Honourable Finance
Minister tabled the much awaited Constitutional Amendment Bill in the
Parliament yesterday evening as a first step to usher in Goods and Service tax.
It is a clear reflection of the fact that the Government is committed to
introduce GST to replace the current indirect tax framework. Suggested
date of implementation as per media reports is 1 April 2016.
One of the key reasons for delay in implementation of GST was concerns expressed by State Governments on loss of autonomy and potential reduction in tax revenues post implementation. The Bill addresses all key issued raised by States; demonstrating that the Union Government is sensitive to challenges that States may face, and is willing to proactively deal with them.
Keeping the levy provisions broad (except for alcohol for human consumption) is a welcome move. It, however, appears that petroleum products may not be zero rated as of now. Additional tax of 1% on inter-state supply of goods may also cover stock transfers (depending on how the term “supply” is defined). In contrast to the current CST framework, this additional tax would apply at the same rate to both B2B and B2C transactions.
GST Council once constituted, is expected to play a significant role in putting in place the detailed framework of regulations, as well as address key issues that may arise from time to time.
We are pleased to release an alert on this development.
One of the key reasons for delay in implementation of GST was concerns expressed by State Governments on loss of autonomy and potential reduction in tax revenues post implementation. The Bill addresses all key issued raised by States; demonstrating that the Union Government is sensitive to challenges that States may face, and is willing to proactively deal with them.
Keeping the levy provisions broad (except for alcohol for human consumption) is a welcome move. It, however, appears that petroleum products may not be zero rated as of now. Additional tax of 1% on inter-state supply of goods may also cover stock transfers (depending on how the term “supply” is defined). In contrast to the current CST framework, this additional tax would apply at the same rate to both B2B and B2C transactions.
GST Council once constituted, is expected to play a significant role in putting in place the detailed framework of regulations, as well as address key issues that may arise from time to time.
We are pleased to release an alert on this development.
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