People across the spectrum from manufacturers to exporters to retailers are unanimous in welcoming the passage of GST Bill in Rajya Sabha and are hopeful that implementation of the tax reform will help the Indian economy grow.
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The amendment would allow the central government to subsume powers to set taxes on goods and services from state legislatures, streamlining what is a fragmented and cumbersome system consisting of an array of different charges into one single levy.
The Congress, which gave rare support to the government in the Rajya Sabha to pass the constitutional amendment that enables the bill, wants the rate of GST to be fixed at no higher than 18%.
“On this truly historic occasion of the passage of the GST Bill in the Rajya Sabha, I thank the leaders and members of all parties”, he said. The bill will also have to be approved by 50 per cent of all the state Assemblies.
Revenue secretary Hasmukh Adhia said the government was doing its best to meet the deadline.
The Finance Minister said that his discussions with States led him to believe that the rates would be moderate and less onerous than the combined burden of the Central and State taxes on goods and services, which comes at present rates to about 27%.
This Bill proposes to benefit nearly every party involved, businesses will benefit with easy compliance and uniformity of tax rates and structures.
“Even now, the upper limit for the tax rates must find form in the GST Bill”, he said.
He said that the state would gain on the services side since it would get a share in the service tax though it would lose on VAT file.
Noting that the GST Bill was introduced by the UPA government, Leader of Opposition Narasingh Mishra of Congress said the bill could not be passed then as BJP was opposing it.
For the period 2012-13 to 2014-15, the state government has claimed compensation of ‘2,908.82 crore. This is because, when the GST is implemented, it will subsume the service tax that is now in place.
“Government must not bring these bills as money bills”.
Moody’s Investors Service today said the GST implementation will be positive for the country’s economic growth without any significant impact on inflation, but cautioned that other “controversial reforms” may witness a slower progress.
The GST bill will now be tabled in Lok Sabha on Monday.
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An “unreasonable” cap would increase the revenue deficit and a Finance Minister can not afford to do that, he said.
