Pressing the pedal on the goods and services tax, the government put out for debate a draft law to introduce this much-delayed reform on Tuesday, a day when Finance Minister Arun Jaitley claimed no support among states for Congress' demand for a constitutional cap on this levy.
The draft model GST law released after deliberation by state finance ministers says the GST rate will be specified in the schedules of this law. It also provides for tax deduction at source for online transactions, clearly bringing ecommerce under GST fold.
"We request all stakeholders to give their suggestions/comments to secretariat of Empowered Committee of FMs and or to finance ministry," revenue secretary Hasmukh Adhia tweeted. The model GST law contains two parts - the Goods and Services Tax Act, 2016 and the Integrated Goods and Services Tax Act, 2016 - providing the framework for implementation of the this tax that is estiamted to add as much as 2% to the country's GDP. Along with the constitutional amendment, the government needs to get these two laws passed to get GST rolling, possibly by April 1, 2017.
"There shall be levied a tax called the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the rate specified in the Schedule...to this Act and collected in such manner as may be prescribed," the draft law says. The Congress party has demanded that the GST rate be mentioned in the Constitution through the constitutional amendment Bill already pending in the Rajya Sabha, a demand that has held up the law that the government wanted to introduce from April 1this year.
"There is a complete consensus on that, there should not be any such ceiling (in the Constitution) as exigencies may arise in future. Now it is left to the GST council," Jaitley told reporters in Kolkata on the first day of a two-day meet of state finance ministers, rebuffing the demand yet again.
The government is open to the idea of mentioning the GST rate in GST Act, but not in the Constitution as that will make it difficult to change the rate. If the constitutional amendment Bill is passed in the upcoming monsoon session, the levy could rollout from April 1, 2017
"Overall, the model law for public debate moves us closer to GST, hopefully from April 1, 2017. Lot of hard work seems to have been put up in arriving at broader consensus with the states," said Pratik Jain, national leader for indirect tax at PwC. "The next important step will be the passage of the constitution amendment Bill in the monsoon session to set the ball rolling for GST implementation by April 2017," said Harishanker Subramaniam, national leader for indirect tax at EY, welcoming the government's decision to seek stakeholder views. "We look forward to the positive movement and with these initiatives, it is expected that implementation of GST with effect from 1April 2017 will become a reality," the Confederation of Indian Industry said in a statement.
TCS FOR E-COMMERCE
The model law provides for a levy of GST on all online sales. It says the ecommerce operator should collect the appropriate GST while making a payment to the supplier of goods or service sold through its portal. The amount is to be deposited with the appropriate state government within 10 days from the end of the month in which the payment was made to the supplier. This provides clarity for taxation of goods sold by a supplier in one state to a consumerin another through electronic commerce.
Source :  The Economic Times