Cong says delay in GST rollout cost ₹12 lakh crore New indirect tax to shore up revenue, spur economic growth
BIG REFORM AIADMK shifts stand postJaya’s death to back Bill, Trinamool says govt needs to put in place a foolproof mechanism STATE LEVIES SUCH AS VAT, SALES TAX, ENTERTAINMENT TAX, PURCHASE TAX, MANDI TAX, LUXURY TAX, OCTROI AND ENTRY TAX, WILL BE SUBSUMED INTO SGST
All big parties came together in the Lok Sabha on Wednesday to usher in the country’s biggest tax reform and supported, albeit with caveats, the four bills related to the Goods and Services Tax (GST).
Opening the debate, former Congress minister Veerappa Moily accused the BJP of delaying the passage of the legislation during the UPA era. “India lost a whopping ₹12 lakh crore due to years of delay,” he said.
Even as the Congress is supporting the bills that aim to roll out a seamless, pan-Indian tax structure, replacing the myriad state-level levies, it termed the NDA’s GST bill as a “baby step.”
“What the NDA government has brought about in the name of a revolutionary tax reform is not a game changer but only a baby step,” Moily said, contradicting finance minister Arun Jaitley’s earlier announcement.
Moily, who heads the finance panel in Parliament, said it will be a “technological nightmare” and the anti-profiteering provisions in it are “far too draconian”.
“Seven to eight years have passed after the erstwhile UPA government wanted to bring the GST Bill. Some parties then felt it should be halted due to reasons best known to them,” he quipped. The Congress also pointed out that the slogan of “one nation, one tax” is a myth as there will be too many tax rates.
AIADMK, which had opposed the GST bill when J Jayalalithaa was alive, came out in support of the legislation. Its lawmaker Venkatesh Babu hailed the GST as the “biggest tax reform initiative” while underlining the challenges in its implementation.
The AIADMK was earlier apprehensive about the GST as it feared that the state’s revenue will take a hit. But on Wednesday, Babu said, “There will be huge revenue loss to states involved in manufacturing like Tamil Nadu. Some of our concerns were addressed while some are yet to be addressed,” he said.
Trinamool Congress member Kalyan Banerjee demanded that the credit should not go to the Centre alone as different states have come together to support the GST. Snatching away the credit from the Centre, Banerjee said, “It was West Bengal which ensured that no state government suffers financially due to the implementation of GST.”
Banerjee also suggested the Centre should look into the models of GST in other countries to make a full-proof mechanism.
Samajwadi Party patriarch Mulayam Singh Yadav couldn’t help deviate from a Parliament debate on the proposed GST on Wednesday to accuse the BJP of winning the Uttar Pradesh assembly elections on false promises. Also, he defended his party’s track record in the state. His defence of the government led by his son Akhilesh Yadav surprised parliamentarians as the party suffered a huge defeat in the February-March elections, despite a tie-up with the Congress.
India on Wednesday created history by paving the way for the biggest indirect tax reform since Independence. The Goods and Services Tax (GST) will unify India into a common market that will eliminate the cascading impact of a plethora of central and state taxes.
Central taxes such as Central Excise Duty, Additional Excise Duty, Additional Customs Duty and Service Tax will all be merged into one CGST.
State levies such as VAT, sales tax, entertainment tax, purchase tax, mandi tax, luxury tax, octroi and entry tax, will be subsumed into SGST.
The Centre will levy the Central GST and Integrated GST, while states will impose the SGST. While several countries have implemented GST or another form of a value added tax, Canada is the closest to India, with a dual tax structure.
The new indirect tax is expected to shore up government revenue and spur economic growth by 1-2 percentage points.
The new regime will have a four-slab structure of 5%, 12%, 18% and 28%.
There will be no tax on essential items such as rice and wheat.
The lowest tax rate of 5% is proposed for items of mass consumption used by common people such as spices, tea and edible oil.
There will be two “standard” rates of 12% and 18% covering most manufactured items and services.
The highest tax rate of 28% will be imposed on items such as luxury cars, pan masala, tobacco and aerated drinks.
The Compensation Bill will ensure that the states get fully compensated for the first five years if there is a revenue loss after the GST rollout. The compensation will be used up from a war chest created from cess that the Centre will charge on certain goods, above the GST rate.
The Centre and states will both assess taxpayers with an annual turnover of above ₹1.5 crore.
States will have the power to assess taxpayers with a turnover below ₹1.5 crore.
Northeastern states with an annual turnover of ₹10 lakh or below will be exempted from the GST, but, for the rest of India, this limit is ₹20 lakh.