The Goods and Services Tax Council will begin a crucial three-day meeting on Tuesday, during which the rate bands for the new regime are likely to be finalised. The council will also look to take a call on other key issues, including the compensation of states for revenue losses. The Centre hopes to complete the deliberations quickly so that it can push the GST Bill during the winter session of Parliament, which begins on November 16. The Centre wants to implement the GST by April 1, 2017.
The GST rate is the most pressing aspect of the new tax regime. A panel led by Chief Economic Adviser Arvind Subramanian had in December 2015 proposed a three-tier system for the tax regime: A standard rate of 17-18%, 12% for some essential goods and 40% for items such as luxury cars, aerated drinks, tobacco and paan masala. These figures have been met with a mixed response from the industry and states.
The Centre’s GST Bill sought to bring in a single tax rate to replace India’s complicated current rules, which include Central excise duty, service tax, additional customs duties, value added tax, entertainment tax and so on. It will replace 17 indirect tax levies. The Centre believes this will help create a unified market in the country, avoiding double taxation and increasing compliance. The GST will have a Central component and a state component, which both forms of government will administer at their levels.
The Bill got Pranab Mukherjee’s approval on September 8, after being ratified by 16 states. It was passed by the Rajya Sabha on August 3.
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