Difference in Goods & Services Tax Bill, 2014 and Proposed 2016 Amendments
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Posted on:05 Aug 2016 09:09:35
05 August 2016 Current Affairs: The Constitution (122nd Amendment) (GST) Bill, 2014 was passed by Rajya Sabha to introduce the goods and services tax (GST) on 3 August 2016. The Bill is aimed at bringing a uniform tax regime in the country by subsuming state levies.
The Bill was introduced in Lok Sabha on 19 December 2014. However, there are certain differences in the GST Bill 2014 and the proposed 2016 amendments as certain official amendments were circulated to the 2014 Bill on 1 August 2016.
Additional tax up to 1% on inter-State trade : GST Bill 2014 : The Bill states that the centre may levy an additional tax of up to 1% on the supply of goods in the course
of inter-state trade for two years or longer, as recommended by the GST Council. This tax will be collected by the centre and accrue directly to the states from where the supply of the good originates.
2016 proposed amendments : The 2016 amendment deletes the provision as this 1% tax deviates from the objective of GST and will result in cascading of taxes.
Compensation to States : Parliament may, by law, provide for compensation to states for any loss of revenues for a period which may extend to five years. This would be based on the recommendations of the GST Council. This implies that Parliament may decide (i) whether it wants to provide compensation; (ii) the time period for which it can provide such compensation, up to five years.
Parliament shall, by law, provide for compensation to states for any loss of revenues, for a period which may extend to five years. This would be based on the recommendations of the GST Council. This implies that (i) Parliament must provide compensation; and (ii) compensation cannot be provided for more than five years, but allows Parliament to decide a shorter time period.
Dispute resolution : The 2014 bill authorised GST Council to decide upon the modalities for resolution of disputes.
Under the proposed 2016 amendments of GST Bill circulated, GST Council will be required to establish a mechanism for adjudication of disputes, which could arise between the Centre and states or among states themselves.
Replacement of the term IGST : The Bill permits the centre to levy and collect GST in the course of inter-state trade and commerce, called the Integrated Goods and Services Tax (IGST). Such tax will be apportioned between the centre and the states on recommendation of GST Council.
The amendments seek to clarify that state's share of IGST will not form part of the Consolidated Fund of India and the term IGST itself would be replaced by Goods and services tax levied on supplies in the course of inter-state trade or commerce.
Inclusion of CGST and IGST in tax devolution to states : The GST collected and levied by the centre, other than states’ share of IGST,(CGST and Centre’s share of IGST) shall also be distributed between the Centre and States.
This Clause remains the same as it also says that the Central GST (CGST) and the centre's share of IGST will be distributed between the Centre and the states.
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