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GST set for July launch; States agree on primary structure

The final draft of Central GST (C-GST) and Integrated GST (I-GST) has been approved by the GST Council in its meeting today. In its next meeting on March 16, the Council will carry out discussions for approving the State-GST and Union Territory-GST (UT-GST) laws. The C-GST and I-GST will now be presented in the Parliament for approval in the second half of the budget session that will start from March 9. According to Finance Minister Arun Jaitley, the model GST law will provide for levy of up to 40%, which would comprise 20% by the Center and 20% by the States. However, the effective tax rate applicable will be as per the earlier agreed structure of 5, 12, 18 and 28 percent.

Speaking on the development, Jaitley said, “The rates will be what have been decided by the Council. There won’t be a higher rate of taxation. But the cap rate in the legislation is always put at a higher level to leave a headspace, just as in the Customs Act you have a difference between the bound rate and applied rate. So the applied rate is going to be what the council has decided.” This way, there won’t be any need to seek Parliament’s approval in case there is a need to increase levy on specific goods and services. It will also be useful when the cess on de-merit goods being proposed to compensate states for loss of revenue from GST, is to be merged with the tax rate itself, said Jaitley.

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