GST Council approves GST Bills

By Ranjeet Mahtani and Sweta Rajan

On March 4 and 5, 2017, the GST Council approved the draft Central CGST and Integrated GST bills. The Government proposes to introduce the CGST, IGST and the Compensation laws in the Parliament on March 27, 2017. The next meeting of the GST Council on March 16, 2017 is expected to see the draft SGST and UTGST laws being approved by the GST Council, to allow States and Union Territories sufficient time to table them for passage. After the last GST Council meeting, the Finance Minister stated that work towards the roll-out of GST on July 1, 2017 is on track.

Indications regarding the draft bills approved:

• As per the CGST Bill, the provision for tax collection at source by e-commerce operators in relation to taxable supplies made through them has been capped at 1%. This cap was suggested by industry players since it will ensure that the levy remains below the prescribed GST rate. Further, the TCS provision will also assist the tax department in monitoring e-commerce transactions.

• The draft bills also contain provisions to protect consumers from profiteering under GST regime. The anti-profiteering clause is a mechanism to ensure that the reduction in prices due to reduction in tax rate under GST actually results in proportionate reduction in the price of the concerned goods or services. The GST Council may set up a new quasi-judicial authority, or rope in an existing authority for this purpose.

Under the draft IGST Bill, suppliers of goods and services from domestic tariff area (DTA) to special economic zones (SEZ) would first have to pay taxes on such supplies, and thereafter claim refund. The Export Promotion Council for EOUs and SEZs has urged the government to provide ab initio exemption to supplies made from DTA to SEZ under the GST regime.