The Goods and Services Tax, which was passed by the Rajya Sabha on Wednesday, has been portrayed as the biggest tax reform in independent Indian history.
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Terming GST as the “biggest reform in the field of taxes in the country”, CII Director General Chandrajit Banerjee said: “GST is expected to remove the cascading effects of various multi-level indirect taxes on goods and services and will subsume most of the country’s central and state level duties and taxes, thus making the country a national market”. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Last week state finance ministers told the Centre that the rate should provide relief to common citizens and small businessmen while not resulting in loss of revenue to states.
The Bill, with nine amendments, secured support from all parties except the AIADMK.
For this 2016 version of the bill, Union finance minister Jaitley held several rounds of consultations with opposition parties and state governments.
But most believe that even an imperfect GST law should be given a chance to succeed. “We want that both Houses should debate and vote on it”, he said.
Chidambaram suggested that once made into a legislation, the uniform tax, that GST stands for, should never exceed 18 per cent.
In their letters to Finance Minister Arun Jaitley, West Bengal Finance Minister Amit Mitra and his Kerala counterpart T M Thomas Isaac raised the issue of depriving the states of the share of Integrated Goods and Services Tax (IGST) revenue. As well, the standard rate of GST should not exceed 18%, the Congress said today in the Rajya Sabha.
Asked if the implementation of the GST would mean rise in cost of air travel, mobile bills and eating out because of incidence of service tax going up in the new regime, he said that tax rate would be decided by the GST Council, comprising of the Centre and the states.
“If we charge 24-26 per cent, it will defeat the very objective of GST”.
At the end of a seven-hour debate, there was no clear picture on the tax rates. With a likely rate of 5% state GST, consumers may pay slightly less for mobile phones.
He said there was a need for a political consensus as far as possible to bring this bill and a process of dialogue with all major political parties and states was undertaken and the “best possible output was incorporated in the bill”. The bill was then referred to a Select Committee of the Rajya Sabha for examination which submitted its Report on July 22, 2015.
The passage of the bill will also boost to the reform agenda of the Modi government, which has struggled to bring about an extensive overhauling of the economy as he had promised before the election.
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Six official amendments, including scrapping of one per cent additional tax, moved by the government were approved by cent per cent votes.
