 "GST platform to become analytics powerhouse")
Signalling the urgency to roll out the goods and services tax (GST) by the April 1, 2017 deadline, the Union Cabinet on Monday gave its nod to the constitution of the GST Council.
The council would be responsible for deciding on rates and preparing a model Bill for implementation of the new tax regime. It is scheduled to meet for the first time on September 23 and 24, as the government expects to resolve all contentious issues in the next two months.
"So far, we are ahead of the schedule in implementing the GST. We are geared up to meet the April 1, 2017 deadline," said Revenue Secretary Hasmukh Adhia.
The urgency with which the government is dealing with the issue can be gauged from the fact though the Constitution amendment Bill had given 60 days for the constitution of the council after it became an Act, it has already go the nod. President Pranab Mukherjee gave his assent to the Bill last Thursday.
On Monday, the Cabinet also approved setting up of a secretariat in New Delhi to facilitate the work of the GST Council. The secretariat will be manned by officers taken on deputation from both central and state governments, an official statement said.
The GST Council will be chaired by the Union finance minister and comprise the minister of state for finance in charge of revenue and state finance ministers or any other ministers nominated by the states.
It has a tough task ahead: To resolve three vexed issues - rates, dual control of the central and state officials over assesses and geographical exemptions.
Experts feel the swift move will send out a positive signal.
M S Mani, senior director, Deloitte Haskins & Sells LLP, said, "The creation of the GST Council will enable the government to move ahead with its decision to introduce GST from April 1, 2017."
The Union revenue secretary will be the ex-officio secretary to the council. State chief secretaries have been asked to nominate any one state minister to the council. The central board of excise and customs chairperson will be a permanent invitee for GST meets, but without voting power. The council will have one additional secretary and four commissioners for GST.
Setting the GST rates will be one of the key challenges ahead of the Council. While Opposition parties are demanding a lower tax rate of 18-20 per cent, states are keen to have a higher rate of at least 22 per cent.
Another contentious issue is dual control for assessment and adjudication, which has been a major bone of contention between the Centre and states, with the latter asking for sole administrative control over entities with up to Rs 1.5-crore annual turnover, and dual control after that.
The Centre has instead been pushing for dual control throughout.
The first meeting of the Council will be held on September 22 and 23. Asked about the agenda for the Council meeting later this month, Adhia said it is yet to be decided
The government is looking at a two-month period for discussion on major aspects of the GST by the council, as the Centre aims to table the Central GST and Integrated GST Bills in the winter session of the Parliament. States are also expected to table their respective GST Bills in the winter session of Assemblies.
"So, from September 22 to November 22, should be a reasonable time limit for discussing and thrashing out the major issues," Adhia said.
Asked if the GST rate, exemptions and threshold would be decided by the Council before November 22 for inclusion in the CGST law, Adhia said: "It should be. Yes".
Another issue is whether GST rates would form a part of the GST Bills, as the Congress has been demanding.
"The GST Council will decide whether the rate would form part of CGST Bill... Already, two committees have given their report based on which we will put up an agenda before the GST Council and the council will deliberate and decide," Adhia said.
Last year, a panel headed by Chief Economic Advisor Arvind Subramanian had suggested 17-18 per cent as the standard rate for bulk of goods and services while recommending 12 per cent as lower rate and 40 per cent for demerit ones such as luxury car, aerated beverages, pan masala and tobacco.
For precious metal, it recommended a range of two to six per cent.
Besides, the Council will decide the dates on which GST will be levied on petroleum and special provisions for hilly and north-eastern states.
Each decision of the GST Council will be taken by a majority of at least three-fourth of weighted votes of members present and voting. While the Centre will have a weightage of one-third votes cast, states together will have two-third weightage.
Although the government is targeting April 1, 2017 rollout, India Inc is seeking more time to prepare for the switch over to the new indirect tax regime.
However, Adhia pointed out that the industry was yet to formally request for a delay on GST launch.
Nangia & Co Director Rajat Mohan said, "Keeping in view the leap taken by government in completing the legal formalities, the target date of April 1, 2017 now seems achievable."
The revenuue secretary added the information technology infrastructure was well on track for GST rollout.
While the GST Network (GSTN) through Infosys is working on the front-end IT infrastructure, the CBEC has given the contract to Wipro to develop the back-end IT infrastructure.
THE STRUCTURE OF THE COUNCIL
MEMBER: Minister of state for finance in charge of revenue (Santosh Kumar Gangwar)
OTHER MEMBERS: State ministers in charge for finance or taxation or any other nominated by each state government
VICE-CHAIRPERSON: The Council to choose one amongst themselves for a specified period
EX OFFICIO SECRETARY: Revenue secretary
PERMANENT INVITEE WITH NO VOTING RIGHTS: CBEC chairman
THE GST COUNCIL WILL RECOMMEND
- GST rate
- Taxes, cesses to be subsumed under GST
- Exempted goods and services from GST
- Model GST laws; principles of levy; apportionment of Integrated GST governing place of supply rules
- Dates on which GST be levied on petroleum
- Special provisions for hilly and north-eastern states
- Rules which may include contentious issues of assessing power of the Central and state indirect tax officials
