Finance Minister Arun Jaitley on Friday touted the Goods and Service Tax (GST) Bill as the "single-biggest tax reform since the Independence" and said it will create a win-win situation for both the Centre and States. Jaitley introduced the Bill in the lok Sabha saying that it will be taken up for passage in the Budget Session of Parliament.
The GST Bill — which was cleared by the Cabinet on Wednesday — will subsume all indirect levies, including entry tax from April 2016, to ensure seamless flow of goods and services across the country.
Further, allaying apprehensions regarding the present economic scenario of the country, including the devaluation of rupee, the Finance Minister said there was ‘no serious crisis’ and the Indian currency is performing better as compared to that of other emerging markets.
"I don’t see any serious crisis on the real value of rupee," Jaitley informed the Rajya Sabha while speaking on the Appropriation (No 4) Bill, 2014. The Bill, which was returned, authorises payment and appropriation of certain additional sums from and out of the Consolidated Fund of India for 2014-15. It was passed by the lok Sabha on December 10.
While the Minister reassured the nation regarding the strength of the rupee, he also presented other positive signals on the condition of the economy. Chief Economic Adviser to the Government Arvind Subramanian said that achieving 4.1 per cent fiscal deficit in FY15 may be tough, but "doable."
Meanwhile, in a report on the mid-term review of the economy, the Government said India’s economy was expected to grow at around 5.5 per cent in the fiscal year to March 2015. The figure is in line with the estimates by the Reserve Bank of India of GDP growth in FY15.
The Government is committed to meeting the fiscal targets for FY 2015 despite the difficult odds engendered by a combination of these factors, the report said.
The mid-year review is based on the trend study of receipts and expenditure in relation to the budget at the end of the second quarter of FY2015, says the Budget deficit target is in line with estimates.
The two crucial data will come handy for the Finance Minister, who could not count on the GST to give additional fillip to the economy, when it is rolled out expectedly in April 2015.
Asserting that concerns of all States have been taken care of in the new taxation system, Jaitley described the GST reform as a "win-win situation" for both the Centre and the states and it would not have "fear of the unknown" unlike Value Added Tax (VAT) and . While The Constitution Amendment Bill on GST was approved by the Cabinet on Wednesday, it was introduced in the lok Sabha on Friday.
"I do not intend to pass it (GST Bill) in the current Parliament session. We will formally take it up in the next session," Jaitley said. Noting that he has held wide consultations in drafting the bill, including with the Empowered Committee on GST, Jaitley said states would be compensated and the first installment would be made before March 31 next year.
GST reform would strengthen the principle of "co-operative federalism" as Centre and state would need to work together to take decisions which would require 75 per cent majority approval. The Centre had held intensive deliberations with states on certain contentious issues, including those related to petroleum product taxation.
"Government is working along with the states as far as GST reform is concerned. GST will be the single biggest tax reform since Independence. It will allow seamless travel of goods and services and tax at the destination. Myth of taxation foregone is not a benefit for a corporate house but benefits given by government," he said.