GST bill passed: India looks set for its biggest ever tax reform

India’s main opposition Congress party and other groups voted for the bill on Wednesday after working out compromises with Prime Minister Narendra Modi’s government.

Former finance minister P Chidambaram, who initiated the discussion from Congress benches, also thanked Jaitley for the friendly tone set by the ruling party “in the last two weeks” and said his party hoped that the Constitution (122nd) Amendment Bill will be passed by the House after the debate.

The overarching consensus over the passage of the Constitution Amendment Bill for GST in Rajya Sabha notwithstanding, there are indications of some fresh sticking points, with the Empowered Committee of State Finance Ministers’ chairman and West Bengal finance minister Amit Mitra raising a red flag over the government’s decision to stop short of explicitly providing for “full” compensation to states in the Bill.

Washington, Aug 4 The US India Business Council has termed the passage of GST bill by the Indian Parliament as a “game-changer”, saying it is a significant milestone in efforts to improve the country’s ranking in World Bank’s ease of doing business index.

But to get a sense of what we should expect, the Subramanian committee’s estimate, based on some assumptions about the tax rate, is a good place to start.

He, however, said the biggest challenge is to make it people friendly.

The Centre will also levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. “PM @narendramodi ji & FM @arunjaitley ji in getting this watershed bill passed to finally achieve the objective of one India one market”, Raman Singh stated in a series of tweets.

While a Finance Bill is voted upon by both houses, a Money Bill cannot be rejected by the Rajya Sabha, which can only recommend changes to the proposal. Das said this would prove to be a big step in the financial growth – “One country one tax” would now be real.

For instance, a majority of Indian states will have to pass the GST amendment, and work toward forming a GST Council that will finalise the nuts and bolts of the new tax.

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.

The minister also sought to allay another fear among the states – that despite India’s federal structure, the Centre would try to impose its authority, especially when it comes to disputes.

According to news reports, The National Institute of Public Finance and Policy (NIPFP) favoured a standard GST rate in the range of 23-25%.

Efficient Taxation System The Goods and Services Tax (GST) regime will weed out black money and usher in an efficient taxation system, but the April 2017 rollout deadline appears to be challenging, experts said.

“This reform will promote Make in India, help exports and thus boost employment while providing enhanced revenue”.

While potable alcohol will be outside the GST purview, petroleum products will be zero-rated for the moment – they will attract nil levy under this common tax.