SALIENT FEATURES OF DRAFT GST BILL

Ministry of Finance has published the Draft Goods and Service Tax Bill, 2016 (“GST BILL"). The draft of GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016 is also published along with the Bill.

Salient Features of GST as per the Discussion Paper issued by Empowered Committee of state finance ministers (“SFM”) are as follows

1. All forms of "supply" of goods and services such as sale, transfer, barter, exchange, license, rental, lease and import of services of goods and services made for a consideration will attract CGST (central levy) and SGST (state levy).
2. As GST will apply on "supply", the erstwhile taxable heads such as "manufacture", "sale" and "provision of services", among others, will lose relevance.
3. The liability to pay CGST or SGST will arise at the time of supply.
4. With GST to be applicable according to whether a transaction is "intra-state" or "inter-state", separate provisions are there to help an Assessee determine the place of supply for goods and services.
5. States will draft their own State GST based on the draft model law with minor variations.
6. GST would be payable on "transaction value", being the price actually paid or payable, and said to include all expenses in relation to sale, such as packing and commission.
7. As the threshold limit, the draft GST Bill proposes Rs 10 lakh, and for Northeast states and Sikkim, an amount of Rs 5 lakh.

WHAT NEXT?

With the empowered GST committee of SFM making headway in Kolkata, the road ahead becomes clearer:

In the House: The Constitution Amendment Bill for the Goods and Services Tax (GST) will be taken up by the Rajya Sabha in the Monsoon session. The Lok Sabha has already cleared it

In the states: At least 50% of the state legislatures have to ratify the Bill, all states expect Tamil Nadu are on board.

For the public: The draft GST law is in the public domain for feedback

To be a law: The Lok Sabha has to pass it. The states have to pass their own GST laws

Three hurdles: 1% per cent inter-state additional levy: Congress wants it abolished. BJP held out for sometime but Jaitley said on Tuesday the Centre would be flexible on this

Cap on GST rate in the Bill: Congress wants the cap to be a part of the Bill. Govt feels it should not be in the Bill, as the Constitution would need to be amended for any future change.

Dispute resolution: States seeking authority to assess and resolve cases below Rs 1.5 crore, taking majority of the service tax cases from the Centre. Meeting in July to discuss this — though the Centre might relent

Current rollout target: April 1, 2017

(Source: Business Standard)