Wednesday, 27 July 2016
Fate of GST Bill uncertain in Rajya Sabha.
With flagging jobs, private investment and exports, the Asia’s third biggest economy is in fragile shape despite robust growth, indicating the need for much delayed Goods and Services Tax (GST) Bill, which aims at changing India into a single common market with a unified tax structure and will create millions of formal sector jobs.
The GST Bill, which was initially scheduled to be introduced from April 1 this year, missed the deadline owing to the protests in the Opposition-dominated Rajya Sabha. The Bill is likely to be taken up for voting in Rajya Sabha during this week. The monsoon session of Parliament ends on August 12.
This uniform, indirect tax regime will no doubt benefit the industrial class by improving the ease of doing business. Integration of existing multiple taxes into single GST will significantly reduce cost of tax compliance and transaction cost. GST will also remove cascading effect of taxes imbedded in cost of production of goods and services.
But there seem to be some point of disagreement, which are preventing the Bill from passing through the Rajya Sabha where the BJP doesn’t have the requisite numbers to push the legislation through.
Although, there should be no fundamental opposition to the notion of having a unified tax structure, the states are still anxious about the total revenue loss that could result from such a levy. The Congress has demanded that the additional one per cent tax to compensate manufacturing States for possible loss of revenue should be scrapped.
The Opposition Congress party wants that a cap be fixed on the tax that can be levied under the GST and include this in the Constitution Amendment Bill. They are demanding that the overall GST rate should be capped at 18 per cent. It also wants an independent mechanism to resolve disputes between states over revenue sharing.
While GST is eagerly awaited by the industry, the legal process to implement the GST in India is quite long and complex. It is therefore very important that the Bill is passed in the current Monsson Session.
Latin Manharlal Group
Posted by Latin Manharlal at 03:50