If all goes to plan, the biggest tax reform since Indian independence would transform its $2 trillion economy and market of 1.3 billion people into a common market for the first time, with potentially significant long-term growth benefits. Later, in December 2014, the Constitution (122nd Amendment) Bill, 2014 was introduced in Lok Sabha.
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“GST will remove one hurdle to the smooth movement of goods and services and focus corporates’ location decisions on operational considerations rather than tax regime”, Diron said.
Adhia said certain inflationary items will be kept out of the ambit of the new tax structure.
But current CBEC Chairman Najib Shah is confident of meeting the rollout deadline.
Details of the bill will be chalked out by a constitutional council and, with the presidential assent, the reform is due to roll out by April next year. “The government wanted to build a larger consensus, which we succeeded in doing”, he said. He said the GST rate will be optimal, but way above the 18% demanded by the Opposition Congress because the states stand to lose on a GST rate as low as 18%.
In a rare show of unity, the ruling Bharatiya Janata Party (BJP) and bitter political rival Congress came together to pass the landmark reform after an eight-hour debate in the Upper House on Wednesday.
While Finance Minister Arun Jaitley had earlier hinted that implementing the new regime from the middle of a financial year say October 1, 2017 is a possible option, industry has warned it would be a messy exercise.
He said the state government was also demanding levy of tax on tobacco products by the states over and above the GST as the central government will tax separately as per entry 84 of the Union List of the Constitution. “We are making a serious and honest effort to ensure that they don’t bring it as a money Bill”, he said.
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Mr Jaitley said the government is targeting to bring the legislations – the Central GST Bill and the Integrated GST (GST) Bill – before Parliament in the winter session in November. AIADMK, which walked out of the Rajya Sabha before voting, too remains a roadblock for the smooth passage of GST.
