“This should improve compliance and raise government revenues”, Diron said.
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It is expected that certain goods, such as capital goods, would become cheaper by 12-14 per cent, increasing demand for them, raising investment and, thus, economic growth. The bill will also have to be approved by 50 per cent of all the state assemblies. In case the amendments are not cleared, the bill will go to parliamentary committee, though the chances are slim.
This would prove to be a big step in the financial growth – “One country one tax” would now be real. At least 15 of India’s 29 states have to ratify the bill followed by the assent of the President. Only Tamil Nadu looks tough at the moment, as the AIADMK MPs skipped the voting in the Upper House on Wednesday. After which, the GST Council will be constituted. “States and the Centre will take a call on rates that will take into account all issues, including the concern related to inflation”, Finance Secretary Ashok Lavasa told reporters.
Nearly all the NDA ruled states will have to call special sessions to pass the GST as the monsoon session of the state assemblies is over and the winter session is still a few months away. Only then, the April 1, 2017, deadline would be met. RNR is the single rate at which there will be no revenue loss to the Centre and states in the GST regime.
The RNR will then get converted into a three-slab GST rate structure, depending on exemptions. Essential commodities will be charged at low rates offset by higher “sin” taxes on goods considered to be luxuries.
However, there has been no agreement yet on rates of various goods and services.
The subsequent legislations Central GST (CGST) and Integrated GST (IGST) – which are likely to come up for discussions in the next Winter session of Parliament – would mention the GST rate.
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State governments widely support the GST because it will boost their share of taxes and make cross-border trade far smoother.
