In a landmark move, the Rajya Sabha on Wednesday passed the Goods and Services Tax Constitutional Amendment Bill which aims to bring in a uniform tax in the country.
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Ending months of uncertainty over the fate of single tax regime, the Constitution (122nd Amendment) Bill, 2014 eventually got an overwhelming support of the entire political spectrum, except the AIADMK, as the government managed to evolve consensus after a painstaking process that saw exhaustive consultations.
“The Congress party was never against the idea of GST”.
Finance Minister Arun Jaitley has said he will push for a roll-out by April 2017 of GST, a national tax that replaces a mesh of indirect taxes to turn the country into the world’s biggest single market.
While calculating the inflationary impact of the introduction of GST, the Subramanian committee had to rely on the earlier version of constitutional amendment bill.
According to the Bill, passed in the Lok Sabha in May 2015, the rates were to be decided by a GST council headed by the central finance minister with state finance ministers as members. The Rajya Sabha appears ready to approve an amendment to the constitution that gives the government new taxation powers.
“And the reason is… why do you not include a part of the revenue into the Consolidated Fund. In a GST system… you can’t have the same accessee being accessed simultaneously by the Centre and the States”.
As a parting note, let us make a flawless GST by subsuming all goods and services and all taxes into one GST basket and come up with a real revenue neutral GST rate to have a real pan-India market to spur production and consumption and not simply explain it away by revenue neutral band rates which are not to be found in any text book of worldwide VAT/GST law. Conceding the Congress’ plea, the Modi government removed the provision for a one per cent inter-state tax in GST.
Replying to a question, Chidambaram said the government could accept the opposition demand for bringing CGST and iGST bills as financial bill and not money bills. But since GST is a regressive tax – the flat rate means it hurts the poor more than the rich – the Centre and the Opposition have pushed for a lower rate. Since opposition parties raised several objections to the Bill, it could not be tabled in Rajya Sabha.
The NDA government will have to pass supporting legislations, the Central and interstate GST Bills and majority state governments will have to ratify the Bill post that.
Businses have pushed hard for years to bring in the tax, saying it will boost economic activity, with lobby group the Confederation of Indian Industry (CII) estimating it will add 1.5 to 2 percentage points to the annual GDP growth rate. “We want that both Houses should debate and vote on it”, he said.
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NASSCOM urged the government not to make Goods and Services Tax a procedural nightmare for Information Technology services sector. Jaitley said the IT (information technology) network for levying the new tax is already in the advanced stage of readiness to facilitate the GST’s implementation from April 1 next year.
