Since opposition parties raised several objections to the Bill, it could not be tabled in Rajya Sabha.
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After a marathon, seven-hour debate, India’s landmark Goods And Services Tax bill was passed in the Rajya Sabha with a sweeping majority voting in favour of the bill.
Analysts say the GST could cause India’s manufacturing powerhouses – such as Tamil Nadu, Maharashtra and Gujarat – to lose revenues they now get from selling goods across states. “Together we will take India to new heights of progress”, the Prime Minister tweeted.
Another issue pertaining to an amendment made by the Union Cabinet last week on Article 270, which allegedly deprives states from the divisible pool of Integrated GST revenue on unclaimed credits in B2C (business-to-customer) and B2G (business-to-government) transactions, has been flagged by Mitra in his letter to the Union finance minister Arun Jaitley.
The bill aims to streamline India’s fragmented tax system with a single levy.
Nasscom on Wednesday urged the government not to make Goods and Services Tax (GST) procedurally a nightmare for Information Technology services sector. “We are looking forward to raise an additional income of around Rs 2,000-3,000 annually”, he said.
The GST bill will cover taxes like central excise duty, state-level taxes like, VAT or sales tax, entertainment tax, entry tax, purchase tax, luxury tax and octroi.
He also dismissed the apprehension of members that the Centre would have veto power in the proposed GST Council, saying it would have only one third weightage in it.
The GST, though, will give Modi the much-needed impetus to kickstart those reforms.
In December 2015, a committee headed by the chief economic adviser Dr Arvind Subramanian on “Possible Tax rates under GST” recommended that lower rates be kept around 12% (Centre plus states) with standard rates varying between 17% and 18%.
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.
“A simplified tax structure can usher in greater compliance, increase the number of tax payers and therefore, widen the tax base resulting in higher tax revenue for the government”, USIBC president Mukesh Aghi said.
Thus the rate of 18 per cent tax was the most acceptable given the economic situation of the country and the Congress did not “pluck this figure out of the air”, he said. He also acknowledged that the GST bill was originally a Congress baby, while introducing the bill.
But for the transition to GST to be complete, Parliament has to pass two Bills, on the central GST and on IGST, and the states must pass state GST laws.
“The Congress party was never against the idea of GST”.
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The Modi government is reportedly looking to operationalize the GST by April 2017, which will mark the start of India’s next fiscal year.
