SGST cleared, GST on July 1

Setting the stage for a likely rollout a single indirect tax in the country on July 1, the GST Council on Thursday approved the final draft of State GST (SGST) and Union Territory GST (UTGST) Bills. With this, all five GST Bills — SGTS, Central GST, Integrated GST (IGST), UGST and compensation Bill — have been cleared. This would pave the way for their introduction in Parliament and state assemblies.

The council has also approved the maximum cess at 15 per cent, which could be imposed on luxury cars, tobacco, aerated drinks and pan masala among others, when the new tax is rolled out from July 1. This would be imposed over and above the peak GST rate of 28 per cent. The actual cess, however, is likely to be less as the council has kept headroom for itself for future exigencies by proposing higher caps.

IT HAS also cleared the maximum cess at 15 per cent, which could be imposed on luxury cars, tobacco, aerated drinks and pan masala among others.

The GST Council on Thursday gave its nod to State GST (SGST) and Union Territory GST (UTGST) paving the way for bringing final legislations on the new indirect tax in the Parliament and state assemblies.

With this all five GST legislations — SGTS, Central GST, Integrated GST (IGST), UGST and compensation law — have been approved by the GST Council. The GST council also approved maximum cess which could be imposed on luxury cars, tobacco, aerated drinks and pan masala among others to raise money to compensate states for loss of revenue when the new tax is rolled out from July 1.

However, the actual cess imposed on these commodities is likely to be less as GST council kept headroom for itself for future exigencies by proposing higher caps. These cess would be imposed over and above peak GST rate of 28 per cent.

As per the approval, maximum cess on luxury cars and aerated drinks will be 15 per cent and on pan masala 135 per cent ad valorem. Tobacco cess will be capped at a mixture of `4,170 per 1,000 sticks or ad valorem of 290 per cent or a combination of both.

Cess on coal would be at `400 per ton. No decision has been taken to levy cess on bidis as of now.

GST Council has kept the option open for levy of 15 per cent cess on “all other supplies”

“If a luxury car at present commands a total tax of 40 per cent, under the new indirect tax regime, a GST of 28 per cent plus 12 per cent cess would be levied to keep the tax incidence at the same level. The cap is ceiling, so we have kept a little headspace. Not an extraordinary headspace, but only a marginal headspace,” Arun Jaitley said after the meeting.

Central GST, IGST, UGST and compensation law will now need to be approved by the Union Cabinet and after which it will be brought in the Parliament. “We will try and do that expeditiously,” said Mr Jaitley. State GST will needed to be approved by each state cabinet and then passed by the respective state assemblies.

Now among the pending agenda for the GST council is to approve four rules — composition, valuation, input tax credit and transitions. For this, the next meeting has been called on March 31.