The government on Friday tabled in Parliament a bill to introduce a country-wide unified goods and services tax (GST), a key reform initiative that had remained stuck for years due to lack of political consensus among the Centre and states.
Introducing the bill, which was cleared by the Cabinet on Wednesday, finance minister Arun Jaitley said that concerns of all states have been taken care of. “We have made sure that no state will lose a rupee of revenue. It will be a win-win situation for Centre and states,” Jaitley said.
Once adopted, GST can dramatically alter tax administration by giving a one-shot solution by subsuming a string of central and local levies such as excise, value-added tax and octroi into a single unified tax, and stitching together a common national market.
However, the bill would be taken up for passage only during the next session of Parliament. “I do not intend to pass it (GST bill) in the current session. We will formally take it up in the next session,” Jaitley said in the Rajya Sabha, where he also spoke on the bill in the afternoon while replying to the debate on the Appropriation Bill, 2014.
The finance minister also said that he will be open to suggestions till the very last minute. “States would be compensated on account of GST and the first installment would be made before March 31 next year,” he said.
Seeking to allay apprehensions of members including Samajwadi Party’s Naresh Aggarwal that states’ interests would be compromised, Jaitley, said that their are more than adequately protected and he did not foresee a situation where states would be the losers.
“The bill would not have fear of the unknown unlike value-added tax,” he told Rajya Sabha.
When Congress Party’s Jairam Ramesh said Gujarat had constantly opposed the UPA government’s attempts to introduce GST, Jaitley responded,
“States have a greater confidence in the current dispensation as their concerns were being addressed.”
The finance minister said he has held wide consultations in drafting the bill, which would bring the single-biggest tax reform since Independence. “GST reform would strengthen the principle of co-operative federalism as the Centre and states would need to work together to take decisions which would require 75% majority approval.”