage points to the GDP while also improving the ease of doing business and encourage investment in manufacturing.
It is also expected to result in greater tax compliance, boosting government revenues.
The GST will replace more than a dozen levies central and state levies, including central excise duty, service tax and central sales tax as well as VAT on sale of goods and entry tax, to make movement of goods seamless across 1.3 billion market. Instead of the good being taxed multiple times at different rates, under the new GST regime goods would be taxed at point of consumption.
