Decks cleared for GST’s July 1 rollout as states agree on bills

Eating out and mobile phone use may get cheaper after new indirecttax slabs kick in

NEWDELHI: The Centre and states agreed on Saturday on two draft laws needed to trigger the country’s biggest tax reform, a move that will likely make a range of services, including eating out and mobile internet, cheaper.

The consensus came at a meeting of finance minister Arun Jaitley and several state finance heads, overcoming almost a decade of political differences on how to replace a multi-layered set of central and state taxes and levies with a unified nationwide Goods and Services Tax (GST).

“July 1 looks possible for the rollout of GST,” Jaitley told reporters, referring to the latest in a series of missed deadlines.

Jaitley said the GST Council, which he heads and has state finance ministers, approved the draft of the Central GST and Integrated GST bills. These will now be ratified by Parliament and the states. Successive governments have pushed to implement the GST, which will create a common market and help lower the tax burden, shore up government revenues, temper inflation and boost economic growth by 1-2 percentage points, analysts say. (See box) But political differences over how to divvy up GST revenues or compensate states for lost income because of the new tax held up progress.

Sources said the GST legislation will likely be taken up as money bills during the second half of the Budget session, which is starting on March 9. This means they can’t be rejected by the Rajya Sabha, where Prime Minister Narendra Modi’s government doesn’t have a majority.