India Inc. welcomes Lok Sabha’s nod
Finance minister Arun Jaitley
New Delhi: Finance minister Arun Jaitley on Wednesday vowed to compensate states for any revenue loss and assured them that the new uniform indirect tax rate will be much less than 27 per cent recommended by an expert panel as representatives from states like Tamil Nadu expressed reservations.
“The whole country would become a single market and therefore it would give a necessary fillip as far as trade is concerned?” Mr Jaitley said, winding up a debate in the Lok Sabha on the Constitution Amendment Bill, which seeks to introduce GST. Though the Lok Sabha has cleared the Bill, the government has a tough in the Rajya Sabha, where it does not have a majority.
If it is passed there, it will need to be ratified by more than half of India’s 29 states before it can be rolled out in April 2016 as planned. The bill was passed by 352 votes against 37 after the government rejected the Opposi-tion’s demand to refer it to a standing committee of the House, as Prime Minister Narendra Modi was absent during voting. As Mr Jaitley finished his reply, Cong-ress leader Mallikarjun Kharge said they were not satisfied with the content of the Bill and hence they were walking out.
Mr Jaitley said the proposal to reform indirect taxes has been pending for the past 12 years, and his predecessor P. Chidambaram had also advocated it during UPA rule. The GST, the biggest indirect tax reform since 1947 which is expected to boost manufacturing, will replace Central taxes like excise duty and service tax and state levies such as sales, value-added, entertainment and purchase taxes. All entry taxes like octroi will also be subsumed under GST.
All goods and services, except alcohol, will be covered by GST. Petroleum products will come under GST but the decision over when to start levying the new tax has been left to the GST Council to decide. This reform of indirect taxation was initiated by the Kelkar Commi-ttee in 2003, after which the then UPA government first proposed a GST in 2006.
According to experts, the roll out of the new tax regime would add 1.5 percentage points to the economic growth and create a common market across India.
“In terms of providing incentives to industry, this is the most extensive and far-reaching reform in the tax domain, which would encourage industry to grow significantly,” CII director general Chandrajit Banerjee said. “It would help reduce tax-on-tax and would be beneficial to the industry,” he added.
( Source : dc correspondent )
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