GST inches closer to July 1 rollout, Council clears all five draft bills


NEW DELHI: The Goods and Services Tax (GST) Council on Thursday capped the proposed cess on aerated drinks and luxury automobiles at 15% and 290% on cigarettes and also approved the State GST and Union Territory GST laws.

Nod to these laws along with changes in the Central GST and Integrated-GST laws paves the way for introduction of the legislations in Parliament and state assemblies as early as next week.

The proposed GST cess would be in addition to the imposition of GST at the highest rate of 28%.

“This is for empowerment….We have kept some head room…These caps have been incorporated in the compensation law,” finance minister and GST Council chairman Arun Jaitley told reporters after the council’s 12th meeting here.

A government official privy to the deliberations said this was just a ceiling and the GST Council will decide how much cess is to be imposed.

In the case of cigarettes and other tobacco products such as pan masala and gutka, the GST Council has provided three caps — if the total cess imposed is specific, if it is ad valorem and a mix of both.

For cigarettes, if the cess is entirely levied on ad valorem basis, then the cap is pegged at 290%, while for pan masala, it is 135%.

The GST Council will also have the power to include any other luxury item under the cess besides these four.

“The council has approved all these laws. CGST, Integrated GST and Compensation laws will be taken to the cabinet and then introduced in the Lok Sabha. SGST and UT GST will be taken to state cabinets…States also will be doing it expeditiously,” Jaitley said.

He said progress on the finalisation of crucial elements of the GST seem to be moving in the right direction for the new tax regime’s roll out on July 1.

GST seeks to replace multiple central and state taxes on goods and services with a single levy. Jaitley also said that rules related to registration, payment, returns and in-voice refunds have already been approved and now the GST Council needed to clear rules dealing with composition and valuation.

He said marginal corrections are required on regulations approved earlier and the GST Council would meet on March 31to finalise these.

On the crucial issue of fitment of goods and services into various slabs, Jaitley said the official committee will work on it and it would be taken up by the Council in its next meeting.

“One major action required will be on fitment; officials will be working on it. Then we will approve it in the meeting. Then we will be ready to implement GST from July 1,” he said. Tax experts too said GST seemed to be progressing towards July 1 rollout.

“There has been a steady and significant progress achieved in successive GST Council meetings which strongly reflect the collaborative approach of the members,” said Saloni Roy, senior director at Deloitte Haskins & Sells LLP.