GST bill: Green light for “one nation, one tax”

After being subject to months of haggling and histrionics, the Goods & Services Tax (GST) finally had its historic day in the Rajya Sabha with the passage of the Bill to amend the Constitution, paving the way for what is popularly referred to as the concept of “one nation, one tax.”

The Constitution (122nd Amendment) Bill, 2014 was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate.

The bill was passed by the Lok Sabha earlier. It will now go back to the Lower House to incorporate the amendments approved by the Rajya Sabha. The bill will also have to be approved by 50 per cent of all the state assemblies.

AIADMK was the only party to oppose the measure and its members staged a walkout from the House to register their unhappiness over the bill.

The easy passage was facilitated after the main opposition party Congress, which had been stalling the measure for over two years, came on board after the government made about six changes in the bill, including scrapping of 1 per cent manufacturing tax and incorporate clearer provisions for compensating states for revenue loss for five years.

Replying to the debate during which most parties pressed for a Constitutional cap on GST tax rate at 18 per cent, Finance Minister Arun Jaitley said the guiding principle would be to keep the “rates as low as possible, certainly lower than what it is today.”

Led by the former Finance Minister P. Chidambaram, the Congress, supported by members of some other parties, made a valiant effort to extract an assurance from Finance Minister Arun Jaitley that as and when he would introduce the subsequent legislation to operationalise the GST, it would be as finance rather than money bills. This was to ensure that they would also be voted in the Rajya Sabha. However, Mr. Jaitley refused to yield, stating that he could not give a commitment on future legislation whose contours would be decided by the Centre and the States together.

The GST will have two components keeping in mind the federal structure of India: the Central GST (CGST) and the State GST (SGST). The constitutional amendment will enable both the Centre and the States to simultaneously levy the GST, which will subsume all indirect taxes currently levied, including excise duties and service tax. It will be levied on consumption rather than production.

The shift to the GST regime will lead to a uniform, seamless market across the country. It will be a uniform rate, will check evasion, and boost growth rates, Mr. Jaitley said.

By – Dhriti Sharma