The passage of the constitutional amendment bill on Wednesday kicks off a legislative marathon in which both the federal and state parliaments will need to pass further laws setting the rate and scope of the GST.
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NCP leader Praful Patel said it is very good that the Constitution amendment bill to bring GST was passed with general consensus.
He said, the reform will promote Make in India, help exports and boost employment while providing enhanced revenue. This recommendation was based on adding up excise duty and the current burden of various service taxes, but doesn’t entirely take into account the broader tax base the GST is supposed to achieve.
Many believe the landmark tax is a key step towards making India’s $2tn (£1.5tn) economy with 1.3 billion consumers a truly single market. Businesses will no longer have to deal with a confusing patch work of Central and state taxes and instead deal with one state GST and one Central GST.
He warned that a rate higher than this would be inflationary, leading to tax evasion.
Chidambaram said he reason why indirect tax has to be low is due to its regressive nature.
Speaking to TOI, trade tax commissioner Mukesh Meshram explained that with implementation of the new GST, some states including Uttar Pradesh might lose some revenue but since central government has already promised to compensate till next five years, UP may not lose much.
Chidambaram, a former finance minister, said that the idea of the GST Bill was floated by the previous United Progressive Alliance (UPA) government in 2005.
Just as the income tax rate can’t be levied at the whim of the executive, and needs legislative approval, the same must also hold true for the goods and services tax rate (GST), former Finance Minister P. Chidambaram said here on Wednesday. If a large IT services company India is providing services to a bank which has operations in all 36 states and union territories, under the existing system, CST is calculated and paid on the basis of contract between two parties.
Not without reason, for GST aims to cut down the country’s labyrinthine indirect tax structure comprising multitudes of levies into a single, uncomplicated tax.
Finance minister Arun Jaitley had earlier hinted about the thaw over the GST bill when he told a television channel, hours before introducing the bill in the Rajya Sabha, that the Congress was never principally against the GST.
He, however, thanked the government for dropping the 1 percent additional tax proposal. These goods provide substantial revenues to state governments.
The two-year-old deadlock was broken only after the government offered concessions to the opposition Congress party, which originally proposed the GST while in power but has now opposed what it termed as a “flawed” tax.
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On the issue of dispute redressal, Yechury said greater thought must be given to it and it must be spelt out more concretely. But I only want an assurance from the Government that it will be treated as a Finance bill, and not as a money bill.
