Road to GST: Jaitley-headed council to approve four draft bills .

The Council will also discuss raising the peak rate in the model GST Bill to 40 percent (20 percent central and 20 percent state). This would be only an enabling provision to ensure that Parliamentary ratification is not required if the highest rate need to be increased in the future. The effective peak rate will continue to remain at 28 percent The Goods and Services Tax (GST) Council headed by Finance Minister Arun Jaitley is expected to approve four crucial bills on Saturday paving the way towards the roll-out of India's biggest tax reform from July 1. The legally vetted draft laws for all important bills — Central GST (CGST), State GST (SGST), Integrated GST (IGST) and Union Territory GST (UTGST) — will likely be cleared by the Council in its eleventh meeting in New Delhi. 

 The government would then introduce the model GST law, which provides a common draft of CGST law, SGST law, IGST law, UTGST law and Compensation Law, in Parliament in the second half of the Budget Session beginning next week. Last month the Council cleared the draft compensation law, according to which the Centre will have to fully compensate states for any revenue loss for five years after migrating to the new tax system. Vetting of the legal language of the draft CGST, IGST and SGST laws raised a couple of issues that had to be clarified to the legal department of the Council these laws were not cleared in the last meeting in February. The legal committee had questions on some of the issues including Composition of Appeal tribunal in Centre and States and eligibility of members, delegation of powers, exemptions during the transition phase, services and Value Added Tax in works contracts, as well as definition of agriculture. Under GST, the states and the Centre will collect identical rates of taxes on goods and services. For instance, if 18 percent is the GST rate on a good, the states and the Centre will get 9 percent each called the CGST and SGST rates. The Centre will also levy and collect the IGST on all inter-State supply of goods and services. 

The IGST mechanism has been designed to ensure seamless flow of input tax credit from one state to another. The GST Council is also said to have proposed raising the peak rate in the model GST Bill to 20 percent from existing 14 percent, which may lead to a peak GST levy move up to being as high as 40 percent (20 percent central and 20 percent state). This would be only an enabling provision to ensure that Parliamentary ratification is not required if the rate need to be increased in the future for an exigency. The effective peak rate will continue to remain at 28 percent. Last year, the council had agreed on a four-slab structure –5, 12, 18 and 28 percent. The draft of model GST law provides for a maximum rate of tax at 14 percent, which would imply an equal 14 percent central GST and state GST, taking the total to 28 percent. The rates committee, comprising officials from the Centre and the States, will soon determine which commodity will fall in which rate slab

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