Jaitley moves GST bills in Lok Sabha, rates capped at 40%
Legislation tweaks compensation formula while mandating an antiprofiteering authority and imprisonment for tax evaders
NEW DELHI: Finance minister Arun Jaitley on Monday introduced in Lok Sabha four crucial bills required to implement the Goods and Services Tax (GST).
The legislation capped the maximum GST levy at 40%, tweaked the compensation formula while mandating an antiprofiteering authority and jail term for tax evaders.
The four bills moved in the lower house of Parliament are the Central Goods and Services Tax (CGST) Bill, Integrated Goods and Services Tax (IGST) Bill, the Goods and Services Tax (Compensation to States) Bill and the Union Territory Goods and Services Tax (UT-GST) Bill.
The CGST, IGST and SGST provide for a maximum tax of 20% each. Taken any of the two taxes together, the bills provide that the maximum tax burden in the GST regime at 40% as an enabling provision for financial emergencies. The actual rates in the four-slab structure will be 5%, 12%, 18% and 28%, as approved by the GST Council.
The GST (Compensation to States) Bill provides for mechanism for making good any loss of revenue of states from introduction of GST in first five years of rollout.
Businesses in the Northeastern and hill states with annual turnover below ₹10 lakh would be out of the GST net, while the threshold for the exemption in the rest of India would be an annual turnover of ₹20 lakh.
The GST will reduce the cascading impact of taxes, help shore up revenues, moderate inflation and spur economic growth by 1-2 percentage points.
The Compensation Law provides for levy of cess on top of the peak rate of approved tax on paan masala, tobacco, aerated waters, luxury cars and coal to create a fund for compensating states. Such cess has been capped at 135% in case of paan masala, ₹4,170 per thousand cigarettes sticks or 290% on value (ad valorem), ₹400 per tonne on coal and 15% on aerated water and luxury cars.
The compensation to states will be paid bi-monthly and the amount due would be calculated after considering a 14% growth rate in taxes over the base year of 2015-16.
THE COMPENSATION TO STATES WILL BE PAID BIMONTHLY AND THE AMOUNT DUE WOULD BE CALCULATED AFTER CONSIDERING A 14% GROWTH RATE IN TAXES OVER THE BASE YEAR OF 201516