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Union Cabinet approves amendments to Customs and Excise Act to facilitate GST Regime

The Union Cabinet has approved amendments to the Customs and Excise Acts related to abolition of cesses and surcharges on various goods and services to facilitate implementation of GST Regime

Decision in this regard was taken by Union Cabinet meeting chaired by the Prime Minister Narendra Modi in New Delhi. It has approved the following proposals:

  • Amendment to Customs Act, 1962;
  • Amendment to Central Excise Act, 1944.
  • Amendments to Customs Tariff Act, 1975.
  • Repeal of Central Excise Tariff Act, 1985 and
  • Amendment/repeal of the provisions relating to Acts under which cesses are levied.
Comment
  • The amendments in Customs Act, 1962 will allow furnishing of information relating to import or export of goods by specified persons to enable analysis and detection of cases of under or over-valuation in imports and exports.
  • It also aims to check misuse of export promotion schemes, including Drawback Scheme and violations of provisions of Customs Act and various other laws which Customs officials have been authorised to implement.
  • The amendments or repealing of various provisions of other Acts which in the GST regime will result in cleansing of the irrelevant portions from the Statute Book and reduce multiplicity of taxes.

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Union Cabinet approves four GST Bills

The Union Cabinet chaired by the Prime Minister Narendra Modi has approved the four Goods and Services Tax (GST) related bills. These Bills were earlier approved by the GST Council after clause by clause, discussion over 12 meetings in past 6 months.

The passage of these four GST related bills will pave the way for the biggest reform in the area of Indirect Taxes in the history of the country.

These four Bills are
  • The Central Goods and Services Tax Bill, 2017 (CGST Bill): It makes provisions for levy and collection of tax on intra-state supply of goods or services for both by the Union Government.
  • The Integrated Goods and Services Tax Bill, 2017 (IGST Bill): It makes provisions for levy and collection of tax on inter-state supply of goods or services or both by the Union Government.
  • The Union Territory Goods and Services Tax Bill, 2017 (UTGST Bill): It makes provisions for levy on collection of tax on intra-UT supply of goods and services in the UTs without legislature.
  • It is akin to States Goods and Services Tax (SGST) that will enacted by state legislatures for levy and collection of tax by the States/UTs on intra-state supply of goods or services or both.
  • The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill): It provides for compensation to states for loss of revenue arising on account of implementation of the GST for a period of five years as per section 18 of the Constitution (One Hundred and First Amendment) Act, 2016.
Background

The Union Government is trying for early introduction of GST, one of the biggest taxation reforms in the country as early as possible. GST Council headed by Union Finance Minister earlier had set 1 July 2017 as the date of commencement of GST. Union Finance Minister Arun Jaitley in his 2017-18 Budget Speech had mentioned that country-wide outreach efforts will be made to explain the provisions of GST to Trade and Industry.

About GST

  • GST regime will amalgamate large number of Central and State indirect taxes into a single tax. It will mitigate cascading or double taxation in a major way and pave the way for a common national market.
  • It will help in the realization of the objective of “One Nation, One Tax” and improve the Ease of Doing Business in the country.
  • It will also indirectly benefit people of the country by reducing the tax burden especially on the daily consumer items.
  • The GST will bring in more transparency and efficiency by minimizing of human interface in the tax administration in the country.
  • It is also likely to lead to a reduction in tax evasion as a result of the computerization of the taxation process. It will in turn lead to increase in revenue collection for the Centre and the States.

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GST Council approves States and UTs GST Bills

GST Council meeting presided by Finance Minister Arun Gaitley has approved draft Bills for implementing the goods and services tax (GST) in States and Union Territories (UTs). It was the 12th meeting of the GST Council.

The Council already has approved three other GST Bills pertaining to central GST, integrated GST and the compensation to be paid to States for loss of revenue.

The approval of these bills paves the way for the Centre and the States to pilot GST, the new indirect tax system, proposed to be introduced from July 1, 2017 through Parliament and the state assemblies.

Key Facts
  • The Council also approved the ceiling rates for the cess to be levied on top of the maximum GST rate of 28% on demerit or sin goods. Four tax rates (ceilings) 5%, 12%, 18% and 28% have been proposed under the GST.
  • It also proposed 15% ceiling on the cess to be levied on aerated drinks and luxury cars over and above the maximum proposed GST rate of 28%.
  • It also proposed separate cess ceilings for pan masala and tobacco products, including chewing tobacco and cigarettes. However, Beedis have been kept out of the GST net.
  • It also decided to make the tax treatment of items produced in special economic zones (SEZs) similar to that on exports. Procurement of supplies by SEZs will be zero-rated.

About Goods and Services Tax (GST)

GST is proposed uniform indirect taxation regime throughout the country. It was approved by The Constitution (One Hundred and First Amendment) Act, 2016. It will merge most of the existing indirect taxes into single system of taxation. It is consumption based tax levied on the supply of Goods and Services which will be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method.

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