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GST with all its Four Bills will set out from July 1 after getting Green signal in Loksabha

GST bills comprise 4 slabs of 5%, 12%, 18% and 28%. The government has set the maximum GST rate at 40% and introduced provisions for an anti-profiteering authority and arrests for evading taxes

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Goods and Services Tax, image courtesy: Wikimedia Commons

New Delhi, March 29, 2017: After an 8-hour long debate, The Lok Sabha passed all four bills corresponding to GST or Goods and Services Tax crucial to the launch from July 1 of the country’s biggest tax reform since Independence. Finance Minister Arun Jaitley defended the four-slab structure, and said that without it the taxing system would be regressive.

The bills passed on Wednesday are the Central GST bill, the Integrated GST bill, the Union Territories GST bill and the compensation law.

Pitching it as a “unique experience of Indian legislatures,” Finance Minister initiated the debate saying, “These are revolutionary bills which will benefit all. States have pooled in their sovereignty into the GST council, and centre has done the same”.

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The Congress remonstrated with Jaitely alleging the practicality of the bills are far from the government’s claim of “one nation, one tax”, referring to the GST’s four-slab structure.

Countering the opposition’s objection to a GST with multiple rate slabs, the Finance Minister said, “If there are no multiple rates, it will become a highly regressive tax… Some goods are essential for the poor.” To illustrate his point he said, “A BMW and Hawai chappal (slippers) can’t have the same tax. What is the good, who uses it, matters.”

GST bills comprise 4 slabs of 5%, 12%, 18% and 28%. The government has set the maximum GST rate at 40% and introduced provisions for an anti-profiteering authority and arrests for evading taxes.

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Senior Congress leader Veerappa Moily objected to the anti-profiteering clause in the Bill, calling it “far too draconian”. The Opposition had also expressed concerns about how the Bills were introduced in Parliament on Monday.

Senior Congress leader Veerappa Moily called down the anti-profiteering provision in the Bill, calling it “far too draconian”. The Opposition had additionally communicated worries about how the Bills were introduced in Parliament on Monday.

Speaking during the debate, the former law minister Veerappa Moily accused the BJP of costing India 12 lakh crores by opposing the reform when it was initiated by his party when it ruled at the centre. He criticized various provisions in the bills and said the BJP’s effort was “not a game-changer, but only a baby step.”

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Commenting at the ‘anti-profiteering provision’ in the Bill, the senior Congress leader called it down as “far too draconian”. The Opposition had additionally communicated worries about how the Bills were introduced in Parliament on Monday.

Mr Moily also accused the government of undermining the Rajya Sabha or Upper House. “The Upper House is the council of states, yet it has no right to discuss crucial bills. This is an assault on federal structure – I say that all members of the Rajya Sabha must resign,” he said.

Because the four bills have been presented as “money bills”, the Rajya Sabha, where the government is in a minority, can only suggest changes. These will be brought back to the Lok Sabha, which can choose to accept or reject them.

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In the defense of accusations labeled by Mr Moily, Finance Minister said that the government has emphasized that it wants the GST bills to be passed in parliament with the consensus of all the members of Parliament.

“States have pooled in their sovereignty into the GST Council, and the Centre has done the same. The council held 12 meetings to make it a process based on consensus and recommendations,” Jaitley said.

The one-nation, one-tax policy of GST is expected to boost the rate of economic growth by about 0.5 percentage points, broaden the revenue base and cut compliance cost for firms.

-prepared by Ashish Srivastava of NewsGram Twitter @PhulRetard

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Some Petroleum Products Could be Brought Under GST by New Government

In April, the GST collection had already shot up to record level of Rs 1.13 lakh crore

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GST levy on natural gas would help state-run oil companies. Pixabay

At least two out of five petroleum products, including the aviation turbine fuel or ATF and natural gas, are likely to be among the first set of petro products to be included in the GST ahead of an earlier agreed schedule.

Sources said that with Modi government again set to take charge of the government at the Centre, the prospect of two products being included into the GST fold has brightened. The Finance Ministry has started preparing ground for next round of discussions at the GST Council with proposal for taking out gas and ATF from GST first before evolving consensus on other petroleum products.

The Ministry of Petroleum and Natural Gas has already put a request for their inclusion in the indirect tax system and the Finance Ministry could consider placing the proposal in the initial meetings of the Council after the new government takes charge at the Centre.

As part of its efforts to build consensus with states on GST launch, the previous Modi government had decided to exclude five petroleum products viz crude oil, petrol, diesel, ATF and natural gas from the list items placed under GST but included products such as cooking gas, kerosene and naphtha in the new regime.

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The Ministry of Petroleum and Natural Gas has already put a request for their inclusion in the indirect tax system. Pixabay

This created a messy situation for companies, as they were required to comply with both the old and new tax regimes. Moreover, tax credits were not transferable between the two systems.

A member of the council had earlier said that though petroleum products were not kept out of the GST, its inclusion in the regular tax system might have to wait at least for a year by when the revenue impact of GST would be better known.

The government hopes that the GST collections would be well over Rs 1 lakh crore mark in all months of FY20 easing pressure on the revenue to bring in next wave of reforms. In April, the GST collection had already shot up to record level of Rs 1.13 lakh crore.

“ATF may be the first among petro product still outside GST. Inclusion of natural gas could be next or may be done simultaneously with ATF,” said government source privy to the development.

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The jet fuel price’s inclusion would allow airlines to take input tax credit on the GST paid thus bringing down the effective cost. Similarly, GST levy on natural gas would help state-run oil companies such as ONGC, IOCL, BPCL and HPCL to save tax burden to the tune of Rs 25,000 crore as they would get credit on taxes paid for inputs and services. Tax credits are not transferable between the two different taxation systems.

Experts said that the ATF price would come down if it is kept in the 18 per cent GST bracket and no other surcharge is levied. The lower fuel cost would mean ticket prices going down for air-travellers. It would benefit corporate travellers the most as they would be able to claim credit on GST paid besides their effective tax rate would also come down. Fuel accounts for nearly 30-40 per cent of an airline’s operating cost.

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The government hopes that the GST collections would be well over Rs 1 lakh crore mark. Pixabay

Inclusion of gas would not pose a challenge for the GST Council as it is largely an industrial product where a switch over to new taxation would not be difficult. The revenue implication for the states is also low in the case of this switchover.

Earlier, former Oil and Petroleum Minister Dharmendra Pradhan had also made a strong case for inclusion of natural gas in GST saying that if polluting coal can be included, then the environment-friendly fuel certainly deserves a place in the new regime. He also favoured bringing others petro products under the GST gradually.

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Gas sales, including CNG and piped gas supplies attract VAT ranging from 5-12 per cent. (IANS)