Union Cabinet approves formation of GST Council:
The Union Cabinet has approved the process, formation and functioning of the Goods and Services Tax (GST) Council as per the Article 279A of the Constitution.
Decision regarding the fixation of the rate of tax under the GST regime was taken by the Union Cabinet meeting chaired by Prime Minister Narendra Modi in New Delhi. The Cabinet “approved setting up of GST Council and setting up its Secretariat,” an official statement said here.
The Empowered Committee is headed by Amit Mitra, Finance Minister of West Bengal, a State that is yet to ratify the constitutional amendment enabling the roll-out of the GST.
Thus, finance ministry notified setting up of the GST council, a representative body comprising the Union finance minister and state finance ministers.
Formation/ Composition of GST Council:
As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the Centre and the States, shall consist of the following members: –
|Union Finance Minister||Chairperson|
|The Union Minister of State, in-charge of Revenue of Finance||Member|
|The Minister in-charge of Finance or Taxation or any other Minister nominated by each State Government||Members|
- Cabinet also approved Creation of the GST Council Secretariat with its office at New Delhi. Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council. Inclusion of the Central Board of Excise and Customs (CBEC) Chairperson as a permanent invitee to all proceedings of the GST Council. He will have no voting rights in GST Council. Creation of one post of Additional Secretary and four posts of Commissioner to the GST Council in the GST Council Secretariat.
- The government is aiming to implement GST from 1 April 2017, but finance minister Arun Jaitley has admitted that it may be an uphill task.
- The Union cabinet on Monday gave its nod to the creation of the goods and services tax (GST) council, the main decision-making body that will finalize the design of GST.
- The finance ministry has notified it, setting in process the penultimate leg of rolling out GST.
- The GST council will be a representative body that will have the Union finance minister as chairman and state finance ministers as members. Its first meeting will be held on 22 and 23 September in New Delhi.
- It has the difficult task of finalizing the design of GST by resolving some contentious issues between the centre and the states.
It will have to decide on tax rates under GST that protect the revenue of the states and the centre, but at the same time do not hurt the common man. It also has to address the issue of dual control of small traders by dividing the administrative powers between the centre and the states in such a manner that every small trader is subject to the scrutiny of a single tax authority.
- The council will also give a nod to the final revenue threshold limit below which traders will be exempted from GST.
- In the GST council, a decision can be taken by a three-fourth majority with the centre having a one-third vote and the states the remaining two-third.
- An early decision on these issues will be crucial for the government to table the draft GST laws—the central GST law and the integrated GST law—in Parliament in the winter session that starts in November.
A Word With Press:
Last week, finance minister Arun Jaitley called it a very stiff target. “We are running against time. But I would certainly like to give it a try,” he said.
However, speaking at a press conference after the cabinet meeting, union revenue secretary Hasmukh Adhia said the government is geared up to meet the 1 April implementation deadline.
“So far, we are ahead of the time schedule. As per our internal deadline, we are looking at a two-month time frame from the date GST council first meets for the council to arrive at a decision on issues like the rate structure, exemptions, thresholds, place of supply rules, floor rates and then finalize the GST laws,” he said. Adhia added that the GST council will decide if the rates should be a part of the central GST and state GST bills or not. Adhia wrote to all state chief secretaries on Monday to nominate the minister who will represent the state in the council. “There is no need for a separate forum of the Empowered Committee now, as all the discussions and decisions should ideally take place in the GST Council,” he added.
GST aims to economically unify the country. A destination-based tax, GST will subsume most of the indirect taxes levied by the centre and the states like excise duty, service tax, value added tax, entertainment tax and luxury tax.
The cabinet approved the creation of the GST secretariat in New Delhi and appointing the revenue secretary as secretary of the GST council and the chairperson of the central board of excise and customs as a permanent invitee to the council. All expenses of the council will be borne by the central government.
Rajeev Dimri, leader, indirect tax, BMR & Associates LLP, said the GST council has a busy agenda.
“The most important of them being reaching consensus amongst all states regarding several aspects of levy and administration of GST in India like tax rates, list of goods to be exempt/taxable on merit rates of GST, determining threshold for taxable turnover for goods and services, and so on. Eyes would also be set on how GST council would resolve key pending items such as common adjudication and assessment by centre and states, fate of existing tax incentives to the industry and deliberation of various industry representations for model GST law,” he said in a note.
The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has approved setting up of GST Council and setting up its Secretariat as per the following details:
- Creation of the GST Council as per Article 279A of the amended Constitution;
- Creation of the GST Council Secretariat, with its office at New Delhi;
- Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;
- Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;
- Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India).
- The Cabinet also decided to provide for adequate funds for meeting the recurring and non-recurring expenses of the GST Council Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat shall be manned by officers taken on deputation from both the Central and State Governments.
- The steps required in the direction of implementation of GST are being taken ahead of the schedule so far.
- The Finance Minister has also decided to call the first meeting of the GST Council on 22nd and 23rd September 2016 in New Delhi.
- The Constitution (One Hundred and Twenty-second Amendment) Bill, 2016, for introduction of Goods and Services tax in the country was accorded assent by the President Pranab Mukherjee on 8th September, 2016, after it was ratified by 18 states.
- The Bill will pave the way for roll out of GST.
- The new tax regime will do away with the indirect taxes. It will usher in one tax for the entire country.
- The GST is a single indirect tax, which will subsume most of the central and state taxes such as VAT, excise duty, service tax and central sales tax.
- After the assent to bill it became law and the same has been notified as the Constitution (One Hundred and First Amendment) Act, 2016.
- The Constitution (One Hundred and First Amendment) Act, 2016 adds Article 279A in the Constitution.
- As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.
- The notification for bringing into force Article 279A with effect from 12th September, 2016 was issued on 10th September, 2016.
Functions of GST Council:
As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like-
- The goods and services that may be subjected or exempted from GST.
- It will determine the parameters related to the GST.
- Model GST Laws.
- Principles that govern Place of Supply, threshold limits, GST rates.
- GST rates will include the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, special provisions for certain States, etc.