Constitution Amendment Bill introduced in Lok Sabha

FM Jaitley has set the ball rolling by introducing the Constitution (122nd) Amendment Bill, 2014 in the Lok Sabha.

In the Bill, most of the concerns of the States have been addressed. The unexpected is the amendment providing for levy of 1% additional tax on Interstate sale that would be retained by the State from which goods are dispatched. Though not in consonance with the destination based levy of tax, this addresses the concern of the States that have invested substantially in creating the infrastructure to develop the manufacturing base.

While we would present soon a detailed clause by clause analysis of the provisions of the Constitution (122nd) Amendment Bill, 2014, here is the brief highlight of the provisions of the Bill.

1. Powers to levy tax on goods and services would simultaneously vest with the Central and State Governments

2. All goods other than Alcohol for Human Consumption would be subject to GST

3. Petroleum products (petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel )will for the time being excluded from the ambit of GST and may be brought in later. States would continue to levy VAT/ Sales Tax till then.

4. Inter State supply of goods and services would be subject to Integrated Goods and Services Tax (IGST) and all transactions within a State would be subject to Central Goods and Services Tax (CGST) levied by the Central Government and State Goods and Services Tax (SGST) levied by the respective State Governments .

5. IGST would be shared with the States

6. Non Creditable additional tax not exceeding 1% on supply of goods in the course of inter-State trade or commerce shall be levied by the State from which the goods originate. This levy would be for a period not exceeding two years or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate

7. Centre would compensate revenue loss to States for a period of five years. The compensation is likely to be 100% of the revenue loss in the first 3 years, 75% in the 4th and 50% in the 5th year.

8. President of India to constitute a Goods and Service Tax (GST) Council within sixty-days of the commencement of the 122nd Constitution Amendment Act.

Click to Download-GST Constitution Amendment Bill 2014 as introduced in Lok Sabha