GST council chaired by finance minister Arun Jaitley has urged states to approve state GST laws by the end of May to smoothen the roll-out of the historic tax reform by its target date of 1 July.
Telangana became the first to pass the State Goods and Services Bill 2017 on Sunday.
The state laws form the basis for levying state GST (SGST) on the supply of goods and services within the state, replacing value-added tax (VAT). Their consent to the reform was obtained by the Union government with a law for full compensation for five years for any revenue loss from GST adoption, mainly from elimination of the ‘tax on tax’ resulting from restrictions on flow of tax credit across the supply value chain. For compensation, 14% growth over states’ tax receipts in the last financial year will be taken as a benchmark.
Passing of state GST Acts and releasing rules and associated forms would be a major milestone in introduction of GST. But based on the recently released rules, it is expected that GSTN (GST Network, the company that manages the IT infrastructure for GST) may also be required to make further changes in the return formats.
The Central Board of Excise and Customs (CBEC) recently released draft rules on electronic way bills (e-way bills) that entities have to furnish regarding the goods meant to be moved within or out of a state. About 5.65 million taxpayers out of an estimated 8 million excise, service and value-added tax assessees have so far joined the GSTN website.