Subsequently, the bills will be tabled together in Parliament in the second half of the budget session. Once it is in force, GST will replace at least 17 state and federal taxes.
J&K Finance Minister Haseeb Drabu said the Centre had accepted the proposals and the Council would take a final view on the two laws in its next meeting.
The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon previous year for the moment, but is only a provision being built into the model law to take care of contingencies in future, two officials in the know told PTI.
The GST Council has made a decision to keep the revenue exemption limit at Rs 20 lakh for all states with the exception of North-Eastern and the hill states where the limit will be Rs 10 lakh. The GST Council meet took place at Vigyan Bhavan with the aim of getting the council's approval on iGST (integrated GST), cGST (central GST) and sGST (state GST) drafts before the second half of the budget session of Parliament that begins on March 9.
Earlier this week, the Economic Affairs Secretary Shaktikanta Das (at a platform involving the OECD) said that both the Centre and State governments are working towards implementing GST by July 1, 2017.
"While the passage of the CGST and IGST Bills by the GST Council is a welcome step, it would be have been wonderful if the SGST and UTGST Bills had also been approved", M.S. Mani, Senior Director - Indirect Tax at Deloitte Haskins & Sells said. The effective peak rate will continue to remain at 28 percent.
The government has already indicated that it is keen to roll out the new regime from July 1 onwards. In its next meeting on March 16, the Council will carry out discussions for approving the State-GST and Union Territory-GST (UT-GST) laws. Sisodia said that real estate should be brought under GST, adding that black money finds its way into real estate so bringing it under the Goods and Services Tax will help in keeping a check on black money.
The Centre and states came to an agreement on Saturday on two draft laws which are needed to trigger the country's biggest tax reform. It has not been decided yet which tax rates will apply to which categories of goods.
Together with this, they will also decide the goods and services that would attract a cess on top of the peak rate to create a corpus that can be used to compensate states for any loss of revenue from implementation of GST in the first five years.