The passage of the GST bill in Rajya Sabha takes the country a step closer to being a large, uniform market
GN Bureau | August 3, 2016
The Rajya Sabha on Thursday passed The Constitution (122nd Amendment) Bill, 2014 (GST), ending years of political wrangling and raucousness.
GST is essentially a comprehensive indirect tax on manufacture, sale and consumption of goods and services across the country and it replace taxes levied by the central and state governments.
The Congress, which had initially pushed for GST, had later opposed the bill. But the party finally came around and helped ensure that the bill gets passed in the upper house. A day earlier, Congress vice president Rahul Gandhi had met Leader of the party in Lok Sabha Mallikarjun Kharge, former finance minister P Chidambaram and Deputy Leader of the party in Rajya Sabha Anand Sharma in Parliament House and held deliberations regarding the tax reform legislation.
Yet the road ahead is still a long one as all the states too have to now pass their own laws on it. Once that happens, it will be an important tax reform that hopes to make India’s 1.2 billion people strong market an easier place to do business in.
The GST bill had a difficult journey. The budget of 2006-07 had announced GST by April 1, 2010. An empowered committee of state finance ministers, headed by the then West Bengal finance minister Asim Dasgupta, had submitted report to the central government in April 2008. Since then it has been a legislative challenge.
The introduction of a single indirect tax regime across the country will be a significant development. South Asia is expected to be the fastest growing sub-region, led by India, whose economy has shrugged off global headwinds and is on track to meet ADB’s March fiscal year 2016 projected growth target of 7.4 percent, the Asian Development Bank has said in a supplement to its Asian Development Outlook 2016 (ADO 2016) report.
According to ey.com, GST will be a game changing reform for Indian economy by developing a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the Tax Structure, Tax Incidence, Tax Computation, Tax Payment, Compliance, Credit Utilization and Reporting leading to a complete overhaul of the current indirect tax system.
GST will have a far reaching impact on almost all the aspects of the business operations in the country, for instance, pricing of products and services; supply chain optimization; IT, accounting and tax compliance systems, it said.
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