The GST Council on Saturday cleared the crucial Central GST and Integrated GST laws, ceding states’ demand for a tax rebate for small restaurants.
This decision should make it possible to roll out the new indirect tax regime from July 1.
Now, the states and Union Territories need to pass SGST and UT-GST laws before March 16, when the council will meet to ready a collective GST Bill for passage by Parliament during the second half of the Budget session, beginning March 9.
“The GST (Goods and Services Tax) Bill will hopefully reach Parliament this session. July 1 now optimistically looks like the implementation date for GST,” Finance Minister Arun Jaitley told reporters after a day-long meeting with his state counterparts at the GST Council.
The two-day meeting concluded in a day due to a consensus between the Centre and the states on almost all the issues concerning CGST and IGST.
Jaitley said the passage of SGST and UT-GST by the federal legislatures was only a formality as they were a “replica” of the Central GST laws.
West Bengal Finance Minister Amit Mitra said the states were seeking tax concession for small restaurants and dhabas under GST, and the Centre has given its consent. Restaurants with an annual turnover below Rs 50 lakh will be taxed 5% under GST.
The rest will be charged at the prevailing rate of the service tax. This will make eating out cheaper.
Tamil Nadu Finance Minister D Jayakumar said his state was fully geared for GST.
Real estate
Delhi Deputy Chief Minister Manish Sisodia, however, wrote to Jaitley for bringing real estate under the ambit of GST. Without this, the fight against black money would be incomplete, Sisodia said.
The Centre and states have decided to exempt agriculturists from registering under the GST regime, while the threshold for traders has been set at Rs 20 lakh turnover.
Jaitley also cleared the air regarding the highest cap for GST, saying it would not be higher than 28% as cleared by the council in its earlier meeting. On the provision for a 40% peak rate, Jaitley said, “The cap in any law is always kept high to give the executive some space in the future.”
Jammu and Kashmir Finance Minister Haseeb Drabu contended that it was wrong to call a 40% peak rate. It was only an enabling rate to give some room to the Centre to manoeuvre when the 12% cess provision was withdrawn after five years and some states still needed compensation.
Last month, the council had cleared the draft compensation law, according to which the Centre will have to fully compensate states for any revenue loss for five years after migrating to the new tax regime.
Bullish on the manufacturing sector’s preparedness, corporates and market analysts see no hurdle to the GST rollout from July 1.