Green light for Goods and Services Tax

New Delhi: The Rajya Sabha passed the Bill to amend the Constitution paving the way for the roll-out of the Goods and Services Tax (GST) on Wednesday evening by two-thirds majority, as all political parties with the exception of the AIADMK pledged support.

The amendments moved by Union Finance Minister Arun Jaitley were also put to vote. The Bill will now be returned to the Lok Sabha for its approval.

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 GST will have two components keeping in mind the federal structure of the country: the Central GST (CGST) and the State GST (SGST). The shift to the GST regime, one of the most significant tax reforms in recent history, 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, initiating the debate.

Earlier in the day, lead speaker for the Congress, former Finance Minister P. Chidambaram, made it clear that the main Opposition party will support the long-pending Bill only if the government gave firm, categorical assurances on two things: keeping the GST rate capped at 18 per cent in the subsequent legislation needed for the GST’s roll-out and bringing them in as financial Bills rather than money bills, which the Upper House will not just discuss but also vote on. Members of nearly all the political parties who spoke raised similar demands.

Mr. Jaitley, while refusing to give an assurance, did give the House his word that the government will go by the Constitutional provisions and precedents at the time of bringing in the Bills. The Congress members voted in favour of the Bill.

The Finance Minister said his discussions with States led him to believe that the rates would be moderate and less onerous than the combined burden of the Central and State taxes on goods and services, which comes to about 27%. However, he said it was not possible for him to give an assurance on legislation that had not yet been drafted. Before the Bill was put to vote, the AIADMK members staged a walkout from the House.
Bureau Report