One nation, one market is closer as GST bills okayed

LOK SABHA Government targets July 1 rollout of biggest tax reform since 1947

NEW DELHI: The proposed goods and services tax (GST) moved a step closer to reality on Wednesday with the Lok Sabha approving four bills that will subsume a profusion of central, state indirect taxes and help create a single, unified market.

The Lower House passed the bills by voice vote, after Speaker Sumitra Mahajan initiated clause-by-clause voting at the end of a long Parliament debate on GST, billed as the country’s biggest tax reforms since Independence.

“These are revolutionary bills which will benefit all. States have pooled in their sovereignty into the GST council, and Centre has done the same,” said finance minister Arun Jaitley, who aims to introduce the GST from July 1.

These supporting legislation for the GST were introduced as money bills and will now go to the Rajya Sabha, where the NDA government doesn’t have the numbers to push through key reforms.

But the Upper House can’t reject money bills, as it only has powers to make recommendations on such legislation, which the Lok Sabha can choose to accept or reject.

Once the bills are passed in Parliament, the government will issue a notification after the President’s consent. The states will pass a separate law — the State GST (SGST) bill — to roll out the reform.

The four proposed legislation are the central goods and services tax (CGST) bill, the integrated goods and services tax (IGST) bill, the goods and services tax (compensation to states) bill, and the Union territory goods and services tax (UTGST) bill.

The passage of the bills removed years of political differences over the GST that will eliminate tax barriers, and subsume a host of indirect taxes levied by the Centre and the states, including excise, service tax, entertainment, entry, luxury and value-added taxes.

“The July deadline is possible. We have promised businesses that there will be clarity on the law at least three months before its implementation. That has come from the passing of the four bills,” revenue secretary Hasmukh Adhia said.

He announced that the GST council will pass all nine sets of rules by March 31.

The CGST will give powers to the Centre to levy tax after excise and service taxes and additional customs duty are subsumed. The IGST will be a tax on inter-state movement of goods and services.

The UTGST is for Union territories such as Chandigarh and Daman and Diu.

The clause-by-clause voting was held as the Congress and other opposition parties sought a division vote as well as more than 30 amendments to the proposed legislation.

“Several amendments were moved but none were passed,” Adhia said. Opposition parliamentarians raised concern about the GST council, fears of revenue loss and loss of autonomy. “I hope we will not end up cloning Parliament and creating the GST Council ... like human cloning, years later this will also raise moral questions,” said Mohammad Salim of the CPM.

Trinamool Congress’s Saugata Roy summed up the mood in the opposition camp: “I support the GST bills with a heavy heart ... where is cooperative federalism?” But most MPs showed consensus that the new indirect tax is the biggest reform since Independence and is the need of the hour.

These are revolutionary bills which will benefit all... states have pooled in their sovereignty into the GST council, and Centre has done the same

ARUN JAITLEY, Union finance minister