The government's bid to implement the goods & services tax (GST) as early as possible got a significant boost with the empowered committee of state finance ministers endorsing the so-called `place of supply' rules that form the back bone of the new regime that will replace a plethora of levies, create a common market and likely give GDP growth a lift of up to two percentage points. The states are also confident GST will be in place will be in place by April 1, 2016 six years after it was originally scheduled to take effect.
The place of supply rules decide where goods or services will be taxed fixing a crucial element of the levy that has gained in importance because of the surge in ecommerce and electronic delivery of services.Meanwhile, the Centre is preparing the ground for a national common market commission that will mesh with GST to create a unified area without interstate barriers to trade.
However, both the Centre and the states continue to differ on the threshold for the levy with the first wanting it to be raised Rs.25 lakh while the latter prefers it at Rs.10 lakh. The Centre has assured the states that they won't suffer any revenue loss on account of subsuming petroleum product and entry taxes within the ambit of GST, promising to meet an important concern of states that are opposed to these levies being included in the levy that was to have been rolled out in April 2010.
Place of supply and consumption will determine the tax-recipient state and consuming state and have implications for their revenue.
Prime Minister Narendra Modi has identified GST as one of the most important items on the government's crowded reforms agenda, and progress on talks is being closely monitored.
The government is expected to finalise the draft of the constitutional amendment Bill that will allow the Centre to tax goods at retail level and states to tax services in a few days. Finance Minister Arun Jaitley has already indicated that the Centre is in the last stage of finalising the draft of the Bill, approval of which is an essential step in the process.
“If all goes well and the constitutional amendment Bill is carried in Parliament by both the Houses, I think the 2016 target date is achievable,“ said GST Empowered Committee Chairman Abdul Rahim Rather. The empowered panel did not agree to the Centre's demand for a higher threshold for taxing goods and services.
The committee wants to stick to the agreed Rs.10 lakh thresh old. However, the final call on the threshold could be taken by the GST Council proposed to be created in the constitution amendment Bill.
GST will subsume central indirect taxes such as excise duty and service tax at the central level and value added tax at the state level besides other local levies such as octroi and entry tax. Though states are reluctant to include entry tax within GST, the Centre is now attempting to persuade them by offering a revenue compensation mechanism. The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha in 2011, has lapsed and the government has to come up with fresh legislation.
The place of supply rules decide where goods or services will be taxed fixing a crucial element of the levy that has gained in importance because of the surge in ecommerce and electronic delivery of services.Meanwhile, the Centre is preparing the ground for a national common market commission that will mesh with GST to create a unified area without interstate barriers to trade.
However, both the Centre and the states continue to differ on the threshold for the levy with the first wanting it to be raised Rs.25 lakh while the latter prefers it at Rs.10 lakh. The Centre has assured the states that they won't suffer any revenue loss on account of subsuming petroleum product and entry taxes within the ambit of GST, promising to meet an important concern of states that are opposed to these levies being included in the levy that was to have been rolled out in April 2010.
Place of supply and consumption will determine the tax-recipient state and consuming state and have implications for their revenue.
Prime Minister Narendra Modi has identified GST as one of the most important items on the government's crowded reforms agenda, and progress on talks is being closely monitored.
The government is expected to finalise the draft of the constitutional amendment Bill that will allow the Centre to tax goods at retail level and states to tax services in a few days. Finance Minister Arun Jaitley has already indicated that the Centre is in the last stage of finalising the draft of the Bill, approval of which is an essential step in the process.
“If all goes well and the constitutional amendment Bill is carried in Parliament by both the Houses, I think the 2016 target date is achievable,“ said GST Empowered Committee Chairman Abdul Rahim Rather. The empowered panel did not agree to the Centre's demand for a higher threshold for taxing goods and services.
The committee wants to stick to the agreed Rs.10 lakh thresh old. However, the final call on the threshold could be taken by the GST Council proposed to be created in the constitution amendment Bill.
GST will subsume central indirect taxes such as excise duty and service tax at the central level and value added tax at the state level besides other local levies such as octroi and entry tax. Though states are reluctant to include entry tax within GST, the Centre is now attempting to persuade them by offering a revenue compensation mechanism. The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha in 2011, has lapsed and the government has to come up with fresh legislation.
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