The Goods and Services Tax (“GST”) Bill is the Constitution (122nd Amendment) Bill,2014. It is the biggest tax reform in India since the economy began to be opened up 25 years ago.
The Lok Sabha (lower house of the Parliament) cleared the GST proposal last year. Inthe Rajya Sabha (upper house of the Parliament), it had been stalled mainly by the opposition Congress, which wrote the original proposal when it was in power. To win the Congress’ backing,the Finance Minister held several rounds of discussions and agreed to changess ought by the Congress. Ending months of uncertainty, the Government has won apolitical consensus on the much awaited Goods and Services Tax (GST) Bill,which passed in the Rajya Sabha on 3rd August, 2016.
However, the changes to the Constitution (122nd Amendment) Bill, 2014 cleared by the Rajya Sabha will have to be ratified bythe Lok Sabha and subsequently get approval from 50% of the state assemblies. It will thereafter be approved by the President.
- The Bill must be passed by at least halfthe State Assemblies.
- GST Council to be set up after Presidential assent.
- GST Council to work out details of GST law and tax rate.
- GST Law must be passed by the Parliament.
- States have to pass their own GST laws.
- Detailed rules have to be notified.
Brief overview of gst
The GST creates one national tax to replace a slew of complex ones that differ from state to state. It’s a blanket indirect tax that will subsume several indirect state and central taxes such as value added tax(VAT), excise duty, different state taxes, octroi, central surcharges,entertainment tax, luxury tax and a slew of related levies by local bodies.
The GST is likely to be at 18 per cent, and is widely expected to be implemented next year in April.