Finally, after 10 long years, the Constitutional Amendment for GST is

through

The Constitution (122nd Amendment) Bill, 2014 (GST) or simply the GST Bill, is
passed with a unanimous 203 AYES. The Bill took about 10 years to get cleared as it
went through multiple rounds of negotiations and re-negotiations. The passage of
the bill by way of Constitutional amendment has gotten the ball rolling for moving
the biggest tax reform in the country.
Key features
Features
Scope of
GST

Levy of GST

Additional
tax

GST Council

Elaboration
1. GST is applicable on the supply of goods or services.
2. Alcoholic liquor for human consumption is exempt from GST.
3. Initially, GST will not apply to:
(a) petroleum crude,
(b) high speed diesel,
(c) motor spirit (petrol),
(d) natural gas, and
(e) aviation turbine fuel.
4. The GST Council will decide when GST will be levied on them.
5. Tobacco and tobacco products will be subject to GST. The center
may also impose excise duty on tobacco
1. Both, Parliament and State Legislatures will have power to make
laws on taxation of goods and services.
2. Central Govt., exclusive power to levy & collect in case of interstate trade or commerce, or imports
3. GST council to specify manner of sharing of IGST between
center and state
1. An additional tax of up to 1% on the supply of goods will be
levied by center in the course of inter-state trade or commerce.
2. The tax will be collected by the center and directly assigned to
the states from where the supply originates
3. Tax to be levied for two (2) years or longer period as per GST
council
1. The GST Council will consist of:
(a) the Union Finance Minister (as Chairman),
(b) the Union Minister of State in charge of Revenue or Finance,
and
(c) the Minister in charge of Finance or Taxation or any other
Minister, nominated by each state government
2. GST council decisions to be made by Three Fourth majority, with
center having one third of the votes cast, the state together
shall be two-third.
3. GST council to make recommendation on taxes, exemptions,
cesses, surcharges, threshold limits, rates od tax, model laws,
principles of levy, apportionment of IGST, any other special
provisions.

Compensati
on to states

Parliament may, by law, provide for compensation to states for

revenue losses arising out of the implementation of GST, based on
the recommendations of the GST Council. Such compensation could
be for a maximum of five years

Road Ahead
1. The bill will go back to the Lok Sabha for its assent on the new amendments
brought in by the Government
2. The bill will have to be ratified by the 50% of the State Assemblies and then
receive the Presidents assent
3. The GST council comprising of the state Finance Ministers, and the Union
Finance Minister, will be set up. It will decide on what the tax rate will be
under GST, the revenue threshold below which traders will be exempted from
the levy and also the administrative processes under GST.
4. The model central GST law and the integrated GST law will be tabled in
Parliament for its approval. All State legislatures will also need to get the
state GST law passed.
5. Subsequent to the passage of the bills, the rules will be notified for finalizing
the processes under GST.
6. Simultaneously, the information technology network will also have to be
readied to ensure a seamless registration, tax payment, return filing and
refund system across all states.

Major Challenges
1. Arriving at a consensus on the tax rate under GST is going to be an uphill
task, with states unlikely to agree to a standard rate of 18% recommended by
a committee constituted by the Central Government
2. Lowering the exemption levels for traders with revenues of less than Rs. 10.0
Lakhs will increase administrative costs for the center.
3. No consensus on administration of traders below Rs. 1.5 crore. States are
demanding exclusive control over traders with annual revenue of Rs. 1.5
crore; the CBEC strongly opposes this move, fearing loss of control over
majority of the traders
4. States have no experience in collecting tax on services, an intangible item
5. Compliance for Service Industry will increase
6. Manufacturers will have to re align their supply chain, as it is important that
every supplier files tax returns, so that input credit can be claimed.
Highlighting the challenge faced by the NDA in implementation, Jaitley quipped to
former finance minister P. Chidambaram, To implement GST is a headache and to
be a former finance minister is a luxury.
Frankly, this is a historic bill and converts India into a single market place. Till date,
each levied different taxes on each product. All, these hassles will be reduced. Once
the Act is in place, it can boost the GDP by 1% to 2%.

The rollout deadline is 1st April 2017, and it shall be a herculean task for Mr. Jaitley
and team to ensure that the bill passes by then.

Sources:
http://www.prsindia.org/billtrack/the-constitution-122nd-amendment-gst-bill-20143505/
http://www.livemint.com/Politics/OE5HKO3s08S1yaHasMQE1J/Rajya-Sabha-GSTdebate-begins-Cong-BJP-lock-horns-on-refo.html
http://www.prsindia.org/uploads/media/Constitution%20122nd/Brief--%20GST,
%202014.pdf