GST BILL THE CONSTITUTION 122 ND Amendment Bill

“GST BILL” -THE CONSTITUTION (122 ND Amendment Bill), 2014 BY CA SRINIVASAN ANAND G 1

GST BILL “GST Bill” is a misnomer for this Bill. This Bill does not propose to introduce a law to levy GST. This Bill proposes to amend the Constitution to: confer concurrent taxing powers on Centre & the States to make laws to levy GST will come into force only when this Bill is passed to and under amended Constitution the Centre & states make laws imposing GST 2

Definition of “Services” ¡ ¡ “Services” defined by proposed new clause (26 A) to be inserted into Article 366 “Services” means anything other than goods 3

Features of GST One indirect tax (GST) to replace a number of Central and state indirect taxes levied at present Intention is to remove cascading effect of multiple indirect taxes Proposed GST aims at creating a common national market for goods and services Concurrent taxing powers to Centre & States to make laws for levying GST to cover all goods/services except alcoholic liquor for human consumption 4

Central Indirect Taxes that GST will replace ¡ ¡ ¡ ¡ Central Excise Duty Additional Excise Duties Excise Duty levied under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 Service Tax Additional Customs Duty (Countervailing Duty) Special Additional Duty of Customs Central surcharges and cesses relating to supply of goods and services CST 5

State taxes that proposed GST will replace ¡ ¡ ¡ ¡ ¡ State VAT/sales tax Entertainment Tax (other than the taxes levied by local bodies) CST (levied by the Centre & collected by States) Octroi Entry Tax Purchase Tax Luxury Taxes on lottery, betting and gambling State surcharges & cesses relating to supply of goods & services 6

Will Central Excise Duty/State VAT go on introduction of GST? ¡ ¡ ¡ Yes. CED to go on all goods except petroleum & petroleum products and tobacco products. Power of Centre under Entry 84 to impose CED to be limited to these products. State VAT to go all goods except petroleum & petroleum products & alcoholic liquor for human consumption. Power of States under Entry 54 to impose VAT to be limited to these products. Petroleum & petroleum products will not come under GST net till a date notified on the recommendation of the GST Council. Presumably, CED/State VAT to apply on these till then. 7

Will Service tax go on introduction of GST ? Ø Ø Ø Service Tax (presently imposed by Centre) will go Entry 92 C “Tax on Services” in Union List ie List I of Seventh Schedule proposed to be omitted All services will be under the GST net 8

Objects of the Constitution (122 nd Amdt) Bill Ø Ø Ø Ø subsuming of various Central indirect taxes and levies into GST; subsuming of State indirect taxes into GST; dispensing with the concept of “declared goods’ levy of Integrated GST on inter-State transactions of goods & services; levy of an additional tax on supply of goods, not exceeding 1%, in the course of inter-State trade or commerce to be collected by the Govt of India for a period of two years, and assigned to the States from where the supply originates; compensation to the States for loss of revenue on account of GST for a period upto 5 years; creation of GST Council to examine issues relating to GST and make recommendations to the Union &the States on parameters like rates, model GST laws, exemption list & threshold limits 9