The country will have to wait a little longer for the Goods and Services Tax Bill, which was passed in the Lok Sabha on Wednesday, to be presented and cleared in the Rajya Sabha. The GST, considered a game-changer and the most significant tax reform yet, will replace the plethora of taxes imposed by the Centre and the states that over the years led to a lot of leakages, institutionalised corruption, harassment, and what came to be known as “Inspector Raj”.
The GST as it has been conceived will lead to India becoming one common market with no boundaries for trades and services. It is also expected, according to Union finance minister Arun Jaitley, that the GST rate would be around 23 per cent, much lower than the 27 per cent recommended by the sub-panel of the empowered committee of state finance ministers. It is hoped that in the interest of the consumers and the states, the rate would be closer to 23 per cent, as recommended by the National Institute of Public Finance and Policy, as 27 per cent, according to one analyst, would be a non-starter. However, this will not form part of the GST Bill but will be decided by a GST council consisting of the Union and state finance ministers that is to be set up after the bill is passed.
The most significant aspect of the GST is the states will get a good share of the taxes. The GST is expected to give a boost to the economy and, by all counts, will add at least one to two per cent to GDP because it will remove tax distortions, add to the ease of doing business and increase export competitiveness by bringing down the cost of doing business. There are still some contentious issues raised by the states but Mr Jaitley has said they would be resolved. The GST Bill is now expected to come up in the Rajya Sabha on Monday. Mr Jaitley and his team have been working overtime to get the Opposition, particularly the Congress, on their side as the BJP-led NDA lacks the numbers to get the bill through the Upper House. It has already conceded the stand of the Congress and other parties in a spirit of give and take by not pushing in this session for the significant real estate legislation which the Congress has called pro-builder. Mr Jaitley still hopes he can get the bill through on Monday.
