New Delhi: The Union cabinet on Monday gave its nod to the supporting legislations for the implementation of the goods and services tax (GST) paving the way for the bills to be tabled in the Lok Sabha this week.
The cabinet approved the Central GST bill, the integrated GST bill, the Union territory GST bill and the bill to compensate states for revenue losses arising from a transition to the GST, in another step towards meeting the 1 July rollout date for this singular tax reform.
The government plans to table these four GST bills together in Parliament since all the bills have many clauses that require cross referencing.
The state GST bill has been sent to the states for approval by their respective state legislatures.
The government is expected to table all the four legislations as money bills in Parliament to ensure its smooth and time bound passage.
A money bill only requires the nod of the Lok Sabha where the ruling alliance is in a majority. The Rajya Sabha, where the ruling National Democratic Alliance is in a minority, only has powers to make recommendations on the bill which the Lok Sabha can choose to accept and reject. Further, once Lok Sabha passes a money bill and sends it to Rajya Sabha for its consideration, the Upper House has to return the bill to the Lok Sabha within 14 days else the bill is presumed to be passed by Parliament.
The GST council—the representative body of the Centre and the states, had cleared the last two remaining legislations on 16 March.
The industry is eagerly awaiting the passage of these bills in Parliament to get some clarity on the fine print of this ambitious indirect tax regime that aims to remove barriers across states and unite the country into a common market.
The government needs to give industry enough time after the finalization of the laws and rules to prepare for a smooth transition to meet the 1 July deadline.
Though the government had put up the initial draft of the bills for stakeholder feedback in November last year, the final legislation incorporating all the changes proposed by the council are yet to be made public.
Passage of these bills will also provide the required thrust for the government to push industry to register under GST and avail the new registration IDs. So far, in the absence of a legislative backing, the process of migration of tax payers to the new indirect tax regime has been slow.
Abhishek Rastogi, partner, Khaitan & Co, said in a note that the 1 July GST rollout deadline seems realistic.
“The timely approval of the bills by the Cabinet ensures that the industry would have reasonable time to peruse the details of the law impacting them,” he said adding that this will ensure the industry will be better prepared for GST’s implementation.