The Revenue Secretary explained the next steps forward, covering the legal framework, the IT and logistical framework and the training and outreach required for offices, as also trade and industry.
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The 66-year-old Constitution, which gives power to the Centre to levy taxes like excise, and empowers states to collect retail sales taxes, was amended though the 122nd Constitution Amendment Bill on Wednesday.
About 42 per cent of the Rs 22 lakh crore ($328 billion) revenue of the central government and 35 states and union territories will now be subsumed under the goods and services tax (GST), passed by parliament’s upper house on August 3, 2016 and being touted by some as one of independent India’s “boldest reforms”.
Under the new GST regime goods would be taxed at the point of consumption, instead of the goods being taxed multiple times at different rates.
“The political maturity demonstrated by both the government and the opposition in forging a consensus for this landmark event is commendable”, said Harishanker Subramaniam, national leader for indirect tax at EY India.
BJP President Amit Shah has called a meeting of chief ministers of party-ruled states on August 27 and organisational core groups of all states on August 23 in which issues like better coordination between government and party, promotion of “pro-poor” initiatives and increasing usage of digital media are likely to figure. Mr Modi has till now maintained a studied silence on the issue, leaving it to government’s senior ministers led by Finance Minister Arun Jaitley to bat and garner support in favour of the bill.
It isn’t yet clear what the GST taxation rate will be, but 17 per cent to 18 per cent is likely.
“For a common man, the cost of services may go up, but there will be a reduction of price of goods”, Jain said, adding that land should be kept out while calculating the tax for purchase of real estate property. Further, there are numerous cascading of taxes on account of levy of CST, input tax credit retention under the VAT laws, levy of entry tax/ Octroi/ local body tax, etc till the time the product reaches the end customer.
Recalling the history of GST, he said in 2003 the Kelkar committee had suggested that structural changes should be brought about in the indirect tax regime.
Industries and commercial enterprises now pay various taxes at various stages of a product or service, such as manufacture, transport, wholesale, logistics and retail.
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