New Delhi : Notwithstanding the Parliament impasse over demonetisation that may wash out the winter session, the Modi Government on Saturday pushed ahead for ushering in the new Goods and Services Tax (GST), putting in public domain three draft laws that it wants passed in this session. These draft laws have not yet been approved by the GST Council, comprising the Centre and the State Finance Ministers. The council is to meet only on December 2-3 to consider them and hence the draft laws” advance release without its approval came as a surprise. An official press release, however, tried to justify it, stating that they are made public only “for information of trade, industry and other stake holders.”
The three draft legislations — Draft Model GST Law, Draft IGST Law and Draft Compensation Law — so disclosed are accessible on three government websites www.cbec.gov.in, www.dor. gov.in and www.gst.gov.in The draft Model GST Law was put in public domain earlier also in June inviting comments of the sake holders and the same were considered and incorporated in a revised draft by a technical committee comprising the central and state officers and discussed in the council meeting on November 21 and 22.
The revised Model GST Law deals with registration of firms, tax, invoice, credit and debit notes, payment of tax, interest, etc, tax deduction at source, refund of tax, transfer of input tax credit, accounts to be maintained, collection of tax at source in case of electronic commerce, self-assessment and scrutiny of returns, audit by the tax authorities, inspection, search, seizure and arrest, offences and penalties.
The liability to pay the Central or State GST on the goods shall arise at the time of supply that may be the date of issue of invoice by the supplier or the date on which the supplier receives payment. The same applies to the tax on the services. It envisages levy and collection of Central/State GST on all intra-state supplies of goods and services at the rate as notified but not exceeding 14%. As regards the tax on the electronic commerce, it says where the operator does not have a physical presence in the taxable territory, any person representing him for any purpose in the taxable territory shall be liable to pay tax. In all other cases, the taxable person is one registered or liable to be registered under Schedule V of the Act. The draft also empowers the Centre or the sate to exempt generally either absolutely or with conditions any goods and services from the whole or part of the tax. A little complicated is the draft Integrated Goods and Services Tax Act on determining the supply of goods or services in the course of the inter-state trade or commerce and how the integrated GST will be collected as also apportionment of tax and settle of funds between the Centre and the states.
The third is to compensate the states for the loss of revenue for five years that they may suffer due to implementation of the GST. It envisages a nominal revenue growth rate of 14% per annum for the state and the compensation calculated on the basis of the base year revenue in the financial year 2015-16. It contemplates release of GST compensation to the state at the end of every quarter and finally calculated for every financial year.