Four key bills on GST get Lok Sabha green signal: Decks cleared for July rollout of uniform tax regime

Arun Jaitley, who steered the passage of the Bills, told the House that the GST will make commodities “slightly cheaper”

Written by Avishek G Dastidar | New Delhi | Updated: March 30, 2017 9:36 am
GST, GST bill, goods and services, lok sabha, GST 4 bills, narendra modi, pm modi, supplementary Bills, GST implementation, indian express news, india news, business news Finance Minister Jaitley at his office. (Source: Express Photo by Renuka Puri)

Clearing the decks for the July 1 rollout of the goods and services tax (GST) that will subsume all central and state taxes for a unified tax regime across the country, Lok Sabha Wednesday night showed the green light to four related crucial supplementary Bills. Finance Minister Arun Jaitley, who steered the passage of the Bills, told the House that the GST will make commodities “slightly cheaper” and rates would depend on whether the commodity is used by a rich person or a common man.

Hailing the historic move, Prime Minister Narendra Modi, who was present in Lok Sabha, tweeted in Hindi later: “Congratulations to all countrymen over passage of the GST Bill. New Year, New Law, New Bharat.” The Central GST Bill, 2017; The Integrated GST Bill, 2017; The GST (Compensation to States) Bill, 2017; and, The Union Territory GST Bill, 2017 were passed after voting down of a slew of amendments moved by Opposition parties.

Read | Lok Sabha passes GST supplementary bills; ‘history in making,’ says Arun Jaitley

During the seven-hour debate in the House, Opposition parties like the Congress, Trinamool Congress and BJD contested several clauses in the Bills such as the power of the GST Council to decide on laws that the states or the Centre would enact, why there was no one rate for all commodities instead of multiple rate slabs.

In his reply, Jaitley said GST rates will depend on whether the commodity is used by a rich person or a common man. “It is no one’s case to place items like baby food in the higher tax slab. Similarly, hawai chappal and a luxury car cannot have the same tax rates. That is something the GST council has decided with unanimity,” he said, adding that food items would will not attract any tax as they have been kept in the zero-tax slab. He said once the new regime is implemented, the harassment of businesses by different authorities would end and India would have one rate for one commodity throughout the country.

To Opposition criticism that the current GST law “abrogates” parliamentary sovereignty on taxation matters, Jaitley quoted Constitutional amendments and said the current arrangement is to make sure each state legislature does not enact its own tax law different from what is enshrined in the GST.

Read | GST debate: Who said what in Parliament today

“Including all states, Union Territories and the Centre, there are 32 entities in the Council. Now, once we have all agreed that there would be a GST, we cannot have a system which allows states to come out with their own tax laws different from the GST. That would be chaos,” he said.
Clarifying that he agreed in-principle to include real estate in the GST list, Jaitley said the Council — comprising Finance Ministers of Union and states — would take a call on this after the first year of the rollout.

Batting for the one-country-one-tax system, he said: “Today you have tax on tax, you have cascading effect. When all of that is removed, goods will become slightly cheaper.” The GST Council has recommended a four-tier tax structure — 5, 12, 18 and 28 per cent. On top of the highest slab, a cess will be imposed on luxury and demerit goods to compensate the states for revenue loss in the first five years of GST implementation.

However, the Central GST (CGST) law has pegged the peak rate at 20 per cent and a similar rate has been prescribed in the State GST (SGST) law, which takes the peak rate to 40 per cent which will come into force only during financial exigencies. Jaitley said the cess would be transient for a period of five years so that the proceeds can be utilised to compensate the states.

Outside Lok Sabha, the Congress criticised the government on the manner in which the GST Bills have been drafted. “It is a historic day where Parliament’s sovereignty has been removed insofar as taxation is concerned and they have no power to abrogate… This is again a big assault on the federal structure of the Constitution of India,” M Veerappa Moily, senior Congress leader, told reporters.

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