What You Need to Know About GST Bill

GST Bill passed in the Parliament, Arun Jaitley

The 10-year-long wait for Goods and Service Tax (GST) Constitutional Amendment Bill finally saw the light at the end of the tunnel. After 7 hours, 46 minutes, 33 speeches later the Rajya Sabha on Wednesday passed the Goods and Services Tax Bill, which was already approved by the Lok Sabha last year. In the 243 member House, 203 votes were put in favour and none against. In the biggest tax reform since Independence, the GST Bill replaced a pontoon of different state and local taxes with a single unified value added tax system – turning the country into world’s biggest single market. Since last 66 years, Constitution gave the power to Centre to levy taxes like excise, and empowered states to collect retail sales taxes – all of which was amended through the 122nd Constitutional Amendment Bill.

What is GST?

GST Bill passed in the Parliament

Currently everything ranging from a film ticket to a car is subjected to a plethora of taxes, and most of the times the value of these taxes vary from one state to another. The Goods and Services Tax will put a closure to this tyranny. The GST Bill proposes to put an end to – central sales tax, excise duty, VAT, luxury tax, entertainment tax and lottery tax – with a single tax. Quashing the riddles and jumbles of multitude of taxes, GST Bill will also make doing business in India easier.

When NDA was voted to power in the year 2014, India had somehow managed to duck severe economic crisis. The fiscal deficit had enlarged to unthinkable proportions, paving many challenges. The last two years have witnessed the rise of Indian economy, a far more stable one. Fiscal deficit is low and inflation is largely under control. All this progress in the midst of rampant floods and heart breaking droughts is definitely a commendable victory.

GST could hugely uplift the GDP growth by atleast 1 to 2%. Current system’s inefficiency has too many loopholes and cracks, which with the help of GST can now be plastered.

Why did it take so long?

GST Bill passed in the Parliament, Congress opposed the GST bill

GST Bill was first announced in the year 2016. And since it was a topic of hot debate and unconcluded debates. In the year 2014 BJP government attempted to pass the BIll but didn’t get any success. Congress party was against the Bill, and Jai Ram Ramesh had clearly expressed it, “Congress chief ministers are in favour of GST, but the current law has a lot of deficiencies. We want the GST bill to be improved and so it has gone to the select committee. It cannot go in the current form.”

However, in the last few weeks both the parties held healthy dialogues and came together on mutually agreeable terms. The BLP government will be removing a proposed additional 1% tax on inter-state transactions and will be compensating states for the lost revenue for 5 years.

GST does not include Alcohol and fuel for the time being.

What next?

GST Bill passed, Indian Economy

The Bill has to be passed by both the houses of Parliament, and for it to move forward, a minimum of 15 states out of 29 have to ratify the document. In order to enshrine the Bill as law, another bill will have to be passed, most likely in the Winter session of the Parliament. To implement the tax, a GST Council will be set up, with ministers of both central and local governments.

Depending on the decision of the Empowered Committee of State Finance Ministers, rates for manufactured goods and services, which are expected to come down, will be decided. Currently, states are trying to bring down the rates as much as possible.  The Constitutional Amendment Bill will give shape to – Laws on Central GST, Integrated GST and separate State GST legislations.

Conclusion

PM Modi, GST Bill passed in the Parliament

140 countries in the world have implemented a unified GST system, however, India will follow a dual system. According this dual-system both Centre and state governments will be imposing tax. After Brazil and Canada, India will be the third country to follow a dual-system.

The Government of India is looking at April 2017 to put GST Bill in place. And before that happens, there is a lot that would have to be done. GST Bill is by and large the biggest economic reform in India and the Modi government holds a huge responsibility to prove the success of a decade long wait.

What is you opinion? Do you think GST Bill can lead India to immense success? Vote now.

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