GST – 122 Constitution Amendment Bill 2014

The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 was introduced in the Lok Sabha on 19th December, 2014

The tabling of the GST Bill in December 2014 was prolonged as the centre and states struggled to reach consensus on sharing tax revenue once the GST is implemented.

GST is a value added tax to be levied on both goods and services except for a list of exempted goods and services at both the centre and state level.

GST is expected to replace the existing multiple tax system including service tax, central excise duty, additional excise and customs duties, central surcharges and cesses, state VAT, state sales tax, entertainment tax not levied by local bodies, luxury tax, taxes on lottery, betting and gambling, tax on advertisements and state cesses and surcharges related to supply of goods and services.

Some of the highlights of proposed GST Bill are –

1. Enhance revenue for the Centre and states as efficient tax collection system lead to better compliance.

2. Reduce tax outflow in the hands of the consumers.

3. Reduction in cost of production will helps our companies to be price competitive in foreign markets.

4. Reduce Compliance cost and simplified the accounting complexity for businesses.

5. the proposed tax system will comprise central and state GSTs which will be legislated, levied and administered separately.

6. The Centre will have exclusive power to levy GST on imports and inter-state trade.

7. To ensure impartial revenue sharing among centre and states, a GST council will be formed

8. A Dispute Settlement Authority will also be formed to resolve disputes between the centre and states.

9. A standard rate of GST across various goods and services will be imposed.

10. Initially certain goods including crude petroleum, diesel, petrol, natural gas, aviation turbine fuel and alcohol for human consumption will be kept out of the GST’s purview, as sharing tax over these goods has been a point of contention between the centre and states. States will have the power to levy taxes on these items, except in the case of imports and inter-state trade.

11. The beauty of GST is that though it will be levied on all products and services, and will cover all stages from manufacture to sale, it will be changed only on the value added at each stage of the product life cycle, hence reducing the tax to be collectively paid by companies and eventually by consumers.

12. Companies can claim deduction on the taxes already paid by their suppliers. This in turn enhances compliance and overall tax income for the government as every firm will be encouraged to ensure that its supplier has paid its portion of tax part to be eligible for deductions.

5 thoughts on “GST – 122 Constitution Amendment Bill 2014

  • what is the status of GST council? Is it an statutory authority or creation of any Act of Parliament? What authority it wields over States? How can it compel any State to fall in line? Can any decision of the Council be challenged in any Court of law?

    • The GST bill seeks to set up a GST Council to take decisions on GST Tax Rates, model, principals and other related matters. According to the GST Bill, the President must constitute a GST Council within sixty days of this Act coming into force.

      The GST Council will make recommendations on:
      1. taxes, cesses, and surcharges to be subsumed under the GST;
      2. goods and services which may be subject to, or exempt from GST;
      3. the threshold limit of turnover for application of GST;
      4. rates of GST;
      5. model GST laws, principles of levy, apportionment of IGST and principles related to place of supply;
      6. special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand; and
      7. other related matters.

      Hence, all decision relating tax rates and structures are to be taken by the GST Counsel. It is expected that the GST Counsel will be set up in the month of September or so. As per the Bill, only GST Counsel is having power to decide on above matters.

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