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Objectives:
The objective of Goods and Services Tax is to replace indirect tax regime in India by a single tax known as GST. The unified taxation regime known as GST will be a single tax rate that will be levied at the point of supply and not at the point of consumption as was being done so far.
How will GST lower taxes and affect common man:
In order to understand this, we need to understand the different levels of the supply chain as follows:
Therefore the total GST levied at two different levels comes out to be Rs 17/- which is collected at the respective points of supply unlike in the earlier taxation regime where complete tax was collected at point of consumption.
Benefit of collecting tax at ‘Point of Supply’:
The supply points are always spread across different states and thus each state would benefit as per its ability to promote entrepreneurship in different stages of supply chain. In the earlier regime, the State with higher demand benefitted as tax was collected at point of consumption thus neglecting the intermediate States which formed part of preceding stages of supply chain.
This methodology of tax collection at point of supply rather than point of consumption will encourage different States of India to promote entrepreneurship irrespective of their population base and thus help eradicate the developmental divide that exists between Indian states.
122nd Constitutional Amendment Bill:
The 122nd Constitutional Amendment Bill was introduced in Parliament in 2014 to amend the constitutional provisions so as to provide the grounds for legislating the Goods and Services Tax laws.
GST Bill has to be passed by both the houses of the parliament individually by special majority and later ratified by atleast half of the State legislatures.
Constitutional provisions amended by the 122nd Constitutional Amendment Bill are as follows:
246A(1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.
246A(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
269A(1) - Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
Explanation.—For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
269A(2) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
279A(1): Formulation of Goods and Services Tax Council: The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and Twenty-second Amendment) Act, 2014, by order, constitute a Council to be called the Goods and Services Tax Council.
279A(2): The Goods and Services Tax Council shall be headed by Union Finance Minister
279A(3): GST Council members will choose from amongst themselves a Vice Chairman.
279A(4): The GST Council shall make recommendations to the Union and the States on—
(a) The taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax. (b) The goods and services that may be subjected to, or exempted from the goods and services tax. (c) Model Goods and Services Tax Laws, principles of levy, apportionment of Integrated Goods and Services Tax and the principles that govern the place of supply. (d) The threshold limit of turnover below which goods and services may be exempted from goods and services tax. (e) The rates including floor rates with bands of goods and services tax. (f) Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster. (g) Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. (h) Any other matter relating to the goods and services tax, as the Council may decide.
279A(5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
279A(6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.
279A(7) One half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.
279A(8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.
279A(9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:—
(a) the vote of the Central Government shall have a weightage of one third of the total votes cast, and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
279A(10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—
(a) any vacancy in, or any defect in, the constitution of the Council; or (b) any defect in the appointment of a person as a member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case.
279A(11) The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its recommendation.”.
Taxes subsumed under GST are:
The other features of the 122nd Constitutional Amendment bill are:
By: Abhinav ProfileResourcesReport error
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