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GST: Govt panel for removing tax on inter-state trade

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New Delhi: To achieve a middle path on the long due Goods & Services Tax (GST) bill, a government panel headed by Chief Economic Adviser Arvind Subramanian suggested the one per cent additional origin tax for manufacturing states recommended to be levied on the GST, specifically on the inter-state trade of goods to help manufacturing states. This is one of the foremost demands of the Congress and the suggestion might help the BJP-led NDA Government to crack this gridlock in Parliament.

In a report submitted to Finance Minister Arun Jaitley on Friday by the authorised committee recommended changes on the main GST rate to be in the range of 16.9-18.9 percent. The rates endorsed a revenue-neutral rate (RNR) of 15-15.5 percent, with an average rate of 17-18 per cent, should be levied on majority goods and services.

The average rate will be implemented on majority goods and services in the new indirect tax regime. These tariffs were deliberate after eliminating real estate, electricity, alcohol and petroleum products.

The demands put forth by Congress’ comprise 18% GST rate to be legislative and doing away with 1% additional origin tax for manufacturing states- Gujarat, Maharashtra and Tamil Nadu. They had also demanded an independent dispute resolving body for GST.

“The idea of not putting rate caps (of 18% as suggested by Congress) in the Constitution is pragmatic, considering the dynamic business environment which may demand future changes in the GST rate. Recommendation towards wider coverage of sectors (including petroleum) within GST is much desirable in the interest of a cleaner indirect tax regime,” said Rajeev Dimri, leader, indirect tax, BMR & Associates LLP, to a newspaper.

The Constitution Amendment Bill, prevalently recognized as the GST bill, is pending approval in the Rajya Sabha due lack of the majority of the leading government. The government is nonetheless working towards negotiating and finalizing the work by March 31 next year to enable GST’s roll out from April 1, 2016.

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GST Council to Introduce New Method of Return Filing in Six Months

"The committee will examine how these contingencies to be addressed by the GST regime. Its constitution will be announced in the next two days," he said.

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The GST Council on Friday decided to roll out in six months a new method of filing monthly returns and to take over ownership of the GST Network (GSTN), even as it deferred a decision on imposing a sugar cess and allowing an incentive for digital payments.
GST in India, Wikimedia commons

The GST Council on Friday decided to roll out in six months a new method of filing monthly returns and to take over ownership of the GST Network (GSTN), even as it deferred a decision on imposing a sugar cess and allowing an incentive for digital payments.

Briefing reporters here following the 27th meeting of the GST Council, the Chairman and Union Finance Minister Arun Jaitley said the Council had decided to set up two separate groups of five Finance Ministers of states to give recommendations both on the imposition of a cess on sugar as well as a 2 per cent incentive for making payments digitally.

“The GST Council discussed the change in ownership structure of GSTN. As per the original structure of GSTN, 49 per cent is held by the government and balance 51 per cent by other entities,” Jaitley said.

“I had made a suggestion that this shareholding of 51 per cent should be taken over by the government and divided equally between the states and the Centre.

“Eventually, the central government should hold 50 per cent and states will hold 50 per cent collectively. The collective share of states will be pro-rata divided among them per their GST ratios,” he added.

The GST Council on Friday decided to roll out in six months a new method of filing monthly returns and to take over ownership of the GST Network (GSTN), even as it deferred a decision on imposing a sugar cess and allowing an incentive for digital payments.
GST Filing, Pixabay

Noting that sugarcane farmers are in deep distress due to rise in costs, Jaitley said the Council decided to constitute a group of five ministers within two days to make a recommendation on ways to meet contingency arising when the cost of a commodity is higher than its selling price. The committee will submit its report within two weeks keeping in view the urgency of the matter, Jaitley said.

“The committee will examine how these contingencies to be addressed by the GST regime. Its constitution will be announced in the next two days,” he said.

A separate group of five ministers from states will be constituted in two days to recommend a 2 per cent concession, subject to a ceiling of Rs 100 per transaction, to consumers if they pay through digital modes. This report will be submitted before the next GST Council meeting.

“The issue before the council as whether on digital payments through either the banking mode or the cheque mode or any form of digitised mode, a two percent incentive should be given to those who pay entirely through digitised mode. This would be subject to a cap of Rs 100 per voucher and would not apply to the composition dealers,” the Minister said.

Also Read: To Review The Existing Framework of MIIs, SEBI Puts Forward Higher Regulatory Requirement

The Council on Friday also approved the new simplified model of filing returns, to be implemented after six months, providing for one monthly return for all taxpayers, except composition dealers and those with nil tax liability.

“Composition dealers and dealers having nil transaction shall have facility to file quarterly return,” Finance Secretary Hasmukh Adhia said elaborating on the new model.

He said the six-month transition phase is required to get the new software ready, during which the present system of filing GSTR 3B and GSTR 1 returns would continue, adding that taxpayers could continue to claim provisional credit in this period. (IANS)

 

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