Marking another major milestone in the long-awaited GST
regime, the Lok Sabha (lower house of parliament) on March 29
passed the Central GST Bill, the Integrated GST Bill, the GST (Compensation to States) Bill and the
Union Territory GST Bill.
The passage was not easy, however. Parliament was locked in
a seven-hour long debate as government ministers tried to
negotiate a host of amendments demanded by opposition parties
and answered numerous questions on the
government’s chosen GST structure.
There were no significant changes made to the bills
presented to the parliament when compared to the third drafts.
However, some definitions in the bills were clarified and
changes were made to the input credit and transitional
Businesses now have less than two months to complete their
preparation for the new tax regime, which will apply from July
With the passage of the GST laws, the "uncertainty about the
GST implementation is put to rest," said Sachin Menon, national
head of indirect tax at KPMG in India.
"The state GST (SGST) bills are yet to be passed in all 29
state assemblies, which is expected to be completed in April
and May. In any case, passage of the SGST bill is a foregone
conclusion, the delay in passage of these bills may not impact
the industries from getting ready for implementation as the
SGST law is a mirror image of CGST legislation," Menon
The laws were approved only two weeks after the GST Council
approved the bills and later gained the Cabinet’s
Earlier this year, the GST Council agreed on a four-tier
structure for GST of 5%, 12%, 18%, and 28%, as well as some
items at 0%. It has also approved the ceiling rates for the
cess (tax) to be levied on top of the maximum GST rate of 28%
on 'demerit goods’ such as some luxury goods,
tobacco and sugar-sweetened beverages.
The government has also confirmed that it plans to migrate
8.5 million central and state taxpayers to the GST system by
March 31. So far, more than 5.1 million taxpayers have migrated
to the new system.
Although the main laws have now been passed, the GST Council
still needs to approve some regulations.
Nine sets of rules and regulations require approval, of
which five have already been agreed, namely laws relating to
registration, payments, refunds, invoices, and returns. Four
laws, relating to composition, valuation, ITC and transitions,
now require formal approval.
Finance Minister Arun Jaitley said these final rules would
be approved at the GST Council’s meeting on March
However, after these are approved, one major action will be
required to categorise certain commodities into the GST rates
structure. After March 31, officers will begin the process of
fitting various commodities into the defined tax slabs and once
this is completed, these would be approved by the GST Council
ministers in their next meeting, the finance minister said.
"Once that is done, we will be ready for GST
implementation," Jaitley said after the last GST Council
For businesses, Menon said it is crucial that every company
is prepared. The taxpayers who are not prepared may face the
risk of continuity of business as non-compliant dealers will
not be able to pass on the tax credit to buyers and, therefore,
may be blacklisted by their customers. That is a serious threat
to businesses that are not GST complaint," he said. "Secondly,
the time available for implementation is relatively short and
hence GST service providers capable of helping companies in GST
transition will all be pre-occupied. This will put pressure
both on the companies and their advisers."