MINISTER OF THE STATE IN THE MINISTRY OF FINANCE (SHRI PRANAB MUKHERJEE)
(a) to (f); A statement is laid on the Table of the House.
STATEMENT REFERRED TO IN REPLY TO PARTS fa) TO ffl OF LOK SABHA STARRED QUESTION NO. 71
FOR ANSWER ON 25IH FEBRUARY, 2011
(a): The salient features of the proposed Goods and Services Tax (GST) are given below
(i) The GST shall have two components: one levied by the Centre called Central GST (CGST),
and the other levied by the State called State GST (SGST).
(ii) While the Centre would legislate for CGST, each State would have its own legislation
for SGST. Efforts will be made to ensure uniformity in the basic features in Central and
State legislations, such as chargeability, definition of taxable event and taxable person,
valuation provisions, basis of classification, etc.
(iii) Both CGST and SGST would be levied on every transaction of supply of goods and services (including
imports into India) for a consideration, except on exempt goods and services or goods kept outside the
purview of GST. Both the Centre and the States would have concurrent jurisdiction for the collection and
administration of these taxes.
(iv) Central Excise duty (including Additional Excise Duty), Excise duty on Medicinal & Toilet Preparations,
Service tax, CVD on imports (Additional duty of customs) Special CVD (4%), and Central cesses and surcharges
would be subsumed within GST.
(v) VAT/ Sales Tax, Entertainment tax (unless levied by local bodies), Luxury tax, Entry Tax not
in lieu of octroi, and taxes on lottery, betting and gambling would also be subsumed within GST.
(vi) There will be a common exemption list for goods and services between Centre and the States.
(vii) Tobacco & its products would be leviable to both CGST and SGST but the Centre could levy Excise
duty over and above GST.
(viii) Petroleum crude, Motor spirit, Diesel, Natural Gas and Aviation Turbine Fuel (ATF),
and Alcoholic liquor for human consumption would be kept out of GST to begin with.
(ix) Centre would levy and collect a tax called Integrated GST (IGST) on inter-State supply
of goods or services. This will enable passing of input tax credit seamlessly across State
boundaries. IGST would be equivalent to the sum of CGST and SGST. Such transactions would,
therefore, bear only IGST and not CGST and SGST separately.
(x) The IGST would follow the destination principle with the revenue accruing to the State
where the goods or the services on which tax is paid is finally consumed.
(xi) There would be a threshold exemption for goods and services so as to keep the small
dealers out of the tax net both under CGST and SGST.
(xii) Registration of taxpayers would be PAN based. Return formats for CGST and SGST should
be common to the extent possible. Functions such as assessment, enforcement, scrutiny and
audit would be undertaken by the authority which is collecting the tax, with information
sharing between the Centre and the States.
(b) and (c): A broad consensus over design of dual GST has been achieved between the Centre and the States.
However, there are some issues on which such convergence of views between the Centre and States is yet to
be arrived at. Some of such issues are listed below:
(i) Some States want Centre to exempt all the goods currently exempted under Central Excise regime,
under CGST also. Centre, however, is of the view that the exemption list for CGST and SGST should
be common.
(ii) Some States have requested that Centre should have gross annual turnover of Rs. 1.5 crore
as threshold for CGST. Centre has however, consistently maintained that the threshold for CGST
and SGST should be same.
(iii) A few States have demanded total autonomy to fix tax rates in GST regime, whereas Centre
has suggested that both Centre and States should follow recommendations of GST Council while
fixing GST rates.
(d) to (f): Empowered Committee of State Finance Ministers has not rejected the proposal to introduce
GST but is working on GST for past few years. EC has prepared and published on 15th November, 2009
`First Discussion Paper on GST`. Central Government is closely engaged with Empowered Committee of
State Finance Ministers (EC) to evolve consensus on all issues related to GST. A meeting to discuss
early introduction of Constitutional Amendment Bill required for rolling out to GST with members of
EC was held on 11th February, 2011.
