GST - One Nation, Two Authorities, Three Taxes, Four Rates ……
NOW it is final - there will be four rates of GST on goods - zero rate, 5%, two standard rates of 12% and 18% and 28%. Four rates doesn't really mean four rates. Apart from these rates there will be a separate-to-be-decided rate for gold. There will be a cess on goods attracting the 28% tax apart from the environment cess. Yesterday's meeting of the GST Council passed off without the need to use the calculator to find out the majority as per the formula. Decisions were by consensus, though Kerala took a lonely path. Kerala's well educated Finance Minister, Dr. Isaac Thomas found the meeting subdued. The TN Finance Minister was cool and the UP Finance Minister who was vociferous opponent of CESS was not seen. Everybody seemed to be eager for consensus. And Dr. Isaac found support strangely from the West Bengal Finance Minister. GST Council has certainly redefined political economics; the Finance Minister Jaitley concluded his Press Conference with a remark that all the Congress Chief Ministers supported all his proposals.
Today's meeting of the Council is certainly going to be a heated one as the question of who controls what is difficult to decide. The Centre wants to retain the whole of the present base of service tax part of GST, maybe after they can ascertain whether it is 1.1 million or 3.3 million. It is being suggested that the entire audit function is to be transferred to the States' Commercial Taxes Department and this has sent a chill down the spines of the Central Excise Department officers as Audit is the most lucrative section now and what will they do with all the Audit Commissionerates? It seems the corruption indices in both the States and the Central Departments are shooting up and one of the reasons cited is the uncertain future!
Finally, the One Nation, One Tax has become
One Nation | India that is a Union of States |
Two authorities | CBEC and State Commercial Tax Departments |
Three Taxes | SGST, CGST and IGST |
Four rates | Zero, 5%, 12%, 18% and 28% with a gold rate and some cesses and a five year cess. |
FICCI has complimented the GST Council for reaching a consensus and finalising the four tier rate structure under GST. The FICCI President Harshavardhan Neotia says, "rate structure will achieve the twin objective of protecting the revenues of the Central and the State Governments and further containing the inflationary pressures that may arise consequent upon the change of the taxation system. It is believed that the consensus reached today on the rate structure will pave the way for a successful implementation of GST in the country from April 1 2017. FICCI looks forward to working with the Central and the State Governments in implementing the most ambitious indirect tax reform of the nation".