1. GST Legislation: Fixation of Rate of Tax can be Most Problematic Customer Care No. 91-11-45562222 www.taxmann.com

2. 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. 2.1 The 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 legislature of every state will have the power to make laws with respect to goods and services tax imposition by the Union or by such state. In the case of inter-state supply of goods or services or both, only Parliament will have the power. 2 Customer Care No. 91-11-45562222 www.taxmann.com

3. 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. * The Council will have to give recommendation on model GST laws, GST rate(s), etc. 3 Customer Care No. 91-11-45562222 www.taxmann.com

4. * 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. 4.1 The Central Govt. proposes to bring into effect GST laws from 1st April, 2017. The task is formidable. One can wish good speed in this regard. 4 www.taxmann.com Customer Care No. 91-11-45562222

5. 5 To read more, please click hereclick here Customer Care No. 91-11-45562222 www.taxmann.com