Goods and Services Tax: All you need to know about the bill and why it's a gamechanger

Following a seven-hour debate on the GST bill in Parliament, the Lok Sabha approved four supplementary legislations on Wednesday.

As four key supplementary GST (Goods and Services Tax) bills were passed in Lok Sabha, Prime Minister  hailed the historic step, and congratulated everyone. The Prime Minister called it "New Year, New Law, New Bharat" as the government moved a step closer towards meeting the July 1 deadline for rollout of Goods and Services Tax in the country.

Following a seven-hour debate on the GST bill in Parliament, the Lok Sabha approved the four supplementary legislations, but not before the Opposition raised objections to certain clauses and called for amendments to the bills.

However, the government, which has the numbers in Lok Sabha, negated the amendments and ensured the bills get cleared as it is. These bills are: Central Goods and Services Tax (CGST) Bill, Integrated GST Bill, Compensation GST Bill and Union Territory GST Bill 2017.

Calling it a revolutionary bill that will benefit all, Finance Minister  led the charge in Lok Sabha. He said 12 meetings of the GST Council were held to ensure the process of drafting the bill and rolling out GST was based on consensus and recommendations.

ALL YOU NEED TO KNOW ABOUT THE GST AND THE FOUR BILLS PASSED IN LOK SABHA:

1. The Goods and Services (GST) is an indirect taxation wherein most of the existing taxes will be merged into a single taxation system.
2. Once the GST Bill is passed, it will allow the Centre and the states to levy indirect tax on manufacture, sale and consumption of goods and services across the country.
3. Simply put, the Goods and Services Tax would put all taxes levied by state and Central government in one basket and merge them into a single-tax system, thus doing away with multiple taxation and promoting the concept of a common market for all.
4. The Goods and Services Tax is governed by the GST Council which is headed by the Finance Minister. In Arun Jaitley's words, "once all other taxes are removed, the cascading effect is removed, goods will become slightly cheaper".
5. The biggest challenge for a smooth GST rollout is coordination between states and the Centre to ensure uniform tax rates for good and services.
6. To this effect, the GST Council has approved a four-tier uniform tax slab of 5, 12, 18 and 28 per cent on goods and services, plus an additional cess on demerit goods such as luxury cars, aerated drinks and tobacco products.
7. Food items will not attract any tax and have been kept in the zero-per cent slab. Similarly, petroleum products, although included under the GST, will remain in zero tax slab as of now. However, the GST Council is yet to take a call on whether to keep alcohol under the Goods and Services Tax.
8. With the Goods and Services Tax coming in, Centre-level taxes likes Sales Tax, Excise Duty, and state-level taxes like Value-added Tax (VAT), Entertainment Tax and Luxury Tax will be subsumed.
9. On Wednesday, among the four supplemtary GST bills passed in Lok Sabha was the Central Goods and Services Tax (CGST) Bill. The CGST Bill will allow the Central government to levy and collect tax on intra-state supply of goods and services.
10. The Integrated Goods and Services Tax Bill 2017 provides for levy and collection of tax on inter-state supply.
11. The Compensation GST Bill will provide compensation to states for the loss of revenue they may incur owing to implementation of the Goods and Services Tax.
12. Clarifying on the clause, Arun Jaitley told the House that no additional tax will be imposed to provide compensation to states, and states will be paid compensation within the existing mechanism.
13. The other bill passed in Lok Sabha pertained to Union Territory Goods and Services Tax. The bill will enable levy and collection of tax on intra-state supply of goods and services or both by union territories.

(inputs from agencies and Wikipedia)