The GST, which seeks to replace Excise Duty and Service Tax at the central level and Value Added Tax (VAT) on the states front, besides local levies, surcharges and cesses, is being viewed as the most radical reform in the indirect tax system.
The Bill, introduced by Finance Minister Pranab Mukherjee, seeks to amend the constitution with a view to confer simultaneous powers on Centre and states to levy taxes on goods and services.
Currently the Constitution does not provide for any concurrent taxing powers to the Centre as well as the states. Under the present mechanism, the Centre cannot impose tax beyond manufacturing, while states cannot impose taxes on service.
“The GST would replace a number of indirect taxes presently being levied by the central government and the state governments and is intended to remove cascading of taxes and provide a common national market for goods and services”, the statement of Object and Reason of the Bill stated. The Bill provides for creation of a GST Council to be headed by Union Finance Minister. It will recommend tax rates and exemption and threshold limits for good and services.
The council will have the Minister of State for Finance in charge of revenue as one of the members. The Bill also proposed a GST Dispute Settlement Authority (GSTDSA) to deal with grievances of the centre and the state with regard to GST. The Bill proposes that items like petroleum, natural gas, diesel, Aviation Turbine Fuel and alcohol for human consumption be kept out of the GST ambit. At the same time, it proposes enabling the levy of GST on sale or purchase of newspapers and advertisements published.
GST’s introduction has been pending for the last four years because of differences between Centre and states over wide range of issues.
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