Why in news?
The Union government is exploring raising a loan to pay the shortfall of the Goods and Services Tax (GST) compensation amount to States as the latter have had to ramp up spending to combat the outbreak of COVID-19.
- The idea has been circulated and since the GST Act prohibits withdrawal of funds from the Consolidated Fund, raising loans is being seen as a way out.
- Given the extraordinary situation we are in, the government can invoke the provision made in law and raise a loan.
- In the last GST Council meeting, in fact, the idea of the Council itself raising loans was floated. However, the Council as an entity cannot do that.
- Goods & Services Tax Council is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax.
- As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.
- The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2016, for introduction of Goods and Services tax in the country was introduced in the Parliament and passed by Rajya Sabha on 3rd August, 2016 and by Lok Sabha on 8th August, 2016.
- GST Council is an apex member committee to modify, reconcile or to procure any law or regulation based on the context of goods and services tax in India.
- The GST council is responsible for any revision or enactment of rule or any rate changes of the goods and services in India.
The council contains the following members:
- Union Finance Minister (as chairperson)
- Union Minister of States in charge of revenue or finance (as member)
- The ministers of states in charge of finance or taxation or other ministers as nominated by each states government (as member).
GST Council makes recommendations on:
- Taxes, cesses, and surcharges levied by the Centre, States and local bodies which may be subsumed in the GST;
- Goods and services which may be subjected to or exempted from GST;
- Model GST laws, principles of levy, apportionment of IGST and principles that govern the place of supply;
- Threshold limit of turnover below which goods and services may be exempted from GST;
- Rates including floor rates with bands of GST;
- Special rates to raise additional resources during any natural calamity;
- Special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
- Any other matter relating to the goods and services tax, as the Council may decide.
- Goods and Services Tax (GST) Act came into effect in 2017.
- Goods and Services Tax (GST) was introduced by the Government of India to boost the economic growth of India. GST is considered to be the biggest taxation reform in the history of Indian economy.
- The power to make any changes in the GST law is in the hands of GST Council. GST Council is headed by the Finance Minister. One hundred and first amendment act, 2016 introduced the GST in India from July 2017.
The Government introduced 3 types of GST which are given below.
- CGST (Central Goods and Service Tax)
- SGST( State Goods and Service Tax)
- IGST(Integrated Goods and Services Tax)
Revenue under CGST is collected by the Central Government.
CGST subsumes the below given central taxations and levies:
- Central Excise Duty
- Services Tax
- Central Sales Tax
- Excise Duty
- Additional Excise Duties Countervailing Duty (CVD)
Revenue under SGST is collected by the State Government.
SGST subsumed the following state taxations:
- Luxury Tax
- State Sales Tax
- Entry tax
- Entertainment Tax
- Levies on Lottery
- IGST is charged when there is movement of goods from one state to another state.
- The revenue will be collected by the central government and accordingly will be shared between the Union and states in the manner prescribed by Parliament or GST Council.