Source: News Bharati English17 Jan 2017 13:24:07
New Delhi, January 17: Central government finally has brought all the solutions for the issues over tax assessments in Goods and Service Taxes (GST) which were creating a deadlock between central and state governments. Now, India will likely to be able to roll out GST from July 1, three months behind the original April 1 schedule. Finally, the most awaited dream of one nation one tax comes true and will be effective in next 5 months.
Let’s understand the implementation of GST:
i) All assessees with an annual turnover of Rs 1.5 crore or below will be split on a 90:10 ratio between the states and the Centre. States would assess 90 percent of businesses with an annual turnover Rs 1.5 crore, while the Centre will assess the remaining 10 percent.
ii) Businesses with a turnover of more than Rs 1.5 crore will be split equally with the states assessing 50 percent of such traders and the Centre the remaining 50 percent.
iii) The Centre also gave the right to tax economic activities within 12 nautical miles to coastal states, even as it will be the territory of the Union. At present, these states have the right to tax these activities.
iv) The Centre has broadly agreed to states demand on “dual control” or cross empowerment to split the administrative, auditing and assessing powers between the two governments under GST, which promises to stitch together a common national market by consolidating a web of local and central taxes into a single charge.
v) The power to levy and collect the I-GST lies with the central government but states will also be cross-empowered in the same ratio as above through a special provision in the law.
vi) Any IGST disputes among states will be resolved by the Centre.
Notably, after the ninth meeting of GST council which was held on Monday, Finance Minister Arun Jaitley in the press conference said that all the differences over tax assessments had been sorted within central and state government and GST will likely to be effective from July 1.
Arun Jaitley said, “we have arrived a decision on dual control and discussed this issue for the entire day and have been able to arrive at a decision on this issue.” He further said, "It's a significant headway.”
Minister Jaitley thanked all the state governments for providing the support and also agreeing on many issues. Jaitley also said that the power to collect the IGST taxation is with the Centre, “but by a special provision in the law, the states will also be cross-empowered in the same ratio of assessment.”
In the exercise of IGST, where there are contentious issues between states, those assessments will necessarily take place by the Centre, he said. “The draft of these laws will now be firmed up and discussed during the next GST Council meeting on February 18,” Jaitley said. “Once those drafts are approved by the council, respective legislative bodies (the Parliament and state Assemblies) will take these for approval.”
Importantly, The GST Bill is aimed at bringing uniform tax regime in the country by subsuming state levies. Under it, a single rate of GST will replace Central Excise, State VAT, entertainment, entry and luxury taxes to ensure seamless transfer of goods and services. The Constitution (122nd Amendment) Bill, 2014 was approved by the Lok Sabha and Rajya Sabha. After both the upper houses ratified the bill, states assembly also ratified the bill one by one within 2 months.