GST Council approves bill to compensate states for revenue losses

The GST Council, in its meeting on 18th February, approved the bill guaranteeing compensation to states for revenue losses that may occur due to the transition to the new tax regime. The council, however, deferred approval on the other three crucial bills that are required to make GST a reality – the Central GST (C-GST), State GST (S-GST) and Integrated GST (I-GST).

The fate of these bills will now be decided in the upcoming council meeting on the 4-5th of march.Speaking in Udaipur, Finance minister Arun Jaitley said that the issue of compensation “will not come before the council anymore”, and will be taken directly to the Cabinet for approval and hopefully passed in the next leg of the budget session.

He also said that the council will aim to finalise the pending bills in its next meeting so they can be passed in the budget session of Parliament beginning March 9, as well. After the parliament approves the S-GST, each state will have to individually pass the law in their own legislature.

Legal issues were the cause for delay

The Finance Minister also clarified that the delay in approving the other bills was due to issues that crept up during legal vetting of these bills. The council has given directions to the legal sub-committee composed of Central and State officers to work on the legal language describing delegation of powers, exemptions during transition, and composition of appeal at tribunal to adjudicate on disputes.

Other issues like VAT in work contracts, taxation of services etc. will also be taken up by the sub-committee and the final draft should ideally be approved in the next council meeting.

No power to the CAG under indirect tax

The CAG act already gives the Comptroller and Auditor general of India the power to question the government on any issue relating to public finances. Mr. Jaitley said that it was not necessary to give additional powers to the CAG under the indirect tax scheme.

What can you do to be GST ready?

We all know that GST is coming; it’s only a matter of when. So, without further dilly dallying it is imperative that you transition your business to the new tax scheme and be ready for when it is implemented. Some of the key points that should be kept in mind are:

1. Get your enrollment done on time. To read more about the enrollment process and its relevance, Click here.
2. Plan your logistics and warehousing requirement carefully. To read our detailed guide on impact analysis on logistics and warehousing, Click here.
3. Adopt such platforms, technologies which will enable your business to be GST-compliant.

Need an expert to help you with all things in GST? Find a CA!