The Union Cabinet on Monday cleared four supporting GST legislations which are the Compensation Law, the Central-GST (C-GST), Integrated-GST (I-GST) and the Union Territory-GST (UT-GST).
This is a significant move for the government which has to meet the July 1 target date for rollout of the new tax regime.
The GST council, in its previous two meetings, had given approval to the four legislations as also the State-GST bill. While the S-GST has to be passed by each of the state legislative assemblies, the other four laws had to be approved by Parliament.
While a composite GST will be levied on sale of goods or rendering of services after the new indirect tax regime is rolled out, the revenue would be split between Centre and states in almost equal proportion.
This because central taxes such as excise and service tax and state levies like VAT will be subsumed in the GST. While the C-GST will give powers to the Centre to levy GST on goods and services after Union levies like excise and service tax are subsumed, the I-GST is to be levied on inter-state supplies.
The S-GST will allow states to levy the tax after VAT and other state levies are subsumed in the GST. The UT-GST will also go to Parliament for approval. Sources said the Council has already finalised a four-tier tax structure of 5, 12, 18 and 28 per cent, but the model GST law has kept the peak rate at 40 per cent (20 per cent to be levied by the Centre and an equal amount by states) to obviate the need for approaching Parliament for any change in rates in future.
(OneIndia News with PTI inputs)