Bills and Acts Current Affairs

GST Council approves Draft Central, State GST laws

The Goods and Services Tax (GST) Council has approved the draft Central GST (CGST) and State GST (SGST) laws along with Compensation Bill to bring the GST into implementation, country’s biggest indirect tax reform.

The CGST and SGST laws contains total of 197 provisions and five schedules. They were approved at the seventh GST Council meeting presided by Union Finance Minister Arun Jaitley in New Delhi.

GST Council agreed upon

The draft CGST and SGST laws do not include division of administrative turf between states and the centre. The gst-coucil-meetingCompensation Bill will have 2015-16 as base year and compensation to States for the loss of revenue from the GST rollout will be paid every two months. It provides legal backing to the centre’s promise to compensate states if their revenue growth rate were to fall below 14% in the first five years of GST. However few issues were left to be settled, such as source of compensation fund.

Next meeting

The next meeting of the Council scheduled early January 2017 will try to resolve the issue of dividing the administrative powers between the Centre and states. It will also take up the Integrated GST (IGST) Bill. It will also discuss the most contentious issue of ‘dual control’ or ‘cross empowerment’.

About GST Council

  • As per Article 279A of the Constitution, GST Council is joint forum of the Centre and the States.
  • Composition: Union Finance Minister (Chairperson), Union Minister of State (MoS) in-charge of Revenue of finance (Member) and Minister In-charge of taxation or finance or any other Minister nominated by each State Government (Members).
  • Functions: They are mention in Article 279A (4) of the Constitution. It will make recommendations on important issues related to GST, like (i) Goods and services that may be subjected or exempted from GST. (ii) Model GST Laws.  (iii) Principles that govern Place of Supply, threshold limits, GST rates. (iv) GST rates will including the floor rates with bands and (v) Special rates for raising additional resources during natural disasters/ calamities, special provisions for certain States, etc.

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Union Cabinet approves ordinance to pay salaries by cheques

The Union Cabinet has approved a draft ordinance to empower states and allow industries to pay workers’ wages digitally, through a direct bank transfer to accounts or by cheque in a bid to encourage cashless transactions.

The draft ordinance proposes changes to the Section 6 of the Payment of Wages Act, 1936 to encourage cashless transactions. It will need the President’s assent to become law as per article 123 of the Constitution.

Key Facts
  • It will allow industries to pay wages to workers earning up to Rs. 18,000/ month, without taking their explicitsalary consent as required under present Act.
  • However, wage payment through the banking system will only be optional, until State governments or Union Government come up with a notification for specific industries since Labour is in the concurrent list.
  • The present law (1936 Act) states that all payment of wages should be in cash. Under it has mandatory provision asking employers to obtain written permission of the worker to pay either by cheque or by crediting wages to his or her bank account.
Comment

The payment of wages through cheque or DBT of employed persons has twin motives  i.e. it will reduce complaints regarding non-payment or less payment of minimum wages and serve purpose of digital and less cash economy. The move is significant in view of the Union Government is promoting cashless transactions after its decision to scrap the old high value Rs. 500 and Rs. 1,000 currency notes. Earlier Payment of Wages (Amendment) Bill, 2016 introduced in the Lok Sabha during 2016 winter session but was not cleared owing to the impasse in Parliament.

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