Chennai: With landmark Goods and Services Tax (GST) now a law, President Pranab Mukherjee on Saturday hoped the government will set up a GST Council soon and reduce cascading effect of indirect taxes.
The GST, which will transform India's USD 2 trillion economy and 1.3 billion consumers into a single market for the first time, has been ratified by 19-20 states after Parliament nod last month, thereby qualifying to Presidential assent, he said.
"And I do hope the finance ministry will take appropriate steps to set up the GST council to fix the rate because it is the responsibility of the GST Council that one uniform rate of goods and services is introduced in our economy," he said at the centenary celebrations of Karur Vysya Bank in Chennai on Saturday.
GST, which will replace an array of central and state indirect taxes like excise duty, service tax and VAT, will "not only be a one uniform rate of taxes but it will also be single point taxation not multi-point taxation and therefore the cascading effect would not be very serious," he said.
Mukherjee said the effort made over almost one and half decades fructified with the passage of GST legislation.
"Finally with the constitutional procedures being complied and constitution amendment being carried by both Houses of Parliament and day before yesterday more than 19states, perhaps 20 states, ratified and therefore it has qualified for Presidential assent," he said.
Mukherjee said India has firmly established itself as the fastest growing large economy with a GDP growth rate of 7.3 per cent in calendar year 2015.
"We can say confidently that our economy has revived andour prospects are brighter as we are poised to grow at 7.5 percent in both 2016 and 2017," he said.
He said India's external sector has remained steady with current account deficit improving to 1.1 per cent of GDP in 2015-16 from 1.3 per cent in the previous year.
Foreign exchange reserves stand at USD 365 billion.
"Blessed with a normal monsoon this year, I am hopeful that our food grain production will surpass the record of 265 million tons achieved in 2013-14," he said.
The President on Thursday gave assent to Constitution Amendment Bill on the new indirect tax regime which the government wants to roll out from April 1 next year.
The assent paves the way for setting up of a GST council that will decide the tax rate and the cess and surcharges that are to be subsumed.
The GST is a single indirect tax which will subsume most of the central and state taxes such as Value Added Tax (VAT), excise duty, service tax, central sales tax, additional customs duty and special additional duty of customs.
Parliament on August 8 passed the bill which then went to the states for ratification. A Constitution amendment bill needs to be ratified by the legislative Assemblies of at least 50 per cent of the 29 states and 2 union territories.
The bill was sent to the President's secretariat after as many as 19 states, BJP-ruled Assam being the first, ratified the bill.
The other states which passed the legislation include Bihar, Jharkhand, Chhattisgarh, Himachal Pradesh, Gujarat, Madhya Pradesh, Delhi, Nagaland, Maharashtra, Haryana, Sikkim,Mizoram, Telangana, Goa, Odisha and Rajasthan.
Revenue Secretary Hasmukh Adhia had recently said that the government is ahead of schedule for implementation of GST.
"Instead of 30 days kept for this (states' ratification), it is achieved in 23 days," he had said in a tweet.
Now that the bill has got Presidential assent, the government will notify the GST Council, which will decide on the tax rate. Headed by Union Finance Minister Arun Jaitley, the Council will comprise state Finance Ministers.
The states and the Centre are working overtime and talking to stakeholders to draft the Central GST, State GST and Integrated GST laws, which are to be passed in the Winter Session of Parliament.
The CGST and IGST will be drafted on the basis of the model GST law. The states will draft their respective State GST (SGST) laws with minor variation incorporating state-based exemptions. The IGST law would deal with inter-state movement of goods and services.