The council, headed by Mr Jaitley and which comprises the representatives of all states, made a decision to levy a five per cent GST rate (2.5 per cent by Centre and 2.5 per cent by states) on small hotels, restaurants and dhabas with an annual turnover of up to Rs 50 lakhs. Subsequently, the bills will be tabled together in Parliament in the second half of the budget session. But political differences over how to divvy up GST revenues or compensate states for lost income because of the new tax held up progress.
J&K Finance Minister Haseeb Drabu said the Centre had accepted the proposals and the Council would take a final view on the two laws in its next meeting.
Added Rakesh Bhargava, Director, Taxmann, "Still the most hard task for the Council is to take decision on phase-wise implementation of GST since some States suggested GST implementation in two or three phases as GST Softwares are not ready and industry also need time for smooth implementation of GST".
The Goods and Services Tax (GST) Council meet, chaired by Union Finance Minister Arun Jaitley, cleared the final raft of C-GST and I-GST law on Saturday.
CGST, IGST and Union Territory-GST (UTGST) law to be taken to Parliament in the second half of Budget session starting March 9, said Jaitley.
"There shall be levied a tax called the central/state goods and services tax (CGST/SGST) on all intra-state supplies of goods and/or services.at such rates as may be notified by the central/state government. but not exceeding 14 percent on the recommendation of the Council and collected in such manner as may be prescribed", the draft law states. The effective peak rate will continue to remain at 28 percent.
The government is keen to roll out the new regime from 1 July. Sisodia said that real estate should be brought under GST, adding that black money finds its way into real estate so bringing it under the Goods and Services Tax will help in keeping a check on black money.
"The applied rates will be 5%, 12%, 18% and 28%".
"The legal committee will finalise the SGST and UTGST bills in the next three days and circulate it to the state assemblies for approval", said Jaitley. The UT-GST will also go to Parliament for approval.