The Lok Sabha passed the much-delayed Constitution Amendment Bill to Goods and Service Tax (GST) on Wednesday, paving the way for a new bill on the uniform tax regime, even as the Congress Party staged a walkout in protest.
The Constitution Amendment Bill to implement GST, originally mooted by the UPA, was passed by 352 votes against 37 after the government rejected the opposition demand of referring it to a standing committee.
Before the mammoth voting session involving a number of amendments, Finance Minister Arun Jaitley once again vowed to compensate states for any revenue loss and assured that the new uniform indirect tax rate will be much less than 27% recommended by an expert panel. Prime Minister Narendra Modi was not present in the House at the time of voting.
“I straightaway concede that 27% (revenue neutral rate) would be very high… We have decided to keep petroleum out and every state finance minister is not interested in imposing higher taxes on its own people, and neither the central government. Therefore, this figure is going to much more diluted compared to the figure (27%) which has been mentioned,"
GST, which is proposed to be implemented from April 1, 2016, will subsume excise, service tax, state VAT, entry tax, octroi and other state levies.
Replying to the debate on the bill before Congress walked out, Finance Jaitley said the proposal to reform the indirect taxes has been pending for the last 12 years and his predecessor P Chidambaram had also mooted it during UPA rule.
Rejecting the Opposition demand for referring the Bill to the Standing Committee, he said the panel has already examined various provisions of the new legislation and several of its suggestions have been incorporated. "A bill is not a dancing instrument that it will be jumping from Standing Committee to Standing Committee.”
He said GST would ensure seamless and uniform indirect tax regime besides lowering inflation and promoting growth in the long run as he sought to allay concerns of the states that they would be hurt by its implementation.
Meanwhile, reactions coming in from the industry welcomed the passage of the bill, and sounded confident that the deadline of April 1, 2016 will be met.
“It is great news for industry and this brings GST closer to reality. It's also an indication that there is broad based alignment on GST amongst major political parties. Now even if the Bill goes to a select committee of Rajya Sabha, one would hope that GST meets it's deadline of April 1, 2016. In any case, it seems almost certain that is now GST is going to happen in the calendar year 2016. It leaves very less time for the industry to prepare for this major transformation,” said Pratik Jain, Partner – Indirect Taxes, at KPMG.
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