Years after a protracted political battle, the Rajya Sabha on Thursday paved the way for passage of the historic Goods and Services Tax (GST) Bill to bring the nation’s tax structure under one umbrella, beginning July 1. All the States will now have to pass the States GST Bill after which the new indirect tax regime can be rolled out towards the country’s biggest tax reform since Independence.
The Central GST Bill, 2017; The Integrated GST Bill, 2017; The GST (Compensation to States) Bill, 2017; and The Union Territory GST Bill, 2017 were returned by the Rajya Sabha after negation of a host of amendments moved by the Opposition parties. The lok Sabha had passed these bills on March 29.
Replying to about eight-hour-long debate, Finance Minister Arun Jaitley insisted that the GST, which will usher in a uniform indirect tax regime in the country, will not lead to inflation as apprehended by some sections. The rates are to be discussed by the GST Council on May 18-19.
Just before the bills were put on vote by Deputy Chairman PJ Kurien, former Prime Minister Manmohan Singh intervened and asked his party members not to seek changes in them to “maintain consensus and federal agreement.” The Congress stakes claim to the mega tax reform as the party that first initiated it when it was in power at the centre under Manmohan Singh as Prime Minister.
Without the support of the Congress, which is the largest party in the Rajya Sabha, amendments moved by other Opposition parties like the Trinamool Congress and the left were voted down.
Jaitley said once the new regime is implemented, the harassment of businesses by different authorities will end and India will have one rate for one commodity throughout the country. The powerful GST Council, comprising Centre and States, has recommended a four-tier tax structure — 5, 12, 18 and 28 per cent. On top of the highest slab, a cess will be imposed on luxury and demerit goods to compensate the States for revenue loss in the first five years of GST implementation.
Jaitley said the successive Governments have contributed towards the GST and no one person can take credit for it. “This Bill, I have no hesitation in conceding, is a collective property,” he said. With implementation of the GST, revenue of the Centre, the states and the industry and trade must benefit, he added.
If changes to the bills had been approved by the House, it would have been more embarrassment than worry for the Government, which is in a minority in the Rajya Sabha. But because they are Money Bills, the Rajya Sabha’s changes would not have been binding on the lok Sabha to which the bills would then have returned. The lok Sabha can choose to accept or reject changes in Money Bills.