The bills will be sent to parliament later this week, while the state GST bill will be passed by each state legislature.
The Goods and Services Tax is a comprehensive uniform indirect tax on goods and services across a country.
The Union Cabinet approved four supporting legislations that would now be sent to Parliament and are likely to be presented in the Lok Sabha as money bills later this week.
These four supporting legislations are Compensation Law, Central-GST, Integrated-GST and Union Territory-GST.
The Compensation law was cleared by the GST council at its Udaipur meeting in February. The states will get full compensation for the first five years for any shortfall in revenue, which would be calculated at 14% annual growth from 2015-16 base year. The compensation will be funded through various cesses.
The Central GST would replace Central Excise Duty, Service Tax, Additional Duties of Excise & Customs, Special Additional Duty of Customs, and cesses and surcharges on supply of goods and services.
The IGST relates to taxation of inter-state transfer of goods and will provide for cross empowerment of state and central officers.
State Taxes GST would replace VAT, Central Sales Tax, Purchase Tax, Entry Tax, Entertainment Tax, taxes on advertisements, lotteries, betting and gambling, and state cesses and surcharges.
A four-tier rate structure has been cleared by the GST Council, but which commodities fit in these slabs would be done after March 31. The slabs are 5%, 12%, 18% and 28%. Items of daily needs will be taxed at 5% while luxury items will be taxed at the higher end.
GST is also expected to disincentivize tax evasion, lower tax rates, and make business operations easier.
(SA - @20/03)