A Parliamentary panel headed by former finance minister Yashwant Sinha said that the bill on goods and services tax should not ideally include specific aspects relating to rates, exemptions, exclusions, thresholds and administrative arrangements.
“What should be included in the laws and rules should not form part of the constitution of India,“ the panel's report said.
The present bill relating to GST, in the committee's view has not been “well-drafted“ from this perspective and therefore, requires amendments. The committee recommended that the entry tax should be subsumed in GST and states should be empowered to collect it.
It proposed a floor and ceiling rates model for GST as in Europe. It asks for states to be given the option to be included in GST just like in the case of VAT.
The panel said the fears in some quarters that GST council be made constitution body, over-riding the supremacy of Parliament or state legislature is not correct as it is envisaged as a recommendatory body.
“The fruitful experience with the empowered committee of state finance ministers so far did not seem to give “any credence to such apprehensions,“ the 95-page report said.
The body has provided a useful platform for consensus building between centre and states and has evolved democratic practices over time to discuss and resolve issues, it said.
The panel thus expects the proposed GST council to follow the principles of cooperative federalism and democratic governance.
As this will be a political and a recommendatory body, it would be in a position to play a constructive and enabling role vis-à-vis the legislature, which would remain supreme in matters of legislation including taxation, the report said.
The panel believed that there is a need to set up GST monitoring or evaluation cell that should closely follow on a continuous basis the immediate impact of GST on key aspects such as growth in GDP , inflation, hoarding, compliance costs for taxpayers, administrative bottlenecks and the retail prices paid by the ultimate consumers.
The efficacy of the proposed GST model in lieu of the existing central sales tax dispensation with regard to inter-state trade, transactions and the requirement for a robust, error-free IT platform also needs to be monitored with a view to assessing and ensuring that India becomes a truly common market.
The panel felt that states should have some limited leverage to vary the rate of tax depending on exigencies. Hence it desires that a system of band with floor rate should be adopted while introducing GST to provide some elbow-room to states.
To ensure that there is no unilateral decision by the center regarding taxation of `declared goods', the panel felt that it should be kept outside the purview of GST to uphold the spirit of cooperative federalism. The panel noted with concern that there was no structured mechanism to tackle the problem of central sales tax compensation to states arising out of phasing out of CST.
“What should be included in the laws and rules should not form part of the constitution of India,“ the panel's report said.
The present bill relating to GST, in the committee's view has not been “well-drafted“ from this perspective and therefore, requires amendments. The committee recommended that the entry tax should be subsumed in GST and states should be empowered to collect it.
It proposed a floor and ceiling rates model for GST as in Europe. It asks for states to be given the option to be included in GST just like in the case of VAT.
The panel said the fears in some quarters that GST council be made constitution body, over-riding the supremacy of Parliament or state legislature is not correct as it is envisaged as a recommendatory body.
“The fruitful experience with the empowered committee of state finance ministers so far did not seem to give “any credence to such apprehensions,“ the 95-page report said.
The body has provided a useful platform for consensus building between centre and states and has evolved democratic practices over time to discuss and resolve issues, it said.
The panel thus expects the proposed GST council to follow the principles of cooperative federalism and democratic governance.
As this will be a political and a recommendatory body, it would be in a position to play a constructive and enabling role vis-à-vis the legislature, which would remain supreme in matters of legislation including taxation, the report said.
The panel believed that there is a need to set up GST monitoring or evaluation cell that should closely follow on a continuous basis the immediate impact of GST on key aspects such as growth in GDP , inflation, hoarding, compliance costs for taxpayers, administrative bottlenecks and the retail prices paid by the ultimate consumers.
The efficacy of the proposed GST model in lieu of the existing central sales tax dispensation with regard to inter-state trade, transactions and the requirement for a robust, error-free IT platform also needs to be monitored with a view to assessing and ensuring that India becomes a truly common market.
The panel felt that states should have some limited leverage to vary the rate of tax depending on exigencies. Hence it desires that a system of band with floor rate should be adopted while introducing GST to provide some elbow-room to states.
To ensure that there is no unilateral decision by the center regarding taxation of `declared goods', the panel felt that it should be kept outside the purview of GST to uphold the spirit of cooperative federalism. The panel noted with concern that there was no structured mechanism to tackle the problem of central sales tax compensation to states arising out of phasing out of CST.
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