The Finance Minister of India, Mr. Arun Jaitely introduced four bills on Goods and Service Tax (GST) on March 27, 2017. These bills mainly focus on the Central Goods and Service Tax (CGST) bill which will amalgamate all the indirect central government levies.
The four bills are
- Central Goods and Service Tax (CGST) Bill,
- Union Territory GST Bill,
- Integrated-GST Bill and
- GST (Compensation to States) Bill
As per the details provided by our finance minister, the maximum GST rate will be of 40 percent. He also added the details about anti- profiteering authority and arrests for evading taxes. These are the penultimate steps before the roll out of GST – the biggest tax reform since independence.
Central Goods and Service Tax (CGST)
Central Goods and Service Tax (CGST) is formed on the amalgamation of all the indirect central government levies like sales tax, service tax, excise duty, additional customs duty (Countervailing Duty), special additional duty of customs and surcharge.
- The CGST Bill also provides for e-commerce companies to collect tax at source at a rate not exceeding 1 per cent of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portals.
- It provides the maximum tax slab of 20 per cent.
- To protect Small businesses, the CGST provides for a tax of no more than 1 per cent of turnover for manufacturers with annual turnover of up to Rs 50 lakh.
Union Territory GST Bill
This bill will look after the taxation in UTs of Chandigarh, Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu.
Integrated-GST Bill (IGST)
- Integrated-GST Bill (IGST) is the combination of both Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST).
- These taxes apply on the Goods and Service exchanged between one states to another.
- The IGST law provides for a maximum tax of 40 per cent.
GST (Compensation to States) Bill,
GST (Compensation to States) Bill, focus on the compensation provided by the Central government to the State government over the loss faced by the later.
- 100% compensation is provided to the state for the first 5 years.
- Compensation will be paid bi-monthly and the amount due would be calculated after considering a 14 per cent growth rate in taxes over the base year of 2015-16.
- The rollout of GST is to take place by July 1, 2017 and the only state which is exempted from GST is Jammu and Kashmir.
GST in foreign countries
- Presently there are around 160 countries that have implemented GST
- The first country to implement GST is France
- Along with India, Canada is the only other country to have a dual GST model
- Hungary is the country with highest GST rate of 27% and least rated country is Yemen with 2%