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GST Legislation: Fixation of

Rate of Tax can be Most
Problematic
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The most violent criticism of the NDA Govt., headed by Shri
Narendra Modi, had been that in two years of its functioning, he has
not made any big bang economic reforms. The passage of the
Constitution (122nd amendment) Bill by the Rajya Sabha on 3rd
August, 2016 blunts this criticism and ushers in a historic change in
the field of taxation relating to Indirect Taxes. This is hailed as the
most significant important step on the lines of economic reforms
introduced by the UPA Govt. in the year 1991.
Why the Constitutional amendment needed?
2.The Constitution provides for clear division of powers in respect
of taxation between Centre and states. While the Centre at present
does not have the right to tax sale of goods, except in the case of
inter-state sale, states cannot levy tax on services. The divisions are
mentioned in the Article 246 under the Seventh Schedule of the
Constitution.
2.1The Constitution needs to be amended to provide for giving
power to both the Centre and states in respect of GST, a single tax
on goods and services. Therefore, the very first provision of the Bill
is to add Article
246A
after Article 246. It says Parliament and the
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Benefits from GST law
3. There have been jubilation all around in support of the Constitutional amendment, which
when GST Act is enacted, lead to one nation one tax, one common market, lower rate of tax
because of avoidance of cascading effect, simplified tax structure, subsuming of nearly 17 taxes
into one single tax, boost to investment via cheaper capital goods, manufacturing to become
competitive, higher tax revenue owing to lesser tax evasion, wider tax-base, lower costs in tax
collections and compliance, lower logistics, protection from cheaper imports, transparency in
working, input tax credits to incentivize suppliers to pay taxes, online trading will provide
greater freedom, provide impetus to 'Make in India' campaign, lift GDP and various other such
benefits.
Many levels to cross
4. However, these benefits will enure only by crossing of large number of stages the passing of
constitutional amendment, being the first stage, though most important one, which held further
progress concerning GST law for nearly a decade, which stands crossed. Before the law becomes
a reality, many more levels have to be passed through such as:* The Constitutional amendment, after it has been assented to by the Parliament, will have to be
ratified by 50% of States.
* The next
important
step, to be taken, is the constitution of GST Council.
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* Union Cabinet will have to approve Central GST & Integrated GST and States will have to give
approval to State's GST laws. Thus, what will emerge after such exercises is not one GST law,
but a set of 38 taxes 29 State Taxes (SGSTs), 7 Union Territories taxes, one Central GST
(CGST) and one Integrated GST (IGST).
* The GST law, as formulated by the Central Cabinet and IGST, will need to be passed by the
Union Parliament. State and UTs GST will need passage by the respective legislatures.
* After the GST Acts (supra) have been enacted, the respective Govts. will need to frame Rules
for carrying out such Acts.
* IT infrastructure will have to be created for various laws of the Centre, the States and the UTs.
* Testing of the infrastructure will have to be done by January-March, 2017
* Officers of the Central, State Govts. and UTs (approx 60,000 to 70,000) will have to be trained
preferably by Dec-2016.
Outreach and sensitization for trade and industry will also need to be done, preferably by
March, 2017.
4.1The Central Govt. proposes to bring into effect GST laws from 1st April, 2017. The task is
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formidable.
wish good speed in this regard.

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