After months of debate and dissension, the Goods and Services Tax (GST) Bill was finally passed on August 8, 2016 by the Indian Parliament. According to Prime Minister Narendra Modi, the GST is “crucial” for ending tax terrorism, besides reducing corruption and black money, and will make the consumer the “king”.
The PM also thanked all political parties for supporting the Bill with all the amendments to the landmark Bill. This is the 122nd Constitutional Amendment Bill. The government wants to implement this tax from April 1, 2017, and it will replace as many as 17 indirect taxes levied by states and the Centre. The Upper House approved six official amendments that the government had moved, including scrapping of 1 per cent additional tax. It needs to get two more laws to be passed by Parliament in the winter session.
At least 16 out of 31 provinces with Assemblies (29 states and two of the seven union territories), or more than half the total, need to pass this Bill before it can be sent for the President’s assent.
What is GST?
G – Goods
S – Services
T – Tax
Goods and Services Tax (GST) is a comprehensive tax levied on manufacture, sale, and consumption of goods and services at a national level. Under the GST, no discrimination is made between the goods and services for levying any taxes. It was proposed as a substitute for all indirect taxes levied by the Central and State governments in India.
The GST is a uniform indirect tax levied on goods and services that will be levied across the country and will replace all the various taxes that are currently levied on goods and services. A committee headed by Chief Economic Adviser Arvind Subramanian suggested a standard GST rate of 18%, while assuming the low end of the rate at 12% and the upper end at 40% on sin goods that are seen as harmful to the society.
The GST, as stated by the PM, is being hailed as a “great step by team India” that will help transform the economy, bring in transparency and bring in the system of “one country one tax”.