The first day of the seventh meeting of the Goods and Services Tax (GST) Council ended with broad consensus over most of the clauses of the draft Central GST (CGST) Bill. The more contentious issue of dual control regarding division of jurisdiction and administrative powers over tax assessees between the Centre and the states will be taken up for discussion by the Council on Friday.
Officials said most of the clauses of the CGST Bill have been discussed, barring those that are related to dual control or territorial definition.
“There was discussion on 197 clauses of the draft CGST law. Have approved the basic structure of the law but those 3-4 clauses which depend on cross-empowerment, definition of states, territorial water are pending and will be taken up for discussion later,” a government official
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The other draft Bills relating to GST such as Integrated GST (IGST) Bill and the Bill for compensating states for revenue losses following the implementation of GST will be discussed by the Council on Friday as it relates to the issue of cross-empowerment, the official added. States had insisted on clause-by-clause discussion of the Bill and that took time for the discussion to be completed, another official said.
The three Bills relating to GST, namely, the CGST Bill, the IGST Bill and the Bill for compensating states for revenue losses following the implementation of GST have missed the initial deadline of passage in the Winter Session of Parliament.
Following the clearance by the GST council, all the draft Bills are likely to be presented in the Session of Parliament. Subsequently, states will have to pass their state GST Bills in their respective assemblies.
Tax experts said clarity on the contentious issues is keenly awaited by businesses for preparing themselves for the rollout of the indirect tax regime.
“It is better if consensus is achieved on the legislative issues so that the Bills can be introduced in the Budget Session in Jan 2017. The need of the hour is to have clarity on several issues, including that of rates and classification so that businesses can be prepared,” said MS Mani, senior director, Deloitte Haskins & Sells LLP.
Harishanker Subramaniam, national leader (indirect tax), EY, said: “Though the Council deliberations will deliberate the thorny cross empowerment issue only tomorrow (Friday), the fact that they spent quality time today (Thursday) on most Sections of CGST law is good news. It’s critical the Council debates and approves CGST and IGST law in these two days.”
The Council will now meet on Friday to discuss the issue of dual control, an issue on which Centre and states have sparred with each other since the second meeting of the GST Council in September.
The tussle between the Centre and the states is about who will gain how much control over the taxpayer base of VAT, excise and service tax after the rollout of the proposed indirect tax regime. The resolution of the issue of dual control is crucial for the rollout of the indirect tax regime by next year.
The initial targeted April 1, 2017, deadline of GST will be tough for the government to meet but is constitutionally mandated to implement it before September 16, 2017.
Last week, finance minister Arun Jaitley had said that being a transactional tax, GST can be introduced anytime between April 1, 2017 and September 16, 2017, though the intent of the government is to introduce GST as early as possible.