Union Cabinet has approved GST supplementary and compensation bills on Monday, ANI reports.

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The Cabinet was likely to take up for approval of the supporting GST legislations, which will now be introduced in Parliament as the government sprints to meet the July 1 target date for rollout of the new indirect tax regime.

A set of four supporting legislations -- the Compensation Law, the Central-GST or C-GST, Integrated-GST or I-GST and Union Territory-GST or UT-GST -- went together to the Cabinet for approval.

The GST Council, in its previous two meetings, had given approval to the four legislations as also the State-GST (S-GST) bill. While the S-GST has to be passed by each of the state legislative assemblies, the other four laws have to be approved by Parliament.

Once approved, levy of Goods and Services Tax (GST) will get legal backing. The government is hoping the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current session of Parliament and the S-GST by each of the state legislatures soon to help roll out the new indirect tax regime from July 1.

While a composite GST will be levied on sale of goods or rendering of services after the new indirect tax regime is rolled out, the revenue would be split between Centre and states in almost equal proportion.

This because central taxes like excise and service tax and state levies like VAT will be subsumed in the GST.

While the C-GST will give powers to the Centre to levy GST on goods and services after Union levies like excise and service tax are subsumed, the I-GST is to be levied on inter-state supplies.

The S-GST will allow states to levy the tax after VAT and other state levies are subsumed in the GST. The UT-GST will also go to Parliament for approval.

Sources said the Council has already finalised a four-tier tax structure of 5, 12, 18 and 28%, but the model GST law has kept the peak rate at 40% (20% to be levied by the Centre and an equal amount by states) to obviate the need for approaching Parliament for any change in rates in future.

Similarly, the cess to be levied on top of peak rate on selected demerit goods like luxury cars for creation of a corpus that will be used for compensating states for any loss of revenue from GST implementation in the first five years, has been capped at 15%.

Sources said the government may attempt for all the four laws to be taken up for approval in Parliament together during the ongoing Budget session that ends on April 12.