Government decides to withdraw SGST bill

The government has decided withdraw the special Goods and Services Tax (GST) which is aimed at simplifying the existing tax structure and consolidates several taxes as single tax, following the Supreme Court’s decision of requiring two-third majority and referendum to enact it as a law, Finance Ministry sources said.

The Court observed that several clauses of the bill are inconsistent with some of the articles of the country’s constitution.

The Special GST consolidates several taxes on liquor, cigarettes, telecommunications, betting and gaming and vehicles. The Attorney General had cleared the draft law.

This legal issue has prompted the Finance Ministry find an option to re-introduce the SGST and one of the options is to withdraw the tax and allow the previous taxation system with some revisions to relevant taxes to continue, a senior official said.  

The Finance Ministry has convened several special meetings to arrive at a decision and it will also seek the legal opinion of the Attorney General on possible options to re-introduce SGST and devising a new bill with necessary amendments.

The Ministry has made all arrangements to set up a separate revenue collection unit at the Treasury and install the computer system to collect SGST online, he said adding that it has been planned to collect additional revenue of Rs. 50 billion from the new tax by law and changes to the Value Added Tax.

The Special GST was proposed to introduce one tax for various taxes imposed under multiple laws and institutions on alcohol, cigarettes, telecommunication, betting and gaming and vehicles, which accounts for 50 per cent of the income from taxes and levies, he added.

The proposed Bill accords power to the Finance Minister to make an Order on the rate of the special GST which comes into immediate effect once an Order is published in the Gazette.

The establishment of a separate unit in the Treasury under a Deputy Secretary General for the collection and accounting of the Special GST is against all administrative and financial regulations of the country as it will take over the functions of the revenue collection institutions of the state Inland Revenue Department, officials said. (Bandula)