LONG DRIVEN PROCEDURE TO BE FOLLOWED FOR IMPLEMENTATION OF GST LAW

GST Update 09.01.2016

GST DAILY DOSE OF UPDATION:-

LONG DRIVEN PROCEDURE TO BE FOLLOWED FOR IMPLEMENTATION OF GST LAW:-

The Hon’ble Finance Minister is making its constant efforts to bring in force the revolutionary taxation reform, GST by the Mid of this year but it appears a far possibility that the GST would be implemented this year. The determination of BJP Government to implement GST can be seen from the recent meeting of Mr. Venkaiah Naidu, Parliamentary affair minister with Congress president Mrs. Sonia Gandhi for early session of budget session of Rajya Sabha for passing of GST bill. Even if the bill is passed by Rajya Sabha in early budget session, which seems to be remote possibility, then also it will be very difficult to implement the same in this financial year.

This is for the reason that till now, even the Constitutional Amendment is pending and it is expected that the Constitution (One Hundred And Twenty Second Amendment) Bill, 2014 will be passed in the Rajya Sabha in the Budget Session of the Parliament as some of the Congress Members would be retiring and there would be comparatively better strength of members supporting the Constitutional Amendment for GST. However, even if the constitutional amendment is got through in the upcoming Budget Session, then too, it appears a remote possibility that the GST law would be implemented by the government this year itself. Although, the simultaneous initiatives taken by the government for preparation of Drafts for proposed GST Laws and creating necessary IT infrastructure for smooth implementation of GST are appreciable but there is still long driven path to be followed for introducing the GST law in India. Not only this, it is being reported in news that probably the Finance Minister will declare the deadline of GST to be April, 2017 in the upcoming budget. Furthermore, this year budget would foresee hike in excise duty and service tax so as to prepare the taxpayers for the higher rate of unified tax to be implemented in near future.

The new Constitution (One Hundred And Twenty Second Amendment) Bill, 2014 was introduced in the lower house of the Parliament, i.e., Lok Sabha on 19.12.2014 and the bill was taken for discussion and was finally passed on 06.05.2015 as the NDA had majority. However, in the upper house of the Parliament, i.e., in Rajya Sabha, the government does not have majority and so the Constitutional Amendment Bill is stuck there for passage. It is hoped that the bill is passed in the upcoming budget session of the Parliament. For announcing GST Bill, it is pre-requisite that the bill is passed by both the houses of the Parliament and thereafter, GST Council will be constituted. Furthermore, any Constitutional Bill is also required to be ratified by at least 50% of the State Assemblies. This means that the Constitutional bill after its passage by the Lok Sabha and the Rajya Sabha is to be approved by more than the State Assemblies. At least 50% of the States have to pass the GST Constitutional Amendment Bill. This is not the end and rather beginning of the procedure for introduction of GST Law. Once the constitutional amendment bill is passed by the Parliament, the Central Government is to provide the draft bill of the proposed GST. Not only this, the draft bill is required to be placed in public domain before presenting it for passage in Lok Sabha and Rajya Sabha so that the suggestions from trade, industry and tax experts are gathered. After amending the draft bill keeping in mind the suggestions of the tax experts and industry, the bill will be required to be passed by both the houses of Parliament and thereafter, to be passed by the State Assemblies.

It is submitted that the above procedure of passage of constitutional bill by both houses of Parliament and thereafter approval by 50% of the State Assemblies is only part of procedure for implementation of GST Law. Thereafter, the draft GST Bill is again to be passed by both the houses of Parliament and again approved by the State Assemblies. Hence, it can be concluded that the deadline of April, 2017 for the effective implementation of GST is also difficult to be met by the government.

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GST Update 09.01.2016

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