Five issues that the GST council needs to tackle once formed

Following President Pranab Mukherjee's signing of the GST Bill into law last week, the next big step is to form the GST council.

Moving on fast track to roll out GST from April 1, 2017, the Cabinet on Monday approved setting up of all powerful GST Council, which will decide on the tax rate, exempted goods and other issues.

The procedure for setting up of the GST Council will begin from September 12th and will be completed within 60 days.

The GST council will have the Union finance minister and state finance ministers as members to finalise the law.

"We are ahead of the time schedule. The main thing to be done now is to call as many meetings of the GST Council and try and sort out all the major issues so that we are ready with the draft law completely and the industry can get itself ready," said Revenue Secretary Hasmukh Adhia.

There are a number of issues that the GST council will have to tackle:

1. The rate at which the GST will be levied.

2. The council will have to negotiate a rate between the opposition parties that are united in demand that GST rate be capped at 18 per cent and states that call for a 20 per cent cap to increase their revenues.

3. The council will have to determine as to what industries will be exempted from the GST.

4. The council will need to decide whether the GST will have different slabs. A lower rate for convenience goods and a higher rate for luxury goods and a seperate rate for services.

5. Ensuring a stable GST infrastructure to facilitate smooth implementation.

"Now it is for the GST Council to thrash out all the issues within the time limit of two months. We have set a time limit of two months for discussion and final decision on all the major aspects. Now whether that's going to be feasible, that we have to watch and see," added Adhia.

GST, which is considered as the biggest tax reform since independence, will subsume excise and service tax, and various other local levies including VAT and octroi.