Report Card on GST implementation
Amidst the disagreement on the dual control issue, political deadlock in parliament’s winter session and the yet to be concluded GST Council meetings, the Ministry of Finance issued a press release on 14 December 2016 to assure stakeholders about the government’s continuous effort to implement GST by 1 April 2017 in India.
The Report Card on Goods and Services Tax underscores the status and success of the efforts taken by the Ministry of Finance till date for the smooth implementation of GST. The highlights of the progress made by the government as stated in the ‘Report Card on Goods and Services Tax Implementation’, are summarised as below:
- Formation of a GST Council on 12 September 2016, within a week of the president’s assent on the Constitutional Amendment Act on 8 September 2016.
- After the formation of the GST Council, six meetings have been held to take major decisions for the timely implementation of the new indirect tax regime. The key decisions taken by consensus of the GST Council members are as follows:
- Threshold limit for exemption from GST is set at INR 2 million for all taxpayers and INR 1 million for taxpayers located in Special Category states.
- Threshold limit for availing the Composition Scheme is set at INR 5 million for all taxpayers except service providers.
- Compensation is to be given to states for the loss of revenue due to GST implementation for five years, the base year for revenue of the state being 2015-16 with a fixed growth rate of 14%.
- Approval of the draft GST rules on various business processes viz. registration, payment, return, refund and invoice debit/credit notes.
- All entities exempted from payment of indirect tax under any existing tax incentive scheme will pay tax under the GST regime. The continuation of such incentive schemes would be at the discretion of the concerned Central or state government if the government agrees to continue the incentive, it will work via a refund mechanism.
- Setting up a four-tier GST rate structure (5%, 12%, 18% and 28%) along with the category of goods exempt from GST was announced. Furthermore, there will be a cess levied on specified luxury and sin goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28%.
- Emphasis on the efforts of the government in setting various timelines for the implementation of GST by 1 April 2017, including recommendations and the passage of the Draft GST legislation by the Union Parliament and state legislatures, devolvement and testing of the front-end and back-end IT infrastructure, ongoing training of government officials and consciousness among industry and consumers.
- The current issues under deliberation include ‘GST related draft laws’ and ‘provisions for cross empowerment to ensure a single interface under GST’. With 99 sections of the law finalised, the remaining sections are set to be discussed and closed in the next meeting scheduled on 22 and 23 December 2016.