GST will curb corruption, end tax terrorism: Modi

NEW DELHI: Parliament cleared the goods and services tax (GST) bill on Monday as Prime Minister Narendra Modi called the landmark reform “pro-poor” and shared credit with all parties, including the Congress, rare bonhomie in a government-opposition relationship marked by bitterness.

Speaking in Lok Sabha, Modi said the legislation will make it easy to detect tax evasion and curb black money as human interface between tax-payers and collectors will almost be eliminated.

“There has always a debate on who gave birth to Krishna and who brought him up. This is not a victory of any party. This is a victory of the Indian democracy,” said the prime minister.

“This could be done because of the participation of the earlier and this government.”

He also dubbed the bill as a “Great step towards Transformation” and a “Great step towards transparency”.

The GST aims to stitch together a common national market by replacing an array of state levies with a countrywide tax.

The bill, touted as the biggest financial reform since the economy was opened up 25 years ago, is expected to improve the ease of doing business and lower prices of many commodities.

Under the current system, levies are charged at multiple points and by different authorities — for example, by the police at check points or by state government agencies at inter-state borders. This encourages corruption that a common nationwide tax is expected to eliminate.

Modi also struck a similar tune, comparing the GST’s passage with the August Kranti freedom movement. “Today is the day of August Kranti. On August 9, freedom fighters faced torture. We will remember this day as the GST will also make people free from tax terrorism,” said Modi.

Last Wednesday, the 122nd Constitution amendment bill — necessary for the GST’s implementation — was passed with nine amendments by Rajya Sabha after protracted negotiations between the

Opposition and government, which is in a minority in the Upper House.

The legislation was cleared by the Lok Sabha on Monday and will now go to the states, where more than half of all assemblies will have to pass it.

The target date for the rollout of the new system is April 1, 2017.

In the Lower House, Modi also linked the passage of the GST with his poll slogan of Ek Bharat, Srestha Bharat.

As the Lok Sabha united to pass the pan-national tax, doing away with myriad local levies, the PM said, “Ek manch, ek march, ek manzil.”

While the PM repeatedly insisted that no single party got the credit for the passage of the bill stuck in Parliament since 2011, Congress floor leader Mallikarjun Kharge quipped, “We are glad that what Modi could not understand as a chief minister, he could realise it as prime minister,” referring to the BJP’s resistance to the tax reform during the UPA regime.

The PM said the consumer will be “king” under the GST because of uniformity in tax rate and processing. The new tax will help small traders—a core vote bank of the BJP—and guarantee their safety, he said.

States with poor development indices will be guaranteed to earn more revenue and banks will not be able to refuse loans indiscriminately, the prime minister said.

He also announced all essential goods used by poor people as out of the tax net.

“Because of chungi (octroi) system, we see goods vehicles are lined up for miles. A study said that transport vehicles can use only 40% of their capacity as they are often stranded in long queues. Every year, Rs 1.40 lakh crore is wasted because of this phenomenon,” Modi said.

But despite refusing to take the entire credit for the GST’s passage, Modi did not forget to mention, “This government has spent 100 weeks, but in this House we have passed more than 100 bills.”