Lok Sabha passes all four GST Bills
- Author: Zachary Reyes Mar 30, 2017,
Mar 30, 2017, 18:00
The Centre has termed the approval of four supplementary bills related to the Goods and Service Tax (GST) in the Lok Sabha as historic and stated that the passage of the bills would bring India under "one country, one tax" regime. Essentially, GST Bill does not provide for what the government has been promoting as "One Nation, One Tax" regime.
Union finance minister Arun Jaitley said that the new regime will make commodities and services slightly cheaper by removing the cascading effect of taxes. Responding to members' questions, the Minister said under the GST, for one commodity there will be only one tax rate in the country. There will be a zero per cent tax slab for essential food items, apart from which there are four rate slabs - 5 per cent, 12 per cent, 18 per cent and 28 per cent. The Compensation Law provides for levy of cess on top of the peak rate of approved tax (28%) on paan masala, tobacco, aerated waters, luxury cars and coal to create a non-lapsable fund for compensating states.
GST is expected to boost GDP growth by about 2 per cent and check tax evasion.
Following the key legislative victory for the Narendra Modi government, the world's fastest growing major economy is a step closer to meeting a target for a rollout of the GST from July 1.
"It's a massive tax change, administrative change at the center and the states, lots of procedures, processes, new forms, so there's a huge implementation challenge", Arvind Subramanian, Modi's chief economic adviser, said Wednesday in a Bloomberg Television interview.
Another mirror legislation of CGST, called State-GST, will amalgamate all state taxes like VAT, will be levied by states and has to be approved by all state legislatures.
The States that have ratified GST are: Assam (August 12), Bihar (August 16), Jharkhand (August 17), Chhattisgarh (August 22), Himachal Pradesh (August 22), Gujarat (August 23), Madhya Pradesh and Delhi (August 24), Nagaland (August 24), Maharashtra, Haryana, Sikkim (August 29), Mizoram, Telangana (August 30), Goa (August 31) and Odisha (September 1). It also needs to decide the rate structure for services, many of which are now on lower side than the proposed tax slabs. The minister said the issue of how service tax paid by banks and IT firms will be treated will be decided by the GST Council. He said the legislation was prepared with the consent of all state governments. "If you don't have one, you can produce other ID and simultaneously apply for it", said Jaitley.
The basic principle to determine tax on items will be to find out the current tax components and bracket them under the nearest tax slab so that the prices do not increase, he said.
Experts said service tax is now levied on payments made for under-construction residential houses after providing abatement, which brings down the effective rate from 18 per cent to around 6 per cent.
During Congress Government Bhartiya Janta Party Opposed the Bill.But now opposition's objection to a GST with multiple rate slabs, the Finance Minister said, "If there are no multiple rates, it will become a highly regressive tax..." The GST Bill is likely to reduce the number of taxes to around half-a-dozen.
Jaitley said care will have to be taken to ensure that the various provisions in the GST Bills are not misused.
Several opposition members, including Congress leader Mallikarjun Kharge, All India Majlis-e-Ittehadul Muslimeen leader Asaduddin Owaisi and Trinamool Congress leader Saugata Roy opposed the way in which the GST bills were introduced.