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28 Nov 2016

Glimpse of Revised Model GST Law(s)

In line with Central Government’s continuous efforts to achieve deadline for implementation of GST i.e. 1st April, 2017; Government has released revised Draft Model Goods & Service Tax Law, IGST Law and GST Compensation Law. GST Council will consider the draft laws on 2nd and 3rd December, 2016. If the GST council approves the revised draft in its meeting, the government may be able to present it before Parliament in the current winter session during 5th to 9th December, 2016.

Revised model GST law is divided in 27 chapters consisting of 197 sections and 5 schedules whereas IGST law is divided in 11 chapters consisting 24 sections. Draft compensation bill has 11 sections. Revised law incorporates suggestions from stakeholders and has addressed several concerns of industry related to taxability, input credit, point of taxation etc. Key highlights of the revised law(s) are:

  1. Centre and state GST rates capped @ 14% each;
  2. Securities have been excluded from the ambit of GST. Significant relief for stock markets, brokers, banks, and mutual funds;
  3. Anti-profiteering measure incorporated to ensure that trade and industry pass the benefits of reduction in tax rates to consumers;
  4. Concepts of ‘Mixed Supply’ and ‘Composite Supply’ introduced;
  5. Supplies made to SEZ units will be treated as Zero rated;
  6. Proposal for considering intangibles as services has been removed;
  7. Changes in time and meaning of supply;
  8. Fine-tuning of definition of valuation of goods & services;
  9. Definition of inputs, capital goods synchronised;
  10. Improved input tax credit rules for telecommunications;
  11. Eligibility to avail Input tax credit of Works Contracts clarified;
  12. Changes in transitional provisions to cover more situations; and
  13. Compensation law will empower Centre to impose cess to finance any potential losses that state governments can incur.