GST council signs off on rules, rates to be taken up in May
Dated 31st March, 2017
The thirteenth meeting of the GST council signed off on the rules that will form the basis of the implementation of the singular tax reform
New Delhi, 31st March, 2017: The prospects of a 1st July rollout of the goods and services tax (GST) brightened further on Friday.
The thirteenth meeting of the GST council signed off on the rules that will form the basis of the implementation of the singular tax reform. This leaves the council with only the time-consuming work of fitting the various goods and services into tax slabs.
Earlier this week, the Lok Sabha cleared the last batch of supporting legislation crucial for the implementation of GST. The Rajya Sabha is expected to take up these bills—tabled as money bills—next week for consideration.
GST aims to remove barriers across states and integrate the country into a common market. It will subsume a host of indirect taxes levied by the Centre and the states.
The council finalized five sets of rules relating to registration, refunds, returns, payment and invoice debit and credit. It also gave its tentative nod to four more sets of rules dealing with input tax credit, valuation, transitional provisions, and the composition scheme. These set of rules will be finalized after receiving industry feedback.
“The next meeting will be held on 18-19 May in Srinagar where besides these rules which will be given final approval, the rate structure in relation to individual commodities will be taken up for consideration. In the meanwhile, the officers’ committee will start working on the fitment of those rates,” said finance minister Arun Jaitley at a press conference.
The GST council has finalized four rate slabs—5%, 12%, 18% and 28%, besides deciding to impose a cess on certain demerit items and sin goods like tobacco, cola, luxury cars and pan masala. Foodgrain is likely to be zero-rated as the government looks to reduce the inflationary impact of this new tax regime on the common man.
Most of the services are expected to be taxed at 18% with a few services being taxed at lower rates in line with the existing abatement rates in service tax. The industry is eagerly awaiting the final laws and rules to prepare for a transition to GST.
Experts said the time available for businesses to prepare for GST rollout was limited but should make every effort to measure up to it.
“The government is very keen to implement the tax reform from 1 July. The industry should cooperate and overcome the hurdles they face in terms of having IT systems in place and bringing the changes needed in their processes. It is a great achievement for the government to have finalized the laws and rules in the same week,” said Prashant Deshpande, partner, Deloitte Haskins & Sells LLP.