India inches closer to July rollout of tax reform as LS passes 4 GST bills
The Lok Sabha on Wednesday passed key legislations, putting the Goods and Services tax (GST) on track for its rollout from July 1.Updated: Apr 14, 2017 09:15 IST
The proposed goods and services tax (GST) moved a step closer to reality on Wednesday with the Lok Sabha approving four bills that will subsume a profusion of central, state indirect taxes and help create a single, unified market.
The Lower House passed the bills by voice vote, after Speaker Sumitra Mahajan initiated clause-by-clause voting at the end of a long Parliament debate on GST, billed as the country’s biggest tax reforms since Independence.
“These are revolutionary bills which will benefit all. States have pooled in their sovereignty into the GST council, and Centre has done the same,” said finance minister Arun Jaitley, who aims to introduce the GST from July 1.
These supporting legislation for the GST were introduced as money bills and will now go to the Rajya Sabha, where the NDA government doesn’t have the numbers to push through key reforms.
But the Upper House can’t reject money bills, as it only has powers to make recommendations on such legislation, which the Lok Sabha can choose to accept or reject.
Once the bills are passed in Parliament, the government will issue a notification after the President’s consent. The states will pass a separate law — the State GST (SGST) bill — to roll out the reform.
The four proposed legislation are the central goods and services tax (CGST) bill, the integrated goods and services tax (IGST) bill, the goods and services tax (compensation to states) bill, and the Union territory goods and services tax (UTGST) bill.
The passage of the bills removed years of political differences over the GST that will eliminate tax barriers, and subsume a host of indirect taxes levied by the Centre and the states, including excise, service tax, entertainment, entry, luxury and value-added taxes.
“The July deadline is possible. We have promised businesses that there will be clarity on the law at least three months before its implementation. That has come from the passing of the four bills,” revenue secretary Hasmukh Adhia said.
He announced that the GST council will pass all nine sets of rules by March 31.
The CGST will give powers to the Centre to levy tax after excise and service taxes and additional customs duty are subsumed. The IGST will be a tax on inter-state movement of goods and services.
The UTGST is for Union territories such as Chandigarh and Daman and Diu.
The clause-by-clause voting was held as the Congress and other opposition parties sought a division vote as well as more than 30 amendments to the proposed legislation.
“Several amendments were moved but none were passed,” Adhia said.
Opposition parliamentarians raised concern about the GST council, fears of revenue loss and loss of autonomy.
“I hope we will not end up cloning Parliament and creating the GST Council ... like human cloning, years later this will also raise moral questions,” said Mohammad Salim of the CPM.
Trinamool Congress’s Saugata Roy summed up the mood in the opposition camp: “I support the GST bills with a heavy heart ... where is cooperative federalism?”
But most MPs showed consensus that the new indirect tax is the biggest reform since Independence and is the need of the hour.
Congress leader M Veerappa Moily said: “Seven to eight years have passed after the UPA government initiated the GST bill ... the country has lost Rs 12 lakh crore because of the delay.”
More than a decade in the making, the GST is expected to shore up government revenue and spur economic growth by 1-2 percentage points. The government has gone on record to state that the tax burden will be reduced, but experts say the GST will stoke inflationary trends in the initial years.
The rates in the four-slab structure of the GST will be 5%, 12%, 18% and 28%. The CGST, IGST and SGST bill provide for a maximum tax of 20% each. The bills allow creation of a fund through a cess to ensure states are compensated for any revenue loss in the first five years of the new tax regime.
First Published: Mar 29, 2017 21:09 IST