GST will cut tax evasion, aid biz environment: FM
Implementation of the Goods and Services Tax (GST) will reduce tax evasion and improve the ease of doing business by creating a common market, finance minister Arun Jaitley said in the Lok Sabha on Monday. The 122nd Constitutional Amendment Bill, amended by the Rajya Sabha last week, was passed by the Lok Sabha on Monday. “GST will ensure one tax in the entire country. It will result in seamless transfer of goods and services in the country...This is a major indirect tax reform which will in the long run will be in interest of the country.
The Rajya Sabha had approved the GST Constitution Amendment Bill on August 3. The Lok Sabha had passed it in May last year, and took it up again on Monday to approve the changes made in the upper house last week.
On the issue of states giving up sovereign power to levy taxes, the finance minister said it was not the case. “States and the Centre will be pooling in their sovereignty together and create a new mechanism, and take all its decision within that pooled sovereignty.”
Jaitley, who did not give any assurance that the legislation will be brought as money bill, said the tax rate under the GST regime will be fixed at the “minimum workable rate.”
“Why will representatives from states and the Centre want to put unnecessary burden on the common man? No government will want to do excessive profiteering as it will create anger among the voters. Again no state will want that tax rate be lowered so much that they are unable to pay salary. ”
On the question of whether the GST rate may have implications for inflation, Jaitley said it would be decided by the GST Council, which will comprise representatives of Centre and states.
He also said that the rate in the new sales tax regime is a matter to be decided by calculations and not by political slogans.
The finance minister also appreciated political parties for showing their support in passing the bill in the upper house. “It is an important legislation and a divided Parliament passing the bill would not benefit India.”
Jaitley also said that the Constitutional Amendment Bill was an enabling law. After being approved by the state assemblies, three more laws — Central GST (CGST), Integrated GST (IGST) and State GST (SGST) — will be drafted by the GST Council.