The Congress batted for a cap on the GST, but finance minister Arun Jaitley maintained that the government will try to keep the rate “moderate”.
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India’s main opposition Congress party and other groups voted for the bill on Wednesday after working out compromises with Prime Minister Narendra Modi’s government.
GST is essentially a comprehensive indirect tax on manufacture, sale and consumption of goods and services across the country and it replace taxes levied by the central and state governments.
At present, anything from Bollywood film tickets to a Tata vehicle is subject to a multitude of taxes that vary from state to state and sometimes double up.
Currently, a real estate developer incurs various taxes during the construction of a project including value-added tax (VAT), central sales tax, customs duties, and service tax among others. “Together we will take India to new heights of progress”, he wrote in another tweet”, he added.
What will it mean for India? It will impact the Tax Structure, Tax Incidence, Tax Computation, Tax Payment, Compliance, Credit Utilization and Reporting leading to a complete overhaul of the current indirect tax system.
He said it will also bring down tax evasions and bring all transactions under the ambit of taxation.
The Congres said it was grateful that the BJP acknowledged it was the Congress that first announced the GST.
For this 2016 version of the bill, Union finance minister Jaitley held several rounds of consultations with opposition parties and state governments.
A major concern that came up again and again during the debate was the possible revenue loss for states, who worry that a destination and consumption-based tax like the GST would dry up revenues from states, hurting their economies. The bill will also have to be approved by 50 per cent of all the state assemblies. The bill was then referred to a Select Committee of the Rajya Sabha for examination which submitted its Report on July 22, 2015.
For instance, a majority of Indian states will have to pass the GST amendment, and work toward forming a GST Council that will finalise the nuts and bolts of the new tax.
The government hopes to have the bill cleared before the end of the monsoon session on August 12, and launch it at the start of the next fiscal year – April 1, 2017.
GST is created to be electronic with no manual filing of returns – necessitating a vast IT infrastructure.
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“There is most definitely a risk that the GST will contribute to a pickup in inflation”, said Amitabh Dubey, an analyst at Trusted Sources.
