Friday, July 29, 2016

Good and Services (GST) Bill – This time it may pass

Hopes are high again regarding the passage of GST (Goods & Services Tax Bill) in Rajya Sabha (Council of States). After all, this is probably the biggest and most radical piece of legislation came out of Indian Parliament after revolutionary Right to Information Act (RTI) and Right to Education Act (RTE).

GST (122nd Constitution Amendment bill) basically put forward the concept of comprehensive tax code on manufacture, sale and consumption of goods and services in India. This will replace numerous taxes levied by central and state governments.

There were numerous oppositions from multiples states, especially manufacturing power houses of India – Tamilnadu, Maharashtra and Gujrat, regarding various sections of the GST. Finally, the Union government on Tuesday agreed for the removal of 1% additional levy on supply of goods and full compensation to the states for all revenue loss they may encounter for next five years.

In addition to these changes; GST rate won’t be capped at 18% and dispute resolutions will be through a mechanism created by GST Council (not by dispute resolution panel as envisaged earlier).
As per many models and experts’ opinion; implementation of GST will not only simplify the tax structure but also help companies to operates more smoothly as far as taxation is concerned. Experts also hope that; this implementation may also add a couple of points to India’s GDP growth rate.

As two of the concerns raised by Congress is already addressed, they may in favour of the passage of GST bill in Rajya Sabha. Main problem in Rajya Sabha is, for passing this constitutional amendment government requires the support of 2/3 of Rajya Sabha members present and voting (i.e. 163 votes). Out of this, ruling NDA alliance only have 72 votes, and congress have 60.

The good side is, in addition to 72 votes GST is currently supported by 19 members of Samajwadi Party (SP), 6 members of Bahujan Samaj Party (BSP), 10 members of Janata Dal (U), 5 members of Nationalist Congress Party (NCP), 3 members of Rashtriya Janata Dal (RJD), 12 MPs of Trinamool Congress and another 8 from Biju Janata Dal (BJD). This will take the total to 135 votes in favour. Now, if Congress also favours the bill; then it can be passed easily in Rajya Sabha in coming session.

In addition to the passage in Rajya Sabha, this bill has to be ratified by half of Indian state assemblies.

Hope that this time there will be consensus for the smooth passage of bill.


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